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Applicability of provisions of domestic transfer pricing

CA Gaurav Ajit Potdar (Chartered Accountant) (846 Points)

31 August 2016

Facts: One of our client have paid Capital advance for purchase of Fixed Assets to its associate Company amounting to Rs 22Cr., in FY 15 - 16. Query Wether the Client is liable to get a report under 3ceb for income tax purpose. ie wether domestic transfer pricing will be applicable for him.

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3 Replies

Bharath (C.A,C.S) (3983 Points)
Replied 31 August 2016

Hi,

Yes the porvisions of Domestic transfer pricing will be applicable as this is a business transaction between related parties and the value exceeds the specified limit of Rs 20 crores.

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CA Gaurav Ajit Potdar (Chartered Accountant) (846 Points)
Replied 31 August 2016

Hey thanks, but i have a doubt that when in the next year when billing will be done, and when we capitalise these advances or expense out the same, should i be required to get 3ceb report again, will the provisions again apply in that year?

Bharath (C.A,C.S) (3983 Points)
Replied 01 September 2016

Regarding domestic transfer pricing, the value of transactions have to be looked on every year. So it will not be applicable in the year you capitalise those expenses.