Existence of actual cross border transaction and motive to shift profits or evade taxes not necessary pre conditions for Transfer pricing provisions to apply

The Delhi Bench of the Income-tax Appellate Tribunal in the case of Tianjin Tianshi India Private Limited Vs. ITO, Ward 16(3) [ITA No. 3991/Del/2010] (Assessment Year 2006- 07), held that existence of actual cross border transaction and motive to shift profits outside India or evade taxes in India are not necessary pre conditions for Transfer Pricing (TP) provisions to apply. Facts of the case • The taxpayer was engaged in the business of trading and distribution of products manufactured by overseas group companies. One of the group companies had established a Permanent Establishment (PE) in...