Revenue authorities struggle to alter method applied
July 02, 2009
A ruling by the Pune tribunal says that the revenue authorities in India must clearly demonstrate the appropriateness of a particular method when trying to make an adjustment based on the taxpayer's method choice. Vineet Chhabra and Viswanathan Subramaniam of Deloitte explain.
MSS India (the taxpayer) is a 100% export oriented undertaking (EOU) engaged in the business of manufacturing and supplying strap connectors to European original equipment manufacturers and power engineering customers in the Gulf and Asia Pacific region. For the financial year 2002-2003, the taxpayer had selected the cost plus method as the most appropriate one for benchmarking the international transactions with its associated enterprise (AE) in relation to the purchase of raw materials and components and the export of finished goods.
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