Maintenance of documents for transfer pricing

FOREGIAN ENTERPRISE

Further, in order to ensure proper compliance of these provisions, Assessing Officers (AOs) have been given sweeping powers including the authority to impose penalty.

This all has resulted in unnecessary harassment of the taxpayers. In this context, the Delhi Tribunal has recently pronounced a landmark judgment in case of Cargill India Pvt Ltd vs DCIT (110 ITD 616) which lays down some practical guidelines in respect of maintenance of information and documents by an assessee, issuance of notices by the AOs and levy of penalty on the assessee.

The Income-tax Act provides that every person who has entered into an international transaction shall keep and maintain the prescribed information and documents. The law also empowers the AO to require any person who has entered into an international transaction to furnish "any" information or document as prescribed in the Rules.

In the above context, an interesting problem arose in the case of Cargill India Pvt. Ltd. vs DCIT (110 ITD 616). The Transfer Pricing Officer (TPO) asked the assessee to furnish entire information and documents maintained under IT Rules.

Rule 10D of IT Rules prescribes various types of information and documents which an assessee should maintain but the Tribunal observed that it would be in the rarest of cases that all the clauses of the Rules would be attracted in any one particular case. It was held:

"Therefore, it is clear that information prescribed under rule 10D in different column is voluminous, alternative and it would have to be seen as to what information and from which clause, is required on the facts of the given case."

In the instant case, the TPO issued a notice and called for