Transfer pricing
Querist : Anonymous
Querist : Anonymous
Querist : Anonymous
Querist : Anonymous
we will see substantial interest individually or cumulative?
---
### 1. **Applicability of Specified Domestic Transactions (Section 92BA)**
* **Section 92BA** defines Specified Domestic Transactions (SDT) as certain transactions between related parties or certain others within India, for which TP provisions apply.
* TP provisions for SDT apply **only if the aggregate value of SDTs exceeds Rs. 20 crore in a financial year.**
* SDTs include transactions like:
* Purchase/sale of goods
* Purchase/sale of services
* Lending/borrowing money
* Any other transaction as notified by CBDT
---
### 2. **Who are Related Parties for SDT?**
Under Section 92BA, **related parties** include:
* **Companies in which the same persons have substantial interest**
* Persons who have substantial interest in a company or enterprise
**“Substantial interest”** means:
* **Direct or indirect holding of at least 20% shares or voting power, or**
* Interest of at least 10% in the capital or profits of the other party (other than company)
---
### 3. **In your example:**
* Pvt Ltd company where X and Y are directors
* Public company where X has 15% shareholding, Y has 7% shareholding
**Are these companies related for SDT?**
* X holds 15% in public co → less than 20%, so not substantial interest as per company shareholding criteria
* Y holds 7% → less than 20% as well
* Unless cumulative interest crosses thresholds via indirect holdings, they are not related parties under substantial interest criteria.
---
### 4. **Individual vs Cumulative Substantial Interest?**
* The law looks at **individual substantial interest** in companies or enterprises.
* **No aggregation or cumulative calculation across persons** unless controlled via a group or combined shareholding in same entity.
* So, X’s 15% and Y’s 7% separately do not create substantial interest.
---
### **Summary:**
| Question | Answer |
| ---------------------------------------------------- | ----------------------------------------------------------------------------------------------------- |
| Is Section 92BA applicable to your example? | Probably **No**, because neither X nor Y has substantial interest (20% or more) in the other company. |
| Who are related parties for SDT? | Companies/enterprises with same person having substantial interest (20%+) |
| Is interest considered individually or cumulatively? | **Individually** for each person |
---
If you want, I can help with examples or the exact wording from the Income Tax Act for your reference. Would that help?
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