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A comprehensive compilation on TP

Fundamentals of India Transfer Pricing
With Reference to US & OECD Guidelines
Authored by Radhika Suri, Advocate, P&H High Court,
Published by Taxmann's Allied Services (P) Ltd
Pages: 208
Price: Rs 375

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Reviewed by TIOL Direct Tax Team

WHAT is Transfer Pricing? What does ALP stand for? How is it calculated? Why does a TPO search for a 'comparable"? What is the big deal about controlled and uncontrolled transaction? Why is FAR so important for tax guys? Not only for a student of fiscal regime but also for an average tax professionals these terminologies contitute an alien class of abbreviations!

However, the facts remain that they form the nucleus of tax tools which are applied for taxing cross-border transactions. With the opening of the economy to the external world India has become a home for myriad number of subsidiaries, JVs and other forms of business entities for trans-national companies (TNCs). India has indeed emerged as a strong magnet for highly mobile global capital. FDI inflows have shown zooming graph in the past few years. And India is destined to witness manifolds increase in international transactions bewteen TNCs and their subsidiaries located in various geographical pockets of the world.

Studies of various multilateral agencies like OECD indicate that the transactions between TNCs, their JVs, subsidiaries and holding companies are going to account for more than 75% of the global trade. And India is also going to see a surge in such transactions. And this quantifies the challenge before the Indian fiscal strategies.

India for the first time incorporated Transfer Pricing provisions in the Income Tax Act in 2001. Since then the CBDT has not done much amendment in the Act except for issuing a few Instructions. However, the law has been evolving at a rapid pace because of the keen analyses by the judicial fora. So far a TP case has reached only the High Court. In other words, a major chunk of contribution to the evolution of TP laws has come from the Income Tax Appellate Tribunal (ITAT) which deserves kudos for taking pain to study the best global practices and implementing the same for interpreation of the Indian TP laws.

This book is the fruit of industrious labour the young author has given to cull even the minute details of the TP laws in India, OECD and particularly the USA with which we have significant volume of trade. The book is a very good compilation of facts, episodes, rules, judicial decisions and administrative measures on this subject. I full agree with the Supreme Court Judge Justice D K Jain who has observed that all aspects of TP have been presented with clarity and making it useful for anybody who is interested in the subject.

The author has indeed made an honest attempt to encapsule many aspects of the subject in the limited number of pages. For the scholars of TP, the only flaw which one may point out in the book is the limited presence of insightful analyses. I am sure such analyses would be an integaral part of this book when it is revised in the future. I wish good luck to the author for a sincere compilation in her maiden intellecutal work.


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