Transfer pricing

[ASHISH DESAI]

an indian pvt ltd co. has three shareholders. two indian residents & one non-resident company incorporated in Dubai.one of the promoter director of the said non-resident co. is a director in our Indian company. the said indian co. sells its' products to a proprietory concern of the said non resident director, who in turn sells the material to various customers in Dubai.now my query is whether provisions of S.92, re. TRANSFER PRICING is applicable in this situation? is it reqd to submit TP report?

[Ravi Chopra]

The scope of section 92A of Income Tax Act, 1961 which defines the meaning of associated enterprises is exhaustive one. Once it is falling within the purview of section 92A, yes, the transactions in the query would be liable to TP and report is required to submited. If the finding is that two are not associated enterprises, no TP is applicable. I think, merely on the basis of limited facts in the query, it is not easy to determine the relationship within the purpose of section 92A.

AI Summary

Transfer pricing: transactions with associated enterprises attract TP compliance and require a transfer pricing report. If the parties qualify as associated enterprises under section 92A, the transactions will be subject to transfer pricing and a transfer pricing report must be submitted; if they do not qualify, transfer pricing does not apply. The scope of section 92A is exhaustive and the determination depends on the specific factual matrix, which cannot be resolved on limited facts.