INDIA Law and Practice Contributed by: Deepak Chopra, Harpreet Singh Ajmani, Rohan Khare, Pulkit Pandey and Priyam Bhatnagar, AZB & Partners
ers and has time and again concluded that the onus is on the Revenue Au - thorities to first establish existence of “transaction” / ”international transaction” of brand promotion/marketing intangibles between the AEs and such threshold can - not be met only on surmises but should be supported by evidence. However, the final verdict is still awaited as the legal issue is sub-judice before the Hon’ble Supreme Court of India. intangible assets such as customer list, customer contracts, customer relation - ships and open purchase orders. Simi - larly, the expression intangible property shall also include contract-related intan - gible assets such as favourable supplier, contracts, licence agreements, franchise agreements and non-compete agree - ments. In this context, the Tax Authorities have been increasingly focused on ensur - ing that profits related to customer- and contract-related intangibles are correctly allocated. • Customer and contract-related intangible assets: (a) By insertion of explanation to Section 92B of the IT Act, the expression “intan- gible property” includes customer-related 11.4 Financial Transactions The definition of “international transaction” as defined under Section 92B of the IT Act is an inclusive definition and specifically includes any type of capital financing including any type of long-term or short-term borrowing, lending or guarantee, purchase or sale of marketable securities or any type of advance, payments or deferred payment or receivable or any other debt arising during the course of business and, hence, the rules governing international transac -
tions ipso facto apply to financing transactions as well.
12. Co-Ordination With Customs Valuation 12.1 Co-Ordination Requirements Between Transfer Pricing and Customs Valuation In India, different statutes govern the legal domain of transfer pricing and custom valua - tion. On one hand, customs-related matters are administered by the Central Board of Indirect Taxes and Customs, while on the other hand, transfer pricing matters fall under the purview of the CBDT. Although, there has been a develop - ment in exchange of information inter se between Customs Authorities and Tax Authorities, how - ever, there is no statutory co-ordination mecha - nism which mandate synchronisation between the valuation adopted by both authorities (ie, the Customs Authorities and the Tax Authorities). Having said so, in terms of the settled legal prin - ciple that two wings of the government cannot take different positions, any finding by either of the authorities does form “persuasive factor” for the other authority. 13. Controversy Process 13.1 Options and Requirements in Transfer Pricing Controversies As a part of a scrutiny assessment, the TPO benchmarks the international transaction report - ed by a taxpayer and, based on his/her analysis, determines the ALP of the international transac - tion.
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