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 Rules May Apply to Indian Company with Non-Resident Shareholder Under Section 92A of Income Tax Act, 1961. An Indian private limited company with two Indian resident shareholders and one non-resident shareholder from a Dubai-incorporated company is involved in a transaction with a proprietary concern owned by a non-resident director. The query is whether the provisions of Section 92 regarding transfer pricing apply, and if a transfer pricing report is required. The response indicates that if the entities are considered associated enterprises under Section 92A of the Income Tax Act, 1961, transfer pricing regulations would apply, necessitating a report. However, determining the relationship based on limited facts is challenging.