(i) Trax & Co. is engaged in providing scientific research services to several non-resident clients. Such services are also provided to Olive…

(i) Provision of scientific research services falls within the scope of international transaction under section 92B. Trax & Co. and Olive Inc. are deemed to be associated enterprises as per section 92A (2) (d), since Olive Inc. guarantees not less than 10% of the total borrowings of Trax & Co. Since there is an international transaction between associated enterprises, transfer pricing provisions are attracted in this case. (ii) Where the Assessing Officer has made a primary adjustment of 310lakhs to the transfer price and the same has been accepted by Trax & Co., secondary adjustment has to be made in the books of account as per section 92CE, since the primary adjustment made by the Assessing Officer and accepted by Trax & Co exceeds 100lakhs and the primary adjustment is in relation to P.Y.2021-22. The excess money determined based on the primary adjustment has to be repatriated to India within 90 days from the date of order, failing which the same would be deemed as an advance and interest would be computed at the one-year marginal cost of fund lending rate of State Bank of India as on 1.4.2023 + 3.25%, since the international transaction has been denominated in Indian Rupees. In this case, since the excess money has not been repatriated within 90 days, the same would be deemed to be an advance made by Trax & Co. to Olive Inc. and interest would be computed @12.25% (9% + 3.25%) from 1.4.2023, being the date of the order of the Assessing Officer. The interest would amount to 37.975 lakhs (i.e., 12.25% of 310lakhs) for the P.Y.2023-24. Alternatively, Trax & Co. can opt to pay additional [email protected]% (tax@18% plus surcharge@12% plus cess@4%) on 310 lakhs, which would amount to 64,99,584. In such a case, secondary adjustment is not required to be made.