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July 17, 2001
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Money > Business Headlines > Report July 17, 2001 |
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CII calls for provisions for intervening period dealsBS Corporate Bureau With the final rules for transfer pricing yet to be announced, some key issues are likely to emerge which need to be tackled, says the Confederation of Indian Industry. According to CII, there is a need for special provisions in the rules for dealing with transactions entered into during this intervening period. Also, there is no effective date for maintenance of information/ documentation, as most of the information/ documents need to be contemporaneous. The new transfer pricing regulations prohibit correlative adjustments in the hands of the other associated enterprise. Meanwhile, there are various tax treaties entered into by India, which provide for such adjustments under Article 9. The relevance of Article 9 vis-a-vis the transfer pricing regulations introduced under Section 92A-92F of the I-T Act need to be determined and could be a subject matter of protracted litigation. Further, the Central Board of Direct Taxes has come out with regulations, which prescribe the basis of determining the most appropriate method to determine arm's length price. Globally, it is recognised that it should be left to the businessmen to determine what he considers to be the most important method to determine arm's length price, says CII. It is globally recognised that there is no single arm's length price. There is a range of arm's length price and so long as the price charged is within the range, it should not be disturbed. The provisions require determination of arm's length price at an average of the price determined by the most appropriate method is not consistent with the global practice. Meanwhile, says CII, the related issue is the implications that may arise under associate laws. Also, there is a need to provide for an exemption from the regulations in case of business reorganisation. According to CII, the incorporation of transfer pricing regulations in the Income Tax Act signifies globalisation and maturing of the Indian economy. However, it is imperative to ensure that the drafting of legislation/ rules is appropriate and ambiguities are clarified by a circular. Powered by YOU MAY ALSO WANT TO READ:
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