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AREAS OF LITIGATION AND POSSIBLE APPROACH
from #TaxmannPPT | How to Handle Transfer Pricing Litigation – Post Supreme Courts' Decision in SAP Labs
by Taxmann
• Selection of Filters & Comparables
Filter Analysis
Turnover filter (companies having low or high turnover are excluded)
As per Rule 10B(2)(b), for determining comparability functions performed, assets employed and risks assumed should be analysed. As per Rule 10B(3), an uncontrolled transaction can be compared if there are no transaction level differences or enterprise level differences or reasonably accurate adjustment can be made for such differences.
• For example, whether RPT filter should be applied, can be traced to the provisions of section 92F. However, what should be the ratio of RPT filter is very subjective.
• For export filter, one can say that Rule 10B(2) provides that geographic market to be relevant criteria.
• Similarly for turnover filter, enterprise wide difference can be considered as basis.
