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The Delhi Income Tax Appellate Tribunal has ruled that once Carraro India Ltd.'s cross-border transactions met the conditions for invoking India's transfer pricing provisions, the burden shifted to the taxpayer to prove that the losses it reported were due to factors other than the company's business arrangement with its Italian parent. [Deputy Comr. of Income Tax v. Carfaro india Ltd., Delhi ITAT, ITA Nos. 2207/DEL/05 and 2097/DEL/05, decision issued 9/30/08]
Although the tribunal agreed with the Commissioner of Income Tax Appeals that India's transfer pricing provisions - Section 92 of the Income Tax Act -correctly were invoked in the case, it rejected the assessing officer's conclusions as to the conditions that would require application of Section 92. The ITAT also remanded the case to the AO to reassess the company in light of its burden of proof and complaints that the AO's transfer pricing assessment was arbitrary and did not provide the taxpayer with an opportunity to be heard on the issue.
Joint Venture. The taxpayer, a manufacturer and designer...