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Transfer pricing issue on specified domestic transactions

18 May 2017

I sell Rs. 21 Crore goods to my brother, whether TP provisions will applicable on me or not ? Further TP provisions will be applicable on my brother who purchased goods from me (Sections 92BA)

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3 Replies

CA PRADEEP C B (Prop: Pradeep C & Company Chartered Accountant Palakkad Kerala) (166 Points)
Replied 18 May 2017

if your specified domestic transaction is at arms length price, no issue arises.
arms length price = price at which one party sold goods to an unrelated party.
limit of transactions = 20 crore

REFER SECTION 92BA.

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Deepak Agarwal (Self) (26 Points)
Replied 19 May 2017

no no sir I just wanted to know whether TP will apply on a sale transaction if it crosses the eligibility limited of 20 crore and not at arm length price?

Because specified domestic transactions (Section 92BA) cover only 5 types of transactions out of which one is transaction under 40A(2) which does not cover a sale transaction at all.

CA PRADEEP C B (Prop: Pradeep C & Company Chartered Accountant Palakkad Kerala) (166 Points)
Replied 19 May 2017

Omitted item (i) of 92BA w.e.f 1.4.2017, hence Any expenditure in respect of which payment has been made or is to be made to a person referred to in clause (b) of sub-section (2) of section 40A are removed from the ambit of Specified Domestic Transaction.

the persons referred to in 40A (2) (b) are the following, namely :—
(i) Where the assessee is an individual
any relative of the assessee;

Hence your transaction is out of the scope of specified domestic transaction u/s 92BA.