Please find attached 'TransPrice Weekly' for the forth week of March 2014. The Snippet covers news alert on approval of first Advance Pricing Agreements and Bombay High Court's decision on commission payouts. Trust you will find it useful.

1. Weekly
24th
-31st
March 2014
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CBDT Signs 5 APAs
Category: News
 As a step to restore certainty in the tax regime in India, the Indian Government has signed 5
Advance Pricing Agreements (APAs) with MNCs operating in different industry sectors
 Signing the agreements on the last day of the financial year, CBDT has kept its word by executing
the agreements in Financial Year 2013-14
 The agreements cover a period of 5 years and specifies Arm’s Length Price for the international
transactions entered in to by 5 tax payers
 The transactions include interest payments, corporate guarantee, investments advisory services
and contract manufacturing in different industry sectors like Pharmaceuticals, Telecom and
Financial Services
 The first set of agreements are concluded in about a year which is a proactive sign of Government’s
conscious policy of non –adversarial tax regime
I-Flex Solutions Limited: Bombay High Court
Decision Outcome: In favour of the Taxpayer
Category: Payment of commission
 High Court (HC) upheld Tribunal’s order on payment of higher commission to the subsidiaries /
Associated Enterprises
 HC observed that the subsidiaries performed additional activities relating to customization and
hence, such an additional payment is justified
 One can conclude, that it is important to document and differentiate the activities undertaken by
the taxpayer vis-à-vis the comparable companies. If a higher pay out needs to be made in relation
to the function undertaken, the same needs to be justified with requisite documentation