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AREAS OF LITIGATION AND POSSIBLE APPROACH
from #TaxmannPPT | How to Handle Transfer Pricing Litigation – Post Supreme Courts' Decision in SAP Labs
by Taxmann
• Selection of MAM - For selection of MAM, the guidelines are given in Rule 10C. However, those guidelines are general in nature and there will be cases, where one will have to fall back on judicial decisions and OECD guidelines to demonstrate the perversity or otherwise.
• Selection of Tested Party – No specific guidance under Act or Rules.
• Selection of PLI and computation thereof - No specific guidance under Act or Rules.
• Adjustments and computation thereof - For adjustments, Rule 10B(1) read with Rule 10B(3) are relevant. First step is to demonstrate that what is the difference between the comparables and tested party. Second step is to demonstrate that difference has impact on price/margin. Once these two conditions are satisfied, adjustment has to be provided or comparable will have to be rejected. Quantification of adjustment, will mostly be factual exercise, unless perversity is demonstrated in the tribunal order.
