Overcoming the impossible!

Talk at Advani Law College

I’m so grateful and thankful to Dr Santhi Dasari for inviting me as a guest of honour in the annual elocution competition in the college today. It feels so good to interact with the students at this age you know the prime age when it’s time to take decision for the life when it’s time to decide upon the careers what exactly they are going to do in their life usually what happens at this age of 25 to 30 people are not very sure what exactly what they going to do in the rest 30 years of their life. 

Reiterating my point here which I discussed in the talk about the technique of AIR. This means associating the things with the next object and imagining it in the most ridiculous manner. Association imagination ridiculous Being the key terms. I just thought I’ll discuss this concept with the students who had come over for the elocution competition you know it’s so important for children to be confident in the art of public speaking at times what happens is when ever you come on to the stage you mind turns blank and then you realise the importance of remembering the points and that’s where the technique of AIR comes in handy. Beat elocution competition over the PowerPoint presentations which we generally give coming onto the stage and facing the audience it becomes all the more imperative that we remember the points that need to discuss as we do not want to lead our discussion in a haphazard manner. The AIR technique helps us to remember the points exactly in the same sequence so that we have a fruitful discussion in a sequin shall manner the way we want to and which will enthrall the audience. 

Then I love talking about the clarity in life as at this age of 25 to 30 years people do not realise that the decisions that they will take during this span of the life time will affect and impact their lives after 30 years of their life. My professor of sociology in New Delhi used to tell us that people who slog their ass during first 30 years of their life live like a king during the next 30 years of your life and those who don’t the lesser it is said the better. It is a general tendency among people to live the life of mediocrity people are very shy to come out of their comfort zone they don’t want to do things going out of their own way whenever they feel discomfort they step back and don’t take an extra effort to excel in life these kind of people comprises the 95% lot in society. I really feel that people should take an extra effort in their life to come out with a different kind of magic in their life by toiling hard day in and day out and achieving excellence in their trade in their sphere of work. It is easy for us to toe the line of others but we tend to forget that everybody is running their own race what the other person is achieving in their life it’s not necessary that we should achieve the same as we may be in a different zone altogether. Coming out with excellent results in your life can happen only with your daily rituals what kind of daily habits you have inculcated what all new habits you are ready to inculcate are you ready to take the plunge are you ready to  go for an extra mile are you ready to track your progress are you ready to master the new skills are you ready to read are you ready to surround yourself with noble thoughts are you ready to become a master of your trade are you ready to go for killing are you ready to put in a dedicated hard work for hours and hours together without distraction. ?? 

Become a super productivity NINJA in your life and then see the reaction of others around you !! You will shine like a star. 

Best wishes!

Management Fees and Transfer Pricing Audit

The payment of management fees falls under the intragroup services that are being availed by the associated enterprises. Here I am going to discuss the striking point for the transfer pricing officer w. r. t. this transaction while doing the TP Audit. 

In one of the cases the assessee had been showing the payment of management fees to its associated Enterprises outside country and for three years in continuation the transfer pricing officer made an adjustment on account of payment of management fees which was determined at a basic minimum as it was discussed by TPO in the order that such huge amount of payment fees is not required to be made. Further it was ascertained by the transfer pricing officer that this payment of management fees falls under the category of shareholder activity. 

Subsequently for two assessment years it was seen that there was no transfer pricing reference made in the case under section 92CA(1). During the course of transfer pricing audit it was noticed that the assessee has shown various expenditure heads in its form 3CEB. These expenditure heads appeared to be dubious as they all fell into the category of intra group services. Hence in order to investigate this transaction further form 3CEB was called for for the previous five assessment years and the transactions reflected in the year under consideration were compared with the transactions reflected in the previous five assessment years. The detailed investigation revealed that the assessee in order to avoid the TP adjustment under the head payment of management fees had shown this excess payments under various different heads falling into the category of intra group services. Interestingly payment of management fees was not shown in the year under consideration. So the assessee had cleverly disguised the payment of management fees into various different other kinds of payments made in the year which were all new transactions occurring for the first time. The important point to note here is that there has been no significant change in the FAR analysis of the assessee. 

Hence it is important for the transfer pricing officers to keep their eyes and ears open while concluding the transfer pricing audits. 

Cheers!

Tryst with Transfer Pricing

Hello everyone

Hope you all are Leading a focused life with clear written goals. They are so very important in bringing clarity in what you are doing and what we plan to do. I just thought of penning my thoughts down as I am at such an important juncture of my life wherein I have to take some very important decisions which would mark a new beginning and Pave a way for my future. Seven years in Mumbai have come to an end. 

This is my second year in transfer pricing as a transfer pricing officer in Mumbai. I have thoroughly enjoyed my tenure the first year has gone by and the second year has begun with some new experiments some new learning some new thoughts. Transfer pricing as a subject is quite technical but after having experienced it and practised it for one year I realised the fact that it is more of a common sense. Nevertheless there is no substitute for a thorough understanding of the subject as they say that knowledge is power and the knowledge of the subject brings a lot of power in the forms of confidence greater understanding and analytical bent of mind. 

Transfer pricing basically pertains to determination of arms length price of the transactions between the related parties. Herein, we try to compare the transactions between two related parties with the transactions between the AE and non-AE And then try to determine whether the price charged by the assessee from the AE is at arm’s-length or not. Then we have certain methods prescribed in the income tax act and we have the comparability analysis the statue makes it very clear As to which method is to be applied when. The income tax rules becomes very significant here as a detailed analysis of the methods prescribed are delineated along with the use of multiple year data and examples thereof. 

The transfer pricing was introduced in India by the Finance act 2001 and since then we are almost about to come to an end of the second decade. The subject has evolved and so have the rules. I have met so many chartered accountants during my one-year tenure in this field and I have heard them saying that transfer pricing is of no use because it is based on estimation. But my dear friends have forgotten that with the rise of globalisation the companies are having more number of international transactions between them there are so many multinational corporations coming up and they have their own subsidiaries and related parties set up in different countries for ease of business. Here comes the role of transfer pricing to investigate whether there is any evasion of tax or shifting of profits from High tax jurisdiction to low tax jurisdiction on account of related party transactions. In view of this how can the role of transfer pricing become insignificant in the new world order. 

I am open to queries on the fundamentals of transfer pricing and its usage. 

Cheers!