ICAI Guidance Note on report under section 92E (Transfer Pricing) under the Income-tax Act. related to Chartered Accountants Report in Form 3CEB under Rule 10E
Committee on International Taxation of ICAI has brought out the fifth edition of “Guidance Note on report under section 92E-Transfer Pricing under the Income-tax Act, 1961 ”. The Revised Guidance Note seeks to help chartered accountants in equipping themselves to face challenges in the complex area relating to Transfer Pricing also.
The previous Guidance Note was revised in August 2013, when Part C was inserted in Form No. 3CEB to report specified domestic transactions under section 92BA. Since then there have been various amendments in Transfer Pricing i.e., safe harbor rules in respect of arm’s length price under section 92C or section 92CA; roll back mechanism; range concept and use of multiple year data for determination of arm’s length price etc. The present revised Guidance Note provide the guidance on the latest provisions.
ICAI Guidance Note on report under section 92E has been divided under nine chapters as under:
1. Chapter 1 – Introduction
Legislative framework
Terms and abbreviations used
Objective of the guidance note
Applicability of the provisions
2. Chapter 2 – Responsibility of an enterprise and the Accountant
Responsibility of an enterprise
Accountant’s responsibility
Professional misconduct
Chapter 3 – Associated Enterprise
Associated enterprises and deemed associated Enterprises
Chapter 4 – International transaction
Definition
Impact of Amendment
Tangible and Intangible property
Services, finances and costs etc.
Cross-border transactions
Chapter 4A – Specified Domestic Transactions
Definition 47 Threshold Limit
Chapter 5 – Arm’s Length Price
Meaning and determination
Uncontrolled transaction
Comparable uncontrolled transactions
Distinctive nature of the property and services
Analysis of functions performed
Analysis of assets employed
Analysis of risks assumed
Characterisation
Tested party
Contractual terms
Market conditions
Business strategies, commercial considerations and economic principles
Power of Assessing Officer
Chapter 6 – Methods of computation of arm’s length price
Meaning of relevant terms
Comparable Uncontrolled Price Method
Resale Price Method
Cost Plus Method
Profit split method
Transactional net margin method
Other Method of determination of arm’s length price
Most appropriate method
Chapter 7 – Documentation and verification
Types of information and documents
Ownership, profile and business
Details of international transactions
Records having a bearing on international transaction
Description of methods considered and working Thereof
Relief from maintenance of specific records
Supporting documents
Contemporaneity of data
Chapter 8 – Penalties
Penalty for concealment of income or furnishing inaccurate particulars thereof
Penalty for under reporting and misreporting of income
Penalty for failure to keep and maintain information and documents in respect of international transaction or specified domestic transaction
Penalty for failure to furnish report under section 92E
Penalty for failure to furnish information or document under section 92D
Penalty for failure to furnish information or documents under Section 286
Chapter 9 – Scope of examination under section 92E
Report under section 92E
Annexure to Form No.3CEB
Apart from the above, the Guidance Note contains all relevant rules and forms, relevant provisions of the Finance Bill(s), circulars, etc.
