Section 92BA of IT act

QUERY:- 
A Private Ltd Company(X), is into manufacturing & it purchases certain raw materials from its sister companies(A,B,C,D&E). The Shareholders & Directors of X company are also Shareholders & Directors of A to E companies, holding substantial interest in A to E companies. 

The X Company is not holding any share in A to E companies All transactions are domestic transactions. Transactions by each company with X company is below threshold limit . But the cumulative figure of all the companies(A to E) taken together crosses the threshold limit. These transactions were reported in Form 3CD under sec. 40A(2)(b), clause, company wise. 

I have taken a stand that the provisions of sec 92BA of the IT Act is not applicable to the X company in this situation as the transactions by the said companies individually  taken did not cross  the threshold limit, for following reasons. that singular  word “person” has been used in the limbs of the section 92BA  besides the closing phrase “Aggregate of such transactions”   with reference to each entity.  

(i)  any expenditure in respect of which payment has been made or is to be made to a person referred to in clause (b) of sub-section (2) of section 40A; (ii)  any transaction referred to in section 80A; (iii) any transfer of goods or services referred to in sub-section (8) of section 80-IA; (iv) any business transacted between the assessee and other person as referred to in sub-section (10) of section 80-IA; (v)  any transaction, referred to in any other section under Chapter VI-A or section 10AA, to which provisions of sub-section (8) or sub-section (10) of section 80-IA are applicable; or (vi) any other transaction as may be prescribed, and where the aggregate of such transactions entered into by the assessee in the previous year exceeds a sum of  Five crore rupees 

Pl offer your opinion.
Asked 3 months ago in Income Tax from Chennai, Tamil Nadu
Dear Sir,

Limit set out in the for domestic transfer pricing is not qua-entity. The aggregate value of the transaction needs to be checked for the purpose of computing threshold limit. This is a settled position and there is no conflict in the position.

We do handle larges number of domestic transfer pricing cases and we can help you in complying with the provision of transfer prpcung.


Further, from FY 2015-16, the limit of 5 crores has increased to 20 crores.

Please feel free to call/revert in case of any doubts

Thanks and Regards
Abhishek Dugar
CA CS B.Com
caabhishekdugar@gmail.com
Abhishek Dugar
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Hope the same is answered as I was out of country for work. If you need further answers pl mail on modani005@gmail.com
Shyam Sunder Modani
CA, Hyderabad
955 Answers
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