• Service: Tax, Global Transfer Pricing Services, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 5/23/2013

India - Reassessment proceedings for transfer pricing, arm’s length issues 

May 23:  Courts in India recently addressed when proceedings for reassessment or for reopening a prior year’s assessment are appropriate or are not valid in two cases that contained transfer pricing issues.
  • Reopening of assessment allowed

    In one case, the Bombay High Court upheld the reopening of assessment based on “tangible material” obtained during assessment proceedings of a subsequent year. The taxpayer was a wholly owned subsidiary of a Scottish bank that allegedly paid business support changes, guarantee fees, and other service changes to its holding company. The Bombay High Court allowed the reopening of the prior assessment year so that the tax authorities (including the Transfer Pricing Officer) could examine the facts concerning payment of the support fees to the related entity because this issue had not been considered in the original assessment proceedings.

    The case is: Rabo India Finance Ltd. Read a May 2013 report [PDF 196] prepared by the KPMG member firm in India.

  • No reassessment allowed merely to determine arm’s length price

    In the second case, the Delhi High Court held that reassessment proceedings merely to determine the arm’s length price of international transactions reported on Form 3CEB were invalid and that no additional assessments relating to a transfer pricing issue were to be made.

    The case is: Cheil Communications India Private Ltd. Read a May 2013 report [PDF 206 KB] prepared by the KPMG member firm in India.

Contact a tax professional with KPMG's Global Transfer Pricing Services.

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