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TMI BlogComputation of income from international transaction having regard to Arm's Length Price - Section 92 of the Income-tax Act - Reference to Transfer Pricing Officer and his role - RegardingX X X X Extracts X X X X X X X X Extracts X X X X ..... ational transaction by an order and the Assessing Officer is required to compute the income having regard to the price so determined by the TPO. The notification regarding jurisdiction of TPOs and their controlling officers have been issued by the CBDT and the copies thereof are enclosed for ready reference as Annexure-II. In order to maintain uniformity of procedure and to ensure that work in this important area proceeds smoothly and effectively, the following guidelines are hereby issued: (i) Reference to Transfer Pricing Officer (T.P.O.): The power to determine Arm's Length Price in an international transaction is contained in sub-section (3) of Section 92C. However, Section 92CA provides that where the Assessing Officer considers it necessary or expendient so to do, he may refer the computation of Arm's Length Price in relation to an international transaction to the TPO. Sub-section (3) of Section 92CA provides that the TPO after taking into account the material available with him shall, by an order in writing, determine the Arm's Length Price in accordance with sub-section (3) of Section 92C. Sub-section (4) of section 92CA provides that on receipt of the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the provisions of Section 92CA reference is in relation to the international transaction. Hence all transactions has to be explicitly mentioned in the letter of reference. Since the case will be selected for scrutiny before making reference to the TPO, the AO may proceed to examine other aspects of the case during pendency of assessment proceedings but await the report of the TPO on the value of international transaction before making final assessment. The threshold limit of Rs. 5 crore will be reviewed depending upon the workload of the TPOs. The work relating to selection of cases for scrutiny and reference to TPO on the above basis in respect of pending returns filed for assessment year 2002-2003 should be completed by 30th June, 2003. (ii) Role of Transfer Pricing Officer: The role of the TPO begins after a reference is received from the AO. In terms of Section 92CA, this role is limited to the determination of Arm's Length Price in relation to the international transaction(s) referred to him by the AO. If during the course of proceedings before him it is found that there are certain other transactions, which have not been referred to him by the AO, he will have to take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PO and, therefore, opportunity by the A.O. for final determination of income under sub-section (4) of 92C read with sub-section (4) of 92CA is to be given by the A.O. (iv) Maintenance of Data Base: It is to be ensured by the DIT (Transfer Pricing) that the reference received from the AO is dealt with expeditiously so as to leave the Assessing Officer with sufficient time to offer an opportunity of being heard to the taxpayer before computing the income and completing the assessment. In order to ensure that all the references are attended to timely and effectively, a record of all such developments should be maintained in the format enclosed as annexure-I to these guidelines. This format will also serve as an important database for future action and also help ensure uniformity in the determination of 'Arm's Length Price' in identical or substantially identical cases. These Instructions are under Section of the 119 of the Income-tax Act. Sd/- Devendra Shanker Director (Foreign Tax Division) [F.No.500/19/2003-FTD dated 20th May, 2003 issued by Ministry of Finance, Deptt. of Revenue, CBDT, New Delhi.] ANNEXURE-I Register of record to be maintained by Transfer Pricing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Areas lying within the territorial limits of states of Maharashtra, Gujarat and Madhya Pradesh, Daman Diu Persons or class of persons whose names begin with alphabet A to L and are assessed or assessable within the jurisdiction of Assessing Officer having their office in the territorial area indicated in Column 4. ii. Joint Commissioner of Income-tax (Transfer Pricing Officer - II) Mumbai Areas lying within the territorial limits of states of Maharashtra, Gujarat and Madhya Pradesh, Daman Diu Persons or class of person whose names begin with alphabet M to Z and are assessed or assessable within the jurisdiction of Assessing Officer having their office in the territorial area indicated in Column 4. 3. i. Joint Commissioner of Income-tax (Transfer Pricing Officer - I) Bangalore Areas lying within the territorial limits of states of Karnataka, Goa, Andhra Pradesh Persons or class of person whose names begin with alphabet A to L and are assessed or assessable within the jurisdiction of Assessing Officer having their office in the territorial area indicated in Column 4. ii. Joint Commissioner of Income-tax (Transfer Pricing Officer - II) Bangalore Areas lying within the territorial limi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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