Transfer pricing – RBI approval do not partake the character of ALP

Press note issued regarding FDI policy and prescribing the percentage of the royalty to the  sales allowed under automatic route and cannot substitute as ALP to be determined under the provisions of the Act and Rules. FDI policy permitting certain percentage of payment of royalty is only for remittance of the amount in foreign exchange and therefore, such permission given in an entirely different context and purpose cannot be considered as relevant for determination of the ALP under I T Act. The Hon’ble Delhi High Court in the case of Nestle India Ltd has held that the purpose of such p...