INDIA Law and Practice Contributed by: Deepak Chopra, Harpreet Singh Ajmani, Rohan Khare, Pulkit Pandey and Priyam Bhatnagar, AZB & Partners
Ltd. v ACIT, Order dated 05.02.2024 in ITA No 1524/Del/2024 (Delhi Tribunal)]
that condition is satisfied, the benefit may not be availed/granted to the taxpayer even in India.
15. Foreign Payment Restrictions 15.1 Restrictions on Outbound Payments Relating to Uncontrolled Transactions The IT Act does not restrict any outbound pay - ments per se relating to uncontrolled transac - tions, however, the said payment should not be prohibited by law and should adhere to the rel - evant provisions in other statutes like the Foreign Exchange Management Act, 1999 (FEMA) and Any outbound payment to related parties needs to adhere to the relevant transfer pricing provi - sions including the determination of ALP. Fur - thermore, such payments should not be prohib - ited by law and should adhere to the relevant provisions in other statutes like FEMA and the rules and regulations thereunder. 15.3 Effects of Other Countries’ Legal Restrictions the rules and regulations thereunder. 15.2 Restrictions on Outbound Payments Relating to Controlled Transactions A taxpayer and the Tax Authorities are bound to act/work within the four corners of the IT Act and the rules and regulations framed thereunder. Thus, as such, there is no compulsion or neces - sity to comply with the laws of other jurisdictions. Having said that, an illustrative case where the effect of legal restrictions in other countries may have a bearing on taxation in India, is a scenario where the provisions of the DTAA allow the ben - efit of availing foreign tax credit subject to sat - isfaction of certain preconditions, then, unless
16. Transparency and Confidentiality 16.1 Publication of Information on APAs or Transfer Pricing Audit Outcomes The Indian government regularly issues press releases to provide statistical updates and details of any landmark developments (such as the signing of Bilateral APAs, the signing of APAs for new or complex transactions, the number of APAs signed in a FY, and updates on any exten - sive audits/search and seizure operations with - out sharing any confidential details). As per data available at the time of writing, dur - ing FY 2023–24, India entered into 86 Unilateral APAs which had 224 covered international trans - actions, and 39 Bilateral APAs entered into had 181 covered international transactions. Unilater - al APAs involve AEs spread across 74 countries, with the majority being in the United States, the United Kingdom, Singapore, Australia, and Ger - many. In the case of BAPA, the USA is the front- runner. Other treaty partners include the UK, Japan, Singapore, Germany, and France. 16.2 Use of “Secret Comparables” The Indian transfer pricing regime does not allow the tax authority to use secret comparables. However, having said that, Section 133 of the IT Act grants tax authorities/TPOs the power to seek information from any person in relation to such points or matters that may help them in computing the arm’s length price. Tax Authori - ties often use these powers to access non- public financial or other key information in order to determine and benchmark the international transaction.
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