Applicability of Transfer Pricing provisions to International Transactions & Specified Domestic Transactions

Applicability of Transfer Pricing provisions to International Transactions & Specified Domestic Transactions.

As you all know that Finance Act, 2012 has extended the provisions of Chapter-X (Special provisions relating to Avoidance of Tax) to Specified Domestic Transactions (Section 92BA of Income Tax Act, 1961). 

Here is a quick comparison between applicability of Transfer Pricing provisions to International Transaction & Specified Domestic Transactions.

Quick Comparison between applicability of Transfer Pricing provisions on International Transaction & Specified Domestic Transaction

Serial No.	International Transactions	Specified Domestic Transactions (SDTs)
1.	Applicable on all International Transactions irrespective of the amount involved.	Applicable to SDTs where aggregate SDTs exceed Rs. 5 crores in a financial year.
2.	Sections 92 to 92F except section 92BA applicable to international transactions.	Sections 92, 92BA, 92C, 92CA, 92D, 92E and 92F applicable to SDTs.
3.	Advance Pricing Agreements [92CC] applicable to international transactions.	Advance Pricing Agreements are not applicable to SDTs.
4.	Related Parties for which TP provisions are applicable to international transactions are Associate Enterprises as defined in section 92A.	Related parties for which TP provisions applicable to SDTs will vary from SDT to SDT.
5.	Any income arising from an international transaction shall be computed having regard to the ALP as determined under Chapter-X provisions.	Any income in relation to a SDT shall be computed having regard to the ALP as determined under Chapter-X provisions.
6.	Allowance for any expense or interest arising from an international transaction shall be computed having regard to the ALP as determined under Chapter-X provisions.	Allowance for any expense or interest in relation to a SDT shall be computed having regard to the ALP as determined under Chapter-X provisions.
7.	TPO can deal with any international transaction not referred to him by AO but which comes to his notice during the course of the proceedings before him as if the international transaction was referred to him by the AO.	TPO cannot deal with any SDT not referred to him by AO but which comes to his notice during the course of the proceedings before him. In respect of SDTs, his powers under section 92CA are confined to SDTs referred to him by AOs.
8.	TPO can deal with any international transaction not reported in audit report u/s 92E but which comes to his notice during the course of proceedings before him as if the international transaction was referred to him by AO.	TPO cannot deal with any SDT not referred to him by AO notwithstanding that assessee did not report it in audit report u/s 92E.
9.	Where audit report u/s 92E not furnished in respect of International Transaction, income shall be deemed to have escaped assessment.	Where audit report u/s 92E not furnished in respect of SDTs, it shall not be deemed that income has escaped assessment.
10.	Lending or Borrowing money between 2 AEs comes within the ambit of International Transaction.	Lending or Borrowing money between resident 'specified persons' or resident 'AEs' is not SDT.