International Taxation—Transfer Pricing Arm’s Length Price Computation : Is This a Question of Law?

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The Tax Publishers International Taxation--Transfer Pricing Arm's Length Price Computation : Is This a Question of Law? Srivatsan Ranganathan The issue of computing Arm's length price (ALP) in case of Transfer pricing is a litigious one. A number of factors are to be considered while computing ALP. The author has dealt a recent verdict of Supreme Court and its ramifications in this write up. In PCIT v. Softbrands India (P) Ltd. (2018) 406 ITR 513 (Karn) the High court held that topic of ALP computation is one of fact and unless there is a perversity demonstrated by revenue the same is not a questionable issue before the High court. The last fact finding authority being the ITAT will have its final say on ALP computation. This decision alongside a number of other decisions on the same topic was adjudicated by the Apex Court arising out of a Special Leave Petition Civil Appeal No. 8463 of 2022 : 2023 TaxPub(DT) 2471 (SC) in the case of SAP Labs India Private Limited on 19th April 2023. The moot question was does the ITAT has the last say on ALP computation especially if the revenue has not established that the computation was contrary to the TP rules and regulations? The Apex court held that SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

International Taxation--Transfer Pricing

Arm's Length Price Computation : Is This a Question of Law?

Srivatsan Ranganathan

The issue of computing Arm's length price (ALP) in case of Transfer pricing is a litigious one. A number of factors are to be considered while computing ALP. The author has dealt a recent verdict of Supreme Court and its ramifications in this write up.

In PCIT v. Softbrands India (P) Ltd. (2018) 406 ITR 513 (Karn) the High court held that topic of ALP computation is one of fact and unless there is a perversity demonstrated by revenue the same is not a questionable issue before the High court. The last fact finding authority being the ITAT will have its final say on ALP computation. This decision alongside a number of other decisions on the same topic was adjudicated by the Apex Court arising out of a Special Leave Petition Civil Appeal No. 8463 of 2022 : 2023 TaxPub(DT) 2471 (SC) in the case of SAP Labs India Private Limited on 19th April 2023. The moot question was does the ITAT has the last say on ALP computation especially if the revenue has not established that the computation was contrary to the TP rules and regulations? The Apex court held that