India: Transfer pricing rules apply if counterparty becomes associated enterprise in same tax year (tribunal decision)

Bengaluru Bench of the Income-tax Appellate Tribunal

Counterparty becomes associated enterprise in same tax year

The Bengaluru Bench of the Income-tax Appellate Tribunal held that a transaction with an unrelated entity is subject to the transfer pricing regulations if the entity becomes an associated enterprise in the same tax year.

The tribunal also held that a transfer of shares on a stock exchange cannot be equated with a transfer of shares involving controlling interest and that the discounted cash flow method used by the tax authority was appropriate for the valuation of listed equity shares.

The case is: Palmer Investment Group Limited

Read a March 2023 report [PDF 310 KB] prepared by the KPMG member firm in India 

 

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.