By:
CA.Gaurav Garg

Section 92 E
“Every person who has entered into an international transaction or
specified domestic transaction during a previous year shall obtain a
report from an accountant and furnish such report on or before the
specified date in the prescribed form duly signed and verified in the
prescribed manner by such accountant and setting forth such
particulars as may be prescribed”

Section 271BA
If any person fails to furnish a report from an accountant as required by
section 92E the Assessing Officer may direct that such person shall pay,
by way of penalty, a sum of one hundred thousand rupees.
Applicable on all type of Assessee who has entered into specified
domestic transaction
 Value of Specified domestic transaction should not be less than
5cr in aggregate
 Accountant means Chartered Accountant in practice
 Specified date shall have the same meaning as assigned to “due
date” in Explanation 2 below sub-section (1) of section 139 i.e.
30th day of November of the assessment year

Scope of examination under section 92E of the Act

The Accountant’s Report has got two parts
 Form 3CEB, &,
 Annexure to Form 3CEB

Annexure to Form 3CEB has again two parts
 Part A – Clause 1 to 6 – Particulars of the tax payers
 Part B – Clause 7 – Particulars of AEs
- Clause 8 – 13 – Information about various transactions
Scope of examination under section 92E of the Act

Form 3CEB Para 1
“*I/we have examined the accounts and records of ………………..
(name and address of the assessee with PAN) relating to the
specified domestic transactions entered into by the assessee during
the previous year ending on 31st March, ……….”
The scope of examination envisaged by section 92E is restricted to
such examination of accounts and records of the taxpayer relating
to the international transaction entered into by the assessee
during the previous year under examination
 Ensuring completeness of the listing of international transactions
is the responsibility of the taxpayer
 MRL should be obtained from the client

Scope of examination under section 92E of the Act

Guidance Note on Transfer Pricing issued by the ICAI
“36.9 Ensuring completeness of the listing of international transactions
is the responsibility of the assessee….”
“36.10 The accountant should obtain a written representation from the
assessee providing him with the name, address, legal status and
country of tax residence of each of the enterprises with whom
international transactions have been entered into by the assessee, and
association linkages among them.”
Scope of examination under section 92E of the Act

Form 3CEB Para 2
“2. In *my/our opinion proper information and documents as are
prescribed have been kept by the assessee in respect of the
international transaction(s) entered into so far as appears from
*my/our examination of the records of the assessee”.
The Accountant needs to give opinion on
Ensuring completeness of the listing of international transactions
is the responsibility of the taxpayer
 MRL should be obtained from the client


Scope of examination under section 92E of the Act

Guidance Note on Transfer Pricing issued by the ICAI
“36.12…… It should however be noted that the accountant is not
responsible for the content of the transactions and documentation
maintained by the assessee.”
“36.13….If any document is not maintained, then the accountant
should suitably qualify his report or disclose the same in his report
depending upon the facts and circumstances of each case. The
accountant should state the qualification in the report making it
comprehensive and self explanatory…”
Scope of examination under section 92E of the Act
 Form 3CEB Para 2
“3. The particulars required to be furnished under section 92E are
given in the Annexure to this Form. In *my/our opinion and to the
best of my/our information and according to the explanations given
to *me/us, the particulars given in the Annexure are true and
correct”.
Scope of examination under section 92E of the Act

Guidance Note on Transfer Pricing issued by the ICAI
“36.16… As mentioned above, the particulars should be obtained from
the assessee, duly authenticated, which should be reviewed by the
accountant. In case of any negative remark or qualification about this
matter, the same should be properly reported.”
Scope of examination under section 92E of the Act

Guidance Note on Transfer Pricing issued by the ICAI
“36.17 The accountant must limit his scope of work and the review
procedures to the extent certified in Form No.3CEB. For e.g. in the
Annexure the method which has been used to determine the arm’s
length price needs to be stated. In this context the accountant is only
required to ensure that the method stated as being used to determine
the arm’s length price by the assessee has actually been used and it is
not the accountant’s responsibility to ensure that the method so used is
the most appropriate method as prescribed by the Board.”
Scope of examination under section 92E of the Act
 Annexure to Form 3CEB
 13 Clauses
 Clause 1 – Name of the assessee
 Clause 2 – Address
 Clause 3 – Permanent account number
 Clause 4 – Status
 Clause 5 – Previous year ended
 Clause 6 – Assessment year
Scope of examination under section 92E of the Act

Annexure to Form 3CEB
 Clause 7 – List of the associated enterprises with whom the assessee has
international transactions
S.No
Particulars
a.
Name of associated enterprise.
b.
Nature of relationship with the associated enterprise as referred to in
section 92 A(2).
c.
Brief description of the business carried on by the associated
enterprise.
 Clause 8 – Particulars in respect of transactions in tangible property.
▪ A - Purchase/sale of raw material, consumables or any other
supplies for assembling/processing/manufacturing of goods/articles
from/to AE
S.No
Particulars
a.
Name and address of the AE with whom the international transaction has
entered into.
b.
Description of transaction and quantity purchased /sold
c.
Total amount paid/received or payable/receivable in the transaction
(i) as per books of account.
(ii) as computed by the assessee having regard to the arm’s length
price.
d.
Method used for determining the ALP
B.
If the assessee has entered into any international transaction in
respect of purchase/sale of traded/finished goods, then:
S.No
Particulars
a.
Name and address of the AE with whom the international transaction has
entered into.
b.
Description of transaction and quantity purchased /sold
c.
Total amount paid/received or payable/receivable in the transaction
(i) as per books of account.
(ii) as computed by the assessee having regard to the arm’s length
price.
d.
Method used for determining the ALP
C.
purchase/sale of any other tangible movable/immovable property or
lease of such property, then:
S.No
Particulars
a.
Name and address of the AE with whom the international transaction has
entered into.
b.
Description of property and nature of transaction.
c.
Number of units of each category of movable/immovable property involved in
the transaction.
d.
Total amount/lease rent paid/received or payable/receivable in respect of
each transaction of purchase/sale or lease provided/entered into:
(i) as per books of account.
(ii) as computed by the assessee having regard to the arm’s length
price.
e.
Method used for determining the ALP
 Clause 9 – Particulars in respect of intangible property
▪ Purchase/sale/use of intangible property such as know-how, patents,
copyrights, licenses etc, then:
S.No
Particulars
a.
Name and address of the AE with whom the international transaction has
entered into.
b.
Description of intangible property and nature of transaction.
c.
Total amount paid/received or payable/receivable for purchase/sale/use of
each category of intangible property:
(i) as per books of account.
(ii) as computed by the assessee having regard to the arm’s length
price.
d.
Method used for determining the ALP
 Clause 10 – Particulars in respect of providing services
▪ In respect of services such as financial, administrative, technical,
commercial services, etc, then:
S.No
Particulars
a.
Name and address of the AE with whom the international transaction has
entered into.
b.
Description of services provided/availed of/from the AE.
c.
Total amount paid/received or payable/receivable for the services
provided/taken:
(i) as per books of account.
(ii) as computed by the assessee having regard to the arm’s length
price.
d.
Method used for determining the ALP
 Clause 11 - Particulars in respect of lending or borrowing of money
▪ Granting/receiving loans/advances to or from AE, then
S.No
Particulars
a.
Name and address of the AE with whom the international transaction has
entered into.
b.
Nature of financing arrangement.
c.
Currency in which loan/advance granted/received.
d.
Interest rate charged/paid in respect of each loan/advance.
e.
Total amount paid/received or payable/receivable in the transaction :
(i) as per books of account.
(ii) as computed by the assessee having regard to the arm’s length
price.
f.
Method used for determining the ALP
 Clause 12 – Particulars in respect of mutual agreement or arrangement.
▪ Mutual agreement or arrangement for the allocation or
apportionment of, or any contribution to, any cost or expense
incurred or to be incurred in connection with a benefit, service or
facility provided or to be provided to any or more of such enterprises:
S.No
Particulars
a.
Name and address of the AE with whom the international transaction has
entered into.
b.
Description of such mutual agreement or arrangement.
c.
Total amount paid/received or payable/receivable in each such transaction:
(i) as per books of account.
(ii) as computed by the assessee having regard to the arm’s length
price.
d.
Method used for determining the ALP
 Clause 13- Particulars in respect of any other transactions
▪ Any other international transaction not specifically referred to
above, with AE
S.No
Particulars
a.
Name and address of the AE with whom the international transaction has
entered into.
b.
Description of the transaction.
c.
Total amount paid/received or payable/receivable in each such transaction:
(i) as per books of account.
(ii) as computed by the assessee having regard to the arm’s length
price.
d.
Method used for determining the ALP
Transfer Pricing Documentation

Refer section 92D of the Act read with Rule 10D of the Rules
Types of Documents
Enterprise - wise
Transaction
specific
Computation
related
25

Enterprise-wise documents
 Ownership structure of the taxpayer
 Profile of the Group
 Name of Associated Enterprises, address,, legal status, country of
tax residence, ownership linkage and business
 Business of the taxpayer, description of industry
26

Transaction-specific documents
 Description of transaction
 Functional Asset & Risk Analysis
 Industry / market condition, forecasts/ budget, financial estimates
 Uncontrolled transactions and comparability analysis

Computation related
 Most appropriate method
 Assumptions and adjustments if any
 Arm’s length price
27

Section 92 D of the Act read with Rule 10E of the Rules
 Should be prepared on contemporaneous basis
 Should be kept and maintained for 8 years from the end of the
relevant assessment year
 No fresh documentation required for continuing transactions
unless there is some significant change which can have impact
on pricing
28
Regulation
Sufficiency
Contemporaneous
Reasonableness
Accuracy
29
CA. Gaurav Garg
JGarg Economic Advisors
Email: gaurav@jgarg.com
Mobile: +91 9899994934
www.jgarg.com
13 Nov 2011