Award for Cross Border Taxation Advisory Firm of the Year – 2014 – Gujarat

We are grateful to ACQ5 Magazine, UK, for presenting us with the award for ‘Cross Border Taxation Advisory Firm of the Year – 2014 – Gujarat, India’.

We would also like to thank all the 105,642 industry peers that participated and voted for this award !

It is an honour to receive this award, and we would like to thank ACQ5, ACQ5 Global Awards 2014, the entire team of Pipara & Co., and our clients who have given us the platform and the opportunity to perform.

For any Consultancy pertaining to International taxation or Cross Border Taxation, feel free to contact Naman Pipara at naman@pipara.com or call him at +91 992 400 0078.

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Pipara & Co. is amongst the Top 50 Prominent & Upcoming CA firms in India

According the a survey done by the magazine ‘Bureaucracy Today’ in its April 2014 issue, Pipara & Co. stands amongst the Top 50 Most Prominent & Upcoming CAs of India.

We are thankful to all the clients and well wishers of the company, who have paved our way to this recognition.

We rejoice our recognition and also convey our sincerest appreciation to the entire team of Pipara & Co., without whom we wouldn’t have made it this far. Every person associated with the firm rightly deserves this prize, because it is our collective effort that has made this possible.

Without losing ground, Pipara & Co.; its team recommits to building stronger knowledge base, articulate expertise & delivering world-class services thereby excelling in our core areas of practice.

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Domestic Transfer Pricing – An Analysis

Widening of scope of Section 40A (2), Transfer Pricing regulations to apply to domestic transactions, (Applicable for the AY 2013-14) [Also referred to as Domestic Transfer Pricing]

 

Under Section 40A(2) of Income Tax Act, 1961 in case of any transaction with a related party, the Assessing Officer can disallow the expenditure while computing income from business or profession  which in his opinion is excessive or unreasonable having regard to the:

 

a. Fair market value of the goods,

b. Services or

c. Facilities

 

for which expenditure has been incurred.

[There is NO mechanism to re-compute the income received from a related party, in case the Assessing Officer is of the opinion that such income is low considering the market value, since this section focuses on EXPENDITURE.]

In order to address this issue, the provisions of Transfer Pricing are being amended to extend the scope to ‘Specified Domestic Transactions’ by amending Section 92 of the Act. Further specified domestic transactions have been defined in a new Section 92BA as following transactions where the aggregate of such transactions entered into by the assessee in a year exceed Rs.5 crore:

 

Section Transaction covered
40A Any payment made or to be made in respect of expenditure incurred to persons specified in section 40A (2) (b). i.e. related parties
In case of deductions in respect of certain tax holidays
80A Any transaction in relation to transfer of goods or services from eligible business (refer sec. 35AD) to non-eligible business, vice versa.
80IA(8) Any business transaction in relation to transfer of any goods or services between units of the assessee i.e. inter units transfers.
80IA(10) Any business transaction between the assessee (covered under 80IA) and his associated entities.
80-IB, 80-IC, 80ID, 80-IE AND 10AA Any business transaction entered between the assessee who is eligible for 80-IB, 80-IC, 80ID & 10AA and associated entities or inter unit transfer between the eligible business of the assessee and his non- eligible business.
Any other transactions as may be prescribed.

 

Because of the above tax holidays deductions, there could be transaction between the related party which is been carried out to eliminate/reduce tax liability by shifting profits to tax holiday entities.

 

It has been further provided by inserting a new subsection (2A) in Section 92 that any allowance or any expenditure or interest or allocation of any cost or expense or any income in relation to specified domestic transaction shall be computed having regards to arm’s length price, meaning thereby the specified domestic transaction will be tested applying arm’s length (ARM) principle.

 

Accordingly corresponding amendment is been made in the procedural laws of transfer pricing to cover domestic transactions i.e.

 

1.  Section 92C for computation of arm’s length price by the method prescribed,

2.  Section 92D maintenance and keeping of information and document,

3.  Section 92E obtaining report from Chartered Accountant in respect of specified domestic transactions,

4.  Section 92CA being reference to the Transfer Pricing Officer,

5.  Penal provisions of Section 271(1), Explanation 7 regarding concealment,

6.  Section 271AA penalty for failure to keep and maintain information and

7.  Section 271G penalty for failure to furnish information or document.

 

Further the section 40A(2)(b)(ii)  scope of the related party is being expanded to cover cases of companies which have the same parent company by providing that “any other company carrying on business or profession in which the first mentioned company has substantial interests” shall be considered to be a related party.

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Furnish Audit Reports Electronically | Income Tax Update | Change in Audit Report Format F.Y. 2012-13

CBDT has also provided that where an assessee is required to furnish a report of audit under sections 44AB, 92E or 115JB of the Act, he shall furnish the same electronically.  Online filing of following audit reports shall be mandatory in following cases:

(a)  Tax Audit report under Sec. 44AB in respect of books of account;

(b)  Audit report under Sec. 92E in respect of international transaction; or

(c)  Audit report under Sec. 115JB in respect of MAT computation.

 

Change in Audit Report format for F.Y. 2012-13

A new format of Audit Report has also been published. All Audit Reports (where applicable) shall be as per the new format as advised.

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Mandatory Compliance for Individuals | ITR

CBDT has vide notification No. 34/2013 dated 01.05.2013 has made it mandatory for the following category of the Assessees to file their Income Tax Return Online from A.Y. 2013-14 :-

(a)  It is mandatory for every person (not being a co. or a person filing return in ITR 7) to e-file the return of income if its total income exceeds Rs. 5,00,000

(b) an individual or a Hindu undivided family, being a resident, having assets (including financial interest in any entity) located outside India or signing authority in any account located outside India and required to furnish the return in Form ITR-2 or ITR-3 or ITR-4, as the case may be.

(c)  Every person claiming tax relief under Section 90, 90A or 91 shall file return in electronic mode.

(c) Those who are required to get their Account under Section 44AB (tax Audit having limit of 1 Crores for Businesses)

(d) A firm required to furnish the return in Form ITR-5 or an individual or Hindu Undivided Family (HUF) required to furnish the return in Form ITR-4 and to whom provisions of section 44AB are applicable

(e) A company required to furnish the return in Form ITR-6.

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Gyan Pipara’s Blog

Gyan Pipara and his team have been regularly conducting 3 day workshops on “Intensive Analysis of Financial Statements” for SBI at Staff College-Hyderabad and Academy-Gurgaon.
He has also taken workshop for the Senior Inspecting Officers of ‘Inspection & Management Audit Department’
This Blog feature is for interaction between the participants and Mr. Pipara post his workshops.
Any questions, suggestions, queries or discussions are appreciated and shall be replied.
Please leave a comment to start a discussion

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Service Tax Consultancy

We are proud to put into action a Service Tax Consultancy wing, thereby adding it to the bouquet of services already offered by us.

The team consists of 3 (Three) Chartered Accountants who have left no page unturned in updating and gearing themselves up to give the clearest and precise opinions in an environment, where due to massive and rapid changes businesses are being posed by technical issues that are not easy to answer.

Our focus is to provide complete and specific solutions to clients thereby leaving no space for ambiguity.

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China Future Economic Outlook

Please check our ‘Knowledge Store’ for the document on Future Economic Outlook – China based on the research of Pipara & Co.

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New ST3 now available (offline version)

Check for our update on new ST3 and link for the same at the ‘Knowledge Store’ on www.pipara.com

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