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2011 (12) TMI 365 - AT - Income TaxArms length price - Principles of natural justice - Reference to TPO - McDonalds India Pvt. Ltd. [MIPL] was established as a wholly owned subsidiary of McDonalds Corporation, US [MDC] in 1993 for the purpose of setting up McDonalds restaurants in India - Under the agreement, in consideration of such license the assessee was required to pay to McDonalds [MDC] a royalty equal to 5 per cent of the gross sales, and an initial franchise fee at the rate of US $ 45,000 for each new restaurant opened during the year - the assessing officer made reference under section 92CA(1) in respect of three international transactions and the ld. TPO in his order dated 17th March, 2005 had found those international transactions at arm's length - The provisions of sub section (2A) of section 92CA inserted from 1/6/2011 do not empower the TPO to determine arm's length price in respect of an international transaction, which was not referred to him by the assessing officer - It is quite possible that in the case of a particular assessee, there may be several international transactions and the Assessing Officer may only wish to refer some of those international transactions for the purposes of computing the arm's length price while in respect of others, he may compute the arm's length price himself - The provisions of section 92-CA(2A) are prospective in nature and will not apply for the assessment year under consideration i.e. assessment year 2002-03 - Decided in favor of the assessee
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