CBDT issues norms for transfer pricing cases

In order to prevent harassment of taxpayers, the government has streamlined assessment of transfer pricing cases, assuring a non-adversarial tax regime in the economy to attract foreign investment. This move will boost taxpayer confidence and could be seen as one of the biggest game changers for Indian transfer pricing litigation.

According to the guidance note issued by Central Board of Direct Taxes (CBDT), the cases would be picked up for scrutiny only through computer-assisted selection process (CASS) and there will be no manual picking of cases. The note also said that a tax officer will be able to refer cases to a transfer-pricing officer on three counts, including on finding that the taxpayer did not report an international transaction or a specified domestic transaction in the filing. Also, in a case where an appeal is pending on the matter related to transfer pricing adjustment of Rs 10 crore or above of last year.

Furthermore, the income tax officer could refer the case to the transfer-pricing officer if transfer-pricing issues have been identified in search or seizure. Nevertheless, the guidance note pointed out that if the case involving transfer pricing is not referred, then the officer shall not determine the arm's length price in any circumstance.