1. Transfer pricing provisions were earlier restricted to international transactions. With effect from 1.4.2013 , the scope of transfer pricing provisions gets extended to specified domestic transactions (SDT) exceeding Rupees twenty crore .
2. Notification no. 41/2013 dated 10th June, 2013 has amended the FORM-3CEB i.e. report under section 92E regarding international and specified domestic transaction.
3. The amended Form No. 3CEB contains 25 clauses requiring disclosure of the details of the various international transactions and SDT. It is divided into the three parts:
Part A: requiring the taxpayer to provide general information about itself along with the aggregate value of international transactions and SDT.
Part B: requiring the taxpayer to provide the details of the international transactions entered into during the Financial Year.
Part C: requiring the taxpayer to provide the details of SDT entered into during the FY.
Provisions of international transaction (section 92B )
i. International transaction means a means a transaction between two or more associated enterprises, either or both of whom are non-residents, in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, or lending or borrowing money, or any other transaction having a bearing on the profits, income, losses or assets of such enterprises, and shall include a mutual agreement or arrangement between two or more associated enterprises for the allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to any one or more of such enterprises.
ii. A transaction entered into by an enterprise with a person other than an associated enterprise shall be deemed to be an international transaction entered into between two associated enterprises, if there exists a prior agreement in relation to the relevant transaction between such other person and the associated enterprise, or the terms of the relevant transaction are determined in substance between such other person and the associated enterprise where the enterprise or the associated enterprise or both of them are non-residents irrespective of whether such other person is a non-resident or not.
Provision of Specified domestic transaction (section 92BA)
Specified domestic transaction means :-
a. any transaction referred to in section 80A (correspond to the market value/arms length price of such goods or services)
b. any transfer of goods or services referred to in sub-section (8) of section 80-IA (interunit transfer of goods and services)
c. any business transacted between the assessee and other person as referred to in sub-section (10) of section 80-IA (applies to transactions between the assessee and any other person which results in excessive profits in the hands of the assesse)
d. any transaction, referred to in any other section under Chapter VI-A or section 10AA, to which provisions of sub-section (8) or sub-section (10) of section 80-IA are applicable. They are listed below:
• 80-IAB- Deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone.
• 80-IB- Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings
• 80-IC- Special provisions in respect of certain undertakings or enterprises in certain special category States
• 80-ID- Deduction in respect of profits and gains from business of hotels and convention centres in specified area
• 80-IE- Special provisions in respect of certain undertakings in North- Eastern States.
e. any other transaction as may be prescribed.
The above referred specific domestic transactions will be covered under domestic transfer pricing only if the aggregate value of all the above specified transactions exceeds the threshold limit of twenty crore rupees (excluding international transaction)
Article by –
Anubhav Jain (CA Final),
Kota (Rajasthan),
Email- anubhav5jain@gmail.com
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(Republished With Amendments)
You claim to disclose “All about form 3CEB” but you didn’t even tell how to file it and where.
In this case, provisions created in relation to the management allocation charges will also be disclosed in form 3CEB?
For an Foreign Subsidiary which has no transactions for that respective financial year. I wanted to know whether is it necessary to file Nil Return in 3CEB form and if any FEMA Compliance is required for the same as it has received Unique Identification Number From RBI and any RBI Compliance for the same
would like to point out that Setion 92BA (1) states any expenditure. It does not state Revenue Expenditure. This means that Even Capital Expenditure is covered.
Yes , it dosnt specify type of expenditure so both revenue and capital will be covered.
I think even fellow subsidiary companies too are covered and not only the entity having more than 20% holding.
I would like to point out that Setion 92BA (1) states any expenditure. It does not state Revenue Expenditure. This means that Even Capital Expenditure is covered.