The Supreme Court has asked the income tax department and HCL Technologies to resolve a dispute concerning international transactions through the Alternate Dispute Resolution Mechanism.
“We are of the view that in the peculiar facts and circumstances of this case... it would be in the interest of both sides to resort to Alternate Dispute Resolution Mechanism suggested in the Budget of 2009,” said a bench headed by Justice S H Kapadia.
The apex court order has come in a transfer-pricing case pertaining to purchase of services by HCL Technologies BPO Services Ltd, a wholly-owned subsidiary of Mauritius-based E-serve Holding and HCL Venture Capital Ltd, from its associated enterprises during 2005-06.
Under the transfer-pricing laws, the international transactions between associated enterprises must take place at the arm’s length price (ALP), which is the price at which the goods or services can be sold or purchased from unrelated parties.
The Delhi High Court had quashed the Transfer Pricing Officer’s (TPO) order that determined the ALP for international transactions entered by HCL with its associated enterprises in 2005-06.