Rationaliseof Inter. Transaction


Rationaliseof Inter. Transaction

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Rationalisation of the Definition of International Transaction [Section 92B]

Rationalisation of the Definition of International Transaction [Section 92B] [W.e.f. A.Y. 2015-16]

 

The existing provisions of section 92B define 'International transaction' as a transaction in the nature of purchase, sale, lease, provision of services, etc. between two or more associated enterprises, either or both of whom are non-residents. Section 92B(2) extends the scope of the definition of international transaction by providing that a transaction entered into with an unrelated person shall be deemed to be a transaction with an associated enterprise, if there exists a prior agreement in relation to the transaction between such other person and the associated enterprise, or the terms of the relevant transaction are determined in substance between the other person and the associated enterprise. The sub-section as presently worded has led to a doubt whether or not, for the transaction to be treated as an international transaction, the unrelated person should also be a non-resident. Therefore, the Act has amended section 92B(2) to provide that where, in respect of a transaction entered into by an enterprise with a person other than an associated enterprise, there exists a prior agreement in relation to the relevant transaction between the other person and the associated enterprise or, where the terms of the relevant transaction are determined in substance between such other person and the associated enterprise, and either the enterprise or the associated enterprise or both of them are nonresident, then such transaction shall be deemed to be an international transaction entered into between two associated "enterprises, whether or not such other person is a non-resident.back

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