Anti-Avoidance measures in certain jurisdictions – Transfer pricing

  • Specific anti-avoidance measures in respect of transactions with persons located in Notified Jurisdictional area was introduced in the Act under sec 94A
  • We have seen in earlier sections that transactions with the AEs are subject to transfer pricing provisions.
  • This is generally sufficient to cover all the related party transactions, since most countries exchange information to the tax authorities of the other country.
  • Where the exchange of information regarding the tax residence of a particular country is difficult to obtain, the CBDT had come up with the idea of Notified Jurisdictional Area (NJA) where any transaction with the resident of that country or jurisdiction would have to comply with transfer pricing provisions irrespective of whether the other entity is an AE or not.
  • Further, rate of TDS was also prescribed for specified transactions with residents of NJA.
  • Some significant features for NJA entities are
Anti Avoidance
  • CBDT had earlier in November 2013, notified Cyprus as NJA.
  • However, after the negotiation of India – Cyprus treaty, this notification has been rescinded in December 2016.


If a country is a Notified Jurisdictional Area, then

  1. SHRs do not apply for transactions with the AEs in that country
  2. Even for non-AEs, TP provisions have to be applied in case of transactions with entities resident of NJA
  3. The tolerance range is not applicable for entities of NJA
  4. All of the above

Answer d.

For a country identified as a Notified Jurisdictional Area, the beneficial SHRs are not applicable and even for non-AEs, TP provisions have to be applied in case of transactions with entities resident of NJA. Further tolerance range (3% / 1%) is not applicable for ALP for entities in NJA.

Economic analysis – Transfer Pricing

Economic analysis – Transfer Pricing Characterization of the transacting parties For applying the above methods, following factors needs to be analyzed with respect to the transactionsSpecific characteristic of the property transferred or services renderedThe functions performed taking into account assets employed and risks assumed by the respective parties.Characterization of entities based on …
Read More

FAR Analysis – Transfer Pricing

FAR Analysis – Transfer Pricing Functional, asset and risk analysis is often referred to as FAR analysis.When transactions between the AEs are examined for the purpose of determining the ALP, one has to analyse the three components closely, namely Functions performed Functions performed by different parties are examined to ascertain which party performs …
Read More

Determination of ALP – Transfer Pricing

Determination of ALP – Transfer Pricing Rule 10C deals with the determination of most appropriate method. Under this Rule, the method is best suited to the facts and circumstances, and which provides the most reliable measure of ALP in relation to the international transaction will be considered to be the MAM. …
Read More

Transfer pricing audit cycle

Transfer pricing audit cycle Reference to Transfer Pricing Officer Section 92CA provides for procedure for reference to a Transfer Pricing Officer (‘TPO’) of any issue relating to computation of ALP in an international transaction. The procedure is as under:The option to make reference to TPO is given to the Assessing Officer. He …
Read More

Transfer pricing adjustment and consequence

Transfer pricing adjustment and consequence Transfer pricing adjustment If the transaction price is not within the ALP range or the tolerance band and if adopting ALP would not reduce the profit or increase losses etc, then the difference between the ALP and the transaction price is added to the income of the …
Read More

Subscribe to our News Letter

Get periodical updates from us

Subscribe to our News Letter

I hope you enjoy reading this blog