C. A. Student, Pune.
Sir,
Re: Delay in introduction of Safe Harbour Rules The Finance Minister introduced section 92CB by the Finance (No. 2) Act, 2009 w.e.f. 1-4-2009, empowering the Board to make Safe Harbour Rules for determination of arm’s-length price. ‘Safe Harbour’ means Circumstances in which Income-tax authorities will accept the transfer price declared by the assessee. The enabling section 92CB was introduced after persistent demand by the taxpayers, particularly by the foreign companies.
One is, therefore, surprised that even after a lapse of three years, the relevant rules have not been notified. If this is not a sign of policy paralysis, then what constitutes policy paralysis? Of course, our ruling politicians and bureaucrats are allergic to use of the term and recently the PM openly chided the business community for using the same.
Further, though the transfer pricing provisions were introduced w.e.f. 1-4-2002, the CBDT has not provided enough guidelines about its implementation even after ten years. In western countries, such as Australia, New Zealand, Canada, UK, USA etc., their tax departments have put up hundreds of pages of guidelines for the taxpayers. Absence thereof in India is puzzling, to say the least; perhaps the Revenue Officers are either themselves not clear about the implications of the Law which they are implementing or they do not want to give up their discretionary powers!!! It is high time that the Tax Department provides clear guidelines on implementation of Transfer Pricing Law and formulate Safe Harbour Rules are introduced. Indian Transfer Pricing Officers are one of the most aggressive in the world, leading to mind boggling adjustments and litigation which helps nobody (except legal and tax professionals) and is driving away the Foreign Direct Investment though the high officials won’t accept the same.
—T. K. Singhal
Chartered Accountant
