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TRANSFER PRICING

Abdul Qader (Student) (35 Points)

23 September 2008

I am Working with my brother who owns a company which is in collaboration with a company in USA it is in the business of offshore consultancy it renders serivces only to its collaborator in USA , it neither take any work from outsiders nor it has any business partners in India.How could the Transfer Pricing comes in to the picture and how to determine arms lenght price as we have no comparable situation

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5 Replies

(Guest)

First make it clear that weather usa co is holding co of your brothers company or not?

if the answer is yes than the offshore services rendered by the indian entity to usa entity is covered under TP and transaction should be at arm lentgh price.

the business has comprable situation on offshore segment and net margin in that case should be 10%

Originally posted by :Abdul Qader

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Sanjay (Profession) (117 Points)
Replied 25 September 2008

Transfer Pricing implications arise only in cases where are international transactions between two associated enterprises. You need to confirm whether you are a company in India and whether the other company in the US falls within the definition of associated enterprise as defined under SEc.92 of the IT Act. TP implications can be decided only thereafter.

Abdul Qader (Student) (35 Points)
Replied 07 October 2008

The Company in India is not subsidary of Company in USA, but it is associate enterprise of Company in USA as perSec 92E. We have no Comparable uncontrolled transaction with any body else other than our associate in USA. then how can we determine Arm's Lenght Price.

Abdul Qader (Student) (35 Points)
Replied 07 October 2008

Thanx for the replies.

Sanjay (Profession) (117 Points)
Replied 09 October 2008

Originally posted by :Abdul Qader
"	Under TP regulations six methods have been prescribed out of which one is comparable uncontrolled price method and presumably you are referring to this method using an internal comparable. You can look at a comparable data (External comparable) comparing a similar transaction with your competitors and the price that they have charged and reason for difference between your prices and price of similar market players in the industry.	"