Section 92D of the Income Tax Act
Income-tax Act, 2025: s.171
Section 92D of the Income-tax Act, 1961 corresponds to section 171 (Maintenance, keeping and furnishing of information and document by certain persons) of the Income-tax Act, 2025.
Read section 171 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 92D is CIT v. Shatrunjay Diamonds (261 ITR 258), cited in 50 of the 485 judgments on BharatTax that turn on this section.
Leading authorities on Section 92D
The assessee bears the initial burden to maintain and produce authentic documentation under Section 92D and Rule 10D to justify transactions with related parties, especially concerning the arm's length price for such transactions under Section 40A(2)(b). The discharge of this statutory obligation to maintain accurate data is a mandatory requirement of law.
Outstanding invoices with a foreign associated enterprise are considered international transactions under Explanation to section 92B, and transfer pricing provisions apply as anti-abuse measures, overriding general provisions. Notional interest income can be brought to tax based on the arm's length principle, even if it involves assumptions.
Penalty under Section 271G cannot be imposed for mere technical lapses or non-compliance with transfer pricing documentation requirements if substantial compliance is demonstrated and the Assessing Officer (AO) or Transfer Pricing Officer (TPO) did not issue a specific requisition for particulars under Section 92D(3).
A company is considered a comparable in transfer pricing analysis unless it is shown to be functionally incomparable.
Incurring high advertisement and marketing expenses does not preclude the use of the Resale Price Method (RPM) for determining the Arm's Length Price (ALP) under transfer pricing provisions. The ratio of related party transactions (RPTs) calculation requires careful consideration of the numerator and denominator to accurately reflect transactions with associated enterprises.
Companies engaged in different activities, such as skill development, tourism research, and environment, are considered functionally different and not comparable to the assessee. Headcount is an appropriate allocation key for common indirect expenses within various business segments.
A penalty under section 271AA of the Income Tax Act is not leviable if the international transaction entered into by the assessee with its associate concern has been held to be at arm's length, especially when transfer pricing documentation was accepted for prior assessment years.
The requirement to furnish prescribed information under Section 92D(3) of the Income-tax Act arises only when the assessee fails to support its Arm's Length Price (ALP) with necessary evidence. There is no justification in demanding information first and then offering an opportunity to the assessee.
The definition of 'charitable purpose' under Section 2(15) includes advancement of any object of general public utility, and the scope of 'public utility' depends on the context of each situation.