Transfer Pricing

Transfer Pricing at LKS

Our focus areas from domestic and international Transfer Pricing standpoints include:

• Advisory services in relation to an executed or a proposed transaction.
• Assistance in the execution of Advance Pricing Agreements.
• Business structuring considering transfer pricing implications.
• Development of transfer pricing policies for MNE Groups.
• Due diligence to identify key issues relating to transfer pricing in business facts.
• Ensuring consistency in the positions taken under Transfer Pricing, Customs, Exchange Control Laws, and GST Laws.
• Litigation support before Transfer Pricing Officers, Dispute Resolution Panel, Commissioner (Appeals), Income-tax Appellate Tribunals, and Courts.
• Preparation of comprehensive transfer pricing planning studies for proposed intra-group transactions.
• Support during transfer pricing assessments.

Some of the issues which we have recently effectively litigated and advised include:

• Applicability of deemed international transaction provisions
• Comparable selection and comparability adjustments
• Excess Advertisement, Marketing, and Promotion (AMP) expenses
• Interest on overdue receivables
• Intra-group financing transaction
• Receipt of intra-group services
• Royalty related issues

Our notable assignments

Few of our recent critical assignments handled are summarised as follows:

Litigation

• Devised litigation strategy for one of the largest Italy based FMCG group for litigation proceedings pending for 7 years before ITAT and Commissioner (Appeals) involving issues relating to advertisement, marketing, and promotion expenses (AMP) and deemed international transaction.
• Represented a manufacturer and trader of tools and spares before ITAT. The issues related to selection of RPM over TNMM, computation of PLI and comparability adjustment.
• Represented an ITES service provider before Delhi High Court and ITAT in multiple matters relating to interest on overdue receivables, selection of comparable, computation of PLI, etc.
• Represented an ITES service provider before Supreme Court in relation to a comparable selection issue.
• Represented Indian automotive manufacturer, a subsidiary of Sweden Group, in litigation proceedings before ITAT in matter relating to intra-group services provided by AEs. Notably, the majority of transfer pricing additions were deleted.
• Represented ITES service provider before the ITAT. The issues involved selection of comparables, and computation of profit level indicator and we ensured that the entire transfer pricing. additions were deleted by the Tribunal.
• Represented licensed manufacturer of automotive components, being a subsidiary of Japanese automotive group, before Dispute Resolution Panel in relation to transfer pricing additions. We successfully ensured the deletion of the transfer pricing additions amounting to more than INR 40 crores.
• Represented marine automation system manufacturer before ITAT for issues relating to computation of PLI, accounting adjustment while computing PLI and selection of comparables.

Advisory

• Prepared royalty benchmarking study for clients engaged in diverse industries such as ITES industry, gaming industry, liquor industry, finance industry and automotive industry.
• Prepared year-end transfer pricing studies for numerous clients engaged in diverse industries such as IT, ITES, support services, consumer electronics, FMCG.
• Structured the intra-group transactions of leading liquor manufacturing group and prepared transfer pricing planning studies for the same.
• Structured transactions involving intangibles for MNE groups based out of India.