Post budget 2012 and after introduction of part C in form 3CEB, ICAI had revised the guidance Note on Sec 92E (August 2013) and since then there have been various developments in TP Provisions like notification of safe harbour rules, notification of provisions/rules for Advance Pricing Agreement (APA) roll back mechanism, range concept and use of multiple year data for determination of arm’s length price, Deemed International Transactions, increased threshold limit for the applicability of the specified domestic transaction provisions, CBCR requirements etc. 

Thus ICAI has come up with the revised Guidance Note (Fifth Edition), 2016 which contains guidance on all these important changes. In this article we have summarised the key changes or revisions made in the Guidance Note on Report u/s 92E.

Read more: Transfer Pricing - Revised Guidance Note -ICAI 2016 Key Highlights

Key Topics Covered:

• International Taxation
• FEMA
• Audit
• Income Tax
• Indirect Tax

Updates

• Income Tax
• Companies Act, 2013
• Indirect Tax

This article is contributed by Partners of SBS and Company LLP - Chartered Accountant Company. You can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

From the title of the article, it is clear that entire discussion is relating to understanding of ‘Governmental Authority’ prior and post to the judgment of Honourable High Court of Patna in the case of Shapoorji Paloonji and Company Pvt Limited. Before going into the discussion, let us try to understand the significance of the phrase ‘governmental authority’.

We all know that negative list has been introduced from 01.07.2012 and post its introduction, majority of the exemptions are clubbed under single notification 25/2012-ST dated which is colloquially referred as ‘Mega Exemption Notification’. The subject notification grants exemption from service tax on various activities and has quite a long list. One such entry is Entry 12 which deals with exemption provided in respect of construction activities if the service receiver is ‘government, governmental authority or local authority’.

Read more: Understanding 'Govermental Authority'

Legal Background:-

Section 50C of the Income Tax Act, 1961 was inserted by Finance Act (“FA”) 2002 w.e.f 01-04-2003. It provides that where the consideration received or accrued as a result of transfer of capital asset by the assesee being land or building or both is less that value adopted or assessed or assessable¹ by stamp valuation authority for the purpose of payment of stamp duty then the value adopted or assessed or assessable shall deemed to be full value consideration for the purpose of computing the capital gain.

The very purpose of introducing the section is to counter suppression of sale consideration on sale of immovable properties, being land or building or both. The section provides for rebuttable presumption that the value adopted for the purpose of computing stamp duty by the competent authorities fairly indicates the market value of the property sold.

The Provisions of section 50C are applicable in case of transfer of Capital Asset. Similar provisions are contained in section 43CA which was introduced by FA 2013 w.e.f 01-04-2014. The said section deals with the immovable property, being land or building or both, held as a stock in trade.

Read more: Rationalisation Of Section 50C