Raja Abhishek For NIRC 2024
about 2 months ago
๐ฐ ๐๐ฒ๐น๐ต๐ถ ๐๐ถ๐ด๐ต ๐๐ผ๐๐ฟ๐ ๐ฅ๐๐น๐ถ๐ป๐ด: ๐ง๐ฃ๐ข ๐๐ฎ๐ป๐ป๐ผ๐ ๐ฅ๐ฒ๐๐๐ฟ๐๐ฐ๐๐๐ฟ๐ฒ ๐ง๐ฟ๐ฎ๐ป๐๐ฎ๐ฐ๐๐ถ๐ผ๐ป๐ ๐ข The bench of Justice Yashwant Varma and Justice Ravinder Dudeja observed, "It would not be permissible for the TPO to engage in the restructuring of a
transaction unless the economic substance of the transaction differed from its form, and if the form and substance of the transaction were the same but the arrangements relating to the transaction, when viewed in totality,
differed from those that would have been adopted by independent enterprises acting in a commercially rational manner." ๐ ๐๐ฎ๐ฐ๐๐: ๐๐ฎ๐๐ฒ ๐ง๐ถ๐๐น๐ฒ: CIT vs. A.T. Kearney Ltd. ๐๐ฎ๐๐ฒ ๐ก๐๐บ๐ฏ๐ฒ๐ฟ: ITA 159/2023
๐๐๐๐๐ฒ: The Transfer Pricing Officer (TPO) made adjustments to the assesseeโs transactions, which included intra-group services, receivables, and provision of management consultancy services.
๐ฃ๐ฟ๐ผ๐ฐ๐ฒ๐ฒ๐ฑ๐ถ๐ป๐ด๐: The respondent, a management consulting subsidiary, provided consultancy services to multinational enterprises & public sector entities. The TPO suggested adjustments based on delayed payments and recharacterized outstanding receivables as unsecured loans.
โ๏ธ ๐๐๐ฑ๐ด๐ฒ๐บ๐ฒ๐ป๐: The Delhi High Court upheld the Tribunal's order and dismissed the department's appeal, ruling that the TPO cannot restructure a transaction unless it can be shown that the economic substance differs from its form.
The court emphasized that it is impermissible for the TPO to question the commercial soundness of the transaction or the expenditure incurred unless an unrelated party would not have undertaken the same in the usual course of business.
๐ This ruling highlights that the TPO must respect the original transaction structure unless there is clear evidence of a discrepancy between the economic substance and the form of the transaction. #TaxLaw #arr4nirc #DelhiHighCourt #TransferPricing #LegalUpdate
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