Arm's Length Pricing Can't Be Determined for Notional Income After Expiry of Agreement.

The ITAT ruled that the Transfer Pricing Officer (TPO) incorrectly deemed international transactions and determined the arm's length price (ALP) for the period after the expiration of a service agreement between the taxpayer and its associated enterprise. The taxpayer conducted international transactions only during the agreement's validity. The TPO's determination of ALP based on presumed or notional income for non-qualifying transactions was invalid. The selected comparables were rejected as the taxpayer's financials were on a non-going concern basis. The ALP adjustment was removed, as tax cannot be imposed on hypothetical income, referencing Supreme Court decisions. .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X