Newly introduced section 92e

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 November 2013 SIR,
COMPANY X PVT LIMITED HAVING 2 DIRECTORS.BOTH THE DIRECTORS ARE PROPRIETOR IN 2 DIFFERENT PROPRIETORSHIP FIRM A AND B .
X PVT LIMITED PURCHASES GOODS FROM A RS.3.00 CRORE AND FROM B RS.3.00 CRORE.
THE AGGREGATE VALUE COMES TO RS. 6.00 CRORE WHICH EXCEEDS RS. 5.00 CRORE.
MY QUESTION IS LIMIT OF RS. 5.00 CRORE WILL BE ASCERTAINED SEPARATELY OR CLUBBED TOGETHER?
PLEASE GUIDE ME

Nikhil Kaushik

Nikhil Kaushik (Expert)
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02 November 2013 they will be clubbed. domestic transfer pricing regulations shall apply to this entity

Querist : Anonymous

Querist : Anonymous (Querist)

06 November 2013 SIR,
WE HAVE ALREADY FILED FORM NO 3CA AND 3CD AND ITR FOR A.Y.2013-14 WITHOUT SUBMITTING FORM 3CEB. CAN IT BE REVISED ? IF YES, THEN WHAT WILL BE THE DOMESTIC PRICE OF RS. 6.00 CRORES

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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04 August 2024 Let's address your questions step by step:

### 1. Application of Section 92E to Company X Pvt Limited:

Section 92E of the Income Tax Act, 1961 pertains to maintenance and filing of transfer pricing documentation in respect of international transactions and specified domestic transactions. In your case:

- **Transactions Involved:** Company X Pvt Limited (X Pvt Ltd) has purchased goods from two proprietorship firms where both directors are proprietors:
- From Firm A: Rs. 3.00 crore
- From Firm B: Rs. 3.00 crore
- Total aggregate value: Rs. 6.00 crore

- **Threshold for Compliance:** The threshold for applicability of transfer pricing documentation requirements under Section 92E is when the aggregate value of specified domestic transactions exceeds Rs. 5.00 crore during the financial year.

### Treatment of Transactions:

- **Separate or Clubbed Basis:** Normally, the transactions with each related party (in this case, the two proprietorship firms) are evaluated separately to determine if they exceed the threshold. Since both transactions are with different entities (Firm A and Firm B), they are considered separately for the purpose of determining applicability under Section 92E.

### 2. Filing Requirements and Revision of Form 3CEB:

- **Form 3CEB Requirement:** Form 3CEB is required to be filed along with Form 3CA and Form 3CD if the aggregate value of specified domestic transactions exceeds Rs. 5.00 crore. In your case, since the aggregate value is Rs. 6.00 crore, Form 3CEB would be required.

- **Revision of ITR for A.Y. 2013-14:** Yes, if Form 3CEB was not filed earlier and it should have been, you may revise the income tax return (ITR) for Assessment Year (A.Y.) 2013-14 to include Form 3CEB.

### Domestic Transfer Pricing Computation:

- **Domestic Price for Rs. 6.00 Crores:** When determining the domestic transfer price for the transactions totaling Rs. 6.00 crore, you need to ascertain the arm's length price (ALP). This involves comparing the prices charged in these transactions with prices charged in comparable uncontrolled transactions under the methods prescribed in the transfer pricing regulations.

### Conclusion:

- Transactions with each related party (Firm A and Firm B) are evaluated separately under Section 92E.
- If Form 3CEB was not filed earlier but should have been, you can revise the ITR for A.Y. 2013-14 to include Form 3CEB.
- The domestic transfer pricing analysis for the Rs. 6.00 crore transactions involves determining the arm's length price based on the applicable transfer pricing methods.

For precise compliance and to ensure correctness in your specific case, it is advisable to consult with a qualified chartered accountant or tax advisor who can assist you with revising the ITR and complying with the transfer pricing requirements effectively.

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