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etrospective effect to cases pending before the assessing officer as of 1st October 2009 [41] .? Further, the proposal states that an international transaction where the variation between the arithmetical mean and the price at which the transaction has actually been undertaken exceeds five percent of the arithmetical mean, the assessee shall not be entitled to exercise the option as referred to in the said proviso.' This proposal is a big step backward. Such retrospective amendments on international transactions show an inconsistency and unpredictability in the system of law, creating a negative image of the country in the minds of foreign investors.

This seems to be a step in the reverse direction. It is the view of the authors that the condition of variable percentage established by the Finance Bill of 2011 is the most suitable way to evaluate transactions in the future and hence, an amendment should be brought in the DTC bill 2010 in that direction.

The safe harbour provision of + 5 per cent, where the tax authorities accept the transfer price determined by the tax payers, [42] ? has been made available to the assessee on his own assessment of the transfer price has also raised a few practical questions in the minds of the taxpayers. The proviso to Section 92C(2) which states, 'where more than one price is determined by the most appropriate method, the arm's length price shall be taken to be the arithmetical mean of such prices, or, at the option of the assessee, a price which may vary from the arithmetical mean by an amount not exceeding five per cent of such arithmetical mean'. It provides the taxpayer a safe harbour to the extent that the value of the international transaction is within a range of +/- 5 per cent of the arm's length price. Assessment experience indicates that taxpayers have been given the benefit of the safe harbour only in cases where more than one price has been determined by the most appropriate method and arithmetical mean of such prices has been taken as the arm's length price. In cases where there is a single arm's length price, the benefit of the safe harbour has been denied to the taxpayers. Such injustice has been caused by strict interpretation of the courts. A reasonable construction of the words of the legislation needs to be made to avoid such injustice in the future. The proposals of the Direct Tax Code Bill 2010 have resolved this problem. Clauses 117(5) & (4) of the Bill allow the 5% exemption in circumstances where a single price is determined or more than one prices are determined by most appropriate method.

The provisions of the current legislation provide five methods for computation of the arm's length price, but do not recognize a hierarchy in the prescribed five methods. There are no specific rules or regulations which determine the method to be used by the assessee in specific circumstances. This causes a great deal of confusion at the time of computation, leading to inaccuracy and unnecessary litigation. There have been many cases like where the central issue was the computation method to be used by the assessee. In the opinion of the authors, this situation arises due to a lack of clarity in the transfer pricing guidelines. It is strongly recommended that supporting rules be made to the DTC which will provide guidelines with respect to the use of computation methods.

Another problem faced in the past was the limited powers of the Tran本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。