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International Taxation - Transfer Pricing

Electives - Final

A Ltd. filed its return of income for A.Y.2020-21 disclosing total income of â?¹.20 crore. During the course of assessment, the Assessing Officer made a primary adjustment of â?¹.2 crore and passed an order on 1.6.2021 in respect of an international transaction denominated in Indian rupees, consequent to which the total income of A.Y.2020-21 has increased to â?¹. 22 crore. The excess money of â?¹.2 crore has not been repatriated till date. What are the consequences of the primary adjustment made and non-repatriation of excess money in computation of total income of A.Y.2022-23, if it is assumed that A Ltd. has opted to pay additional income-tax@20.9664% on â?¹.1 crore on 1.12.2021? Assume that the one year marginal cost of fund lending of SBI as on 1.4.2021 is 8.5% and as on 1.4.2022 is 9%. (a) Interest of â?¹. 9.754 lakhs to be included in total income of A.Y.2022-23 (b) Interest of â?¹. 9.792 lakhs to be included in total income of A.Y.2022-23 (c) Interest of â?¹. 15.645 lakhs to be included in total income of A.Y.2022-23 (d) Interest of â?¹. 16.311 lakhs to be included in total income of A.Y.2022-23 In the Material Answer Given (C) Can anyone guide me the answer for this MCQ.

B S Suraj

CA Final

★ 31K+

18-May-22 12:13

374

Answers (1)

Applying the provisions of Section 92CE and Rule 10CB, Where the excess money is not repatriated within the time limit of 90 days, interest shall be charged on the excess money or part thereof. The interest shall be computed at one year marginal cost of fund lending of SBI of relevant previous year (2021-22 in the given case) + 325 basis points. Also, in case of payment of additional tax, secondary adjustment is not required to be made and interest need not be computed from the date of payment of tax, which means interest has to be computed till the date of payment of tax (1.12.2021 in the given case) Interest computation will be done from the date of the order of the AO - 1.6.2021 In the given case, the rate at which interest has to be computed is 11.75% (8.5%+3.25%). In simple terms, interest on 1 crore on which additional tax is not paid shall be computed at the rate of 11.75% for the period of 1.6.2021 to 31.3.2021 and the interest on 1 crore on which additional tax has been paid shall be computed at the rate of 11.75% for the period of 1.6.2021 to 1.12.2021. The calculation comes to approximately Rs. 15.6 lakhs.