Section 92D — Maintenance and Keeping of Information and Document by Persons Entering into an International Transaction or Specified Domestic Transaction

Section 92D of the Income-tax Act, 1961 mandates that any person who has entered into an international transaction or a specified domestic transaction must maintain and keep certain prescribed information and documents. This section is crucial for ensuring transparency and compliance with transfer pricing regulations. The statutory requirement aims to ensure that the pricing of cross-border and certain domestic transactions is consistent with the arm's length principle. The burden of proof lies with the taxpayer to demonstrate that the transaction pricing is fair and in accordance with the law. Failure to maintain the required documentation can lead to penalties and adjustments by tax authorities. This section is significant as it helps prevent tax evasion through manipulation of transaction prices and ensures that taxable profits are not understated.

Common Litigation Flashpoints

1. Adequacy of documentation maintained
2. Timeliness of documentation submission
3. Interpretation of 'arm's length price'
4. Penalties for non-compliance

Judgments on Section 92D — Maintenance and Keeping of Information and Document by Persons Entering into an International Transaction or Specified Domestic Transaction

• Vodafone International Holdings B.V. vs Union of India & Anr. — SC,
  Section 9 of the Income Tax Act does not cover indirect transfers of capital assets situated in India.
• The Authority for Advance Rulings (Income Tax) and Others vs Tiger Global International II Holdings — SC,
  The DTAA between India and Mauritius allows capital gains to be taxed only in Mauritius, provided the entity holds a valid TRC.
• SAP Labs India Private Limited vs Income Tax Officer, Circle 6, Bangalore — SC,
  The High Court can scrutinize the Tribunal's determination of the arm's length price if it is alleged to be perverse or not in accordance with the guidelines under the IT Act and Rules.
• Aditya Birla Nuvo Limited vs The Deputy Director of Income-tax — HC,
  The beneficial ownership of shares, despite being registered in the name of a permitted transferee, determines the taxability of capital gains in India.