Friday, April 26, 2013

SG Piara Singh still haunting ->>Vodafone and Like Cases - Not Yet out of the Woods !

on TP
Justice Vineet Kothari
The Law On Use Of Secret Comparables In Transfer Pricing

Hon’ble Dr. Justice Vineet Kothari, Judge, Rajasthan High Court

The question whether the TPO is entitled to rely on secret comparables whilst determining the ALP of an international transaction has been the subject matter of great controversy. The learned Judge, who is also a qualified CA and CS, has carefully analyzed the entire law on the subject and explained it with great clarity. He has also provided perspective on the proper procedure that the TPO has to follow while determining the ALP

Seems worth a study !

  • Even on a first reading, one is left with a genuine impression that the study is quite a painstaking analysis by an eminent person of his stature; hence, a must- not merely a read, but a careful and purposeful one – for all interested alike. The purpose must be to try and understand that TP is an area replete with nothing but unscientific principles to go by, hence requiring such an ideally appropriate outlook and approach, in order to strive and most intelligently decide on a pragmatic application of the ‘most appropriate method’ – in the sense that would have , of course again expectantly, the least scope for any more further controversy, once such an uniformly satisfactory and acceptable decision , be it for or against either contesting party, is taken in a given case.
    Intentionally a long winding comment attempted-in the hope of driving home the point that how complex and taxing the branch of law i.e. TP has proved thus far; and most likely to continue to prove, to infinity/eternity.
  • With the same breath, in an attempt to add spice (with borrowed thoughts from NAP):
    Over the decades gone by, no denying that, tax evasion has been the national sport, nay international pastime. The poser eluding a righteous answer for too long to brush aside, however, is- is it not high time now, if not before, the law makers wake up and realize,- so as to change the course (by way of rationalizing and moderating policies, formulations, prescriptions, so on), – that when the law comes into conflict with the basic forces of human nature, especially if it is undeniably riddled with complicity / complexities of such a nature- as say, TP law, – the law is engaged in a losing battle.
    Tax evasion has come to stay as a worldwide phenomenon. No country is known to have been able to eradicate the evil. In the quoted words of Lord Denning, ” No one would wish that any of those who defraud the Revenue should go free. They be found out and brought to justice. But it is fundamental in our law that the means which are adopted to this end should be lawful means. A good end does not justify a bad means...."
    In the context herein, the point for consideration and serious deliberation by eminent law men is, – whether the numerous regulatory rules in place could be rightly regarded as the foolproof means which do not offend against the very basic principles of commercial practice, not judging or being influenced necessarily by so called ‘ideologies’.
    Over to those law / tax experts, however in minority be, for further impartial thoughts- who, in principle, are convinced that prolonged but inconclusive litigation ought to be avoided or obviated at any cost, keeping in mind that ‘litigation’ has come to increasingly prove a major cause of drain on human faculties, time and energy, – besides its inherent potential to breed the most dreaded of all evils- viz ‘corruption’, hence requiring to be eschewed in the larger public interests.

  • <previous

    On a reading of the tribunal's order, one is left with an indelible impression that the arguments on assessee’s behalf, so also the discussion, and conclusions reached, have gone on merrily on the dotted lines as on prior occasions, - on the beaten track so to say- as laid by case law, with origin traced back to the historically leading Piara singh's case.

    One of the aspects which, however, attracts special attention is the finding of fact by the Customs, as upheld by the CEGAT (also, not disturbed by the HC). That is to the effect that  the assessee’s claim
    to have purchased silver from 18 NRIs was not proved hence not accepted, leading to seizure of the confiscated commodity. Al beit, that is not readily reconcilable by one, with the observation of / view taken by the itat that “the stock of silver under consideration was very much a part of the stock shown in the regular books of account” ; and “therefore, no addition is possible under s. 69/69C of the Act. “
    Be that as it may, some of the finer points with regard to the entire scheme of related provisions i.e. of sections 69, 69A, 69B and 69C came to be lucidly explained but in a different light by the High court of Gujarat  in Fakir Mohmed Haji Hasan,s case (2002) 120 Taxman 11. That case  is not seen to have been even cited or relied on by the Revenue in the instant case. For a detailed analysis and elucidation of those points, refer  the published article – (2006) 156 Taxman 121 (also be read, - (2007) 160 Taxman 145)

    Share valuation: MNCs feel the heat of transfer pricing orders
    Vodafone, too, files writ petition in Bombay HC »
    Sporadic Reactions:
    The write-up is somewhat unintelligible to a non-expert. The basic point of contest, as stated, is, - whether share subscriptions, being capital receipts could at all be regarded as covered under transfer pricing rules.
    One’s guess is that, intended reference must be  to a case of shares  ‘transfer’, not shares ’subscriptions’, - which is the anterior stage simply involving ‘allotment’ hence no ‘transfer’- by any sound  logic or sane reasoning.
    Again, to one’s understanding, the ‘Tolerance Band’ spoken of could , in any case, be of relevance and application to Vodafone and other like cases, provided the final ruling /verdict on the mentioned basic  proposition /issue eventually turns out to be against .
    For elucidation, over to the Experts at large!

    No comments:

    Post a Comment