Beta Ltd. is an Indian Company in which Robert Inc. (a company incorporated in Country E), holds 30% shareholding and voting power during the…
CA Final · Direct Tax Laws and International Taxation · PYQS · September 2025
Beta Ltd. is an Indian Company in which Robert Inc. (a company incorporated in Country E), holds 30% shareholding and voting power during the financial year 2024-25. During the financial year 2024-25, the Beta Ltd. supplied 700 pieces of computers to Robert Inc. @ USD 1100 per piece. The price of computer supplied to other un-related parties in Country E is @USD 1400 per piece. The Transfer Pricing Officer while determining of arm's length price of 700 pieces of computers sold to Robert Inc. adopted the price charged for computer supplied to un-related parties as Internal uncontrolled comparable transaction and proposed adjustment to total income. Considering above facts, you are required to answer the following questions: (i) Would Beta Ltd. and Robert Inc. be treated as associate enterprises for the purpose of transfer pricing? If yes, why?
Suggested Answer and Working Notes:
Beta Ltd., an Indian company and Robert Inc., a company incorporated in Country E are deemed to be associated enterprise as per section 92A (2) , since Robert Inc. holds more than 26% of voting power i.e., 30% in Beta Ltd.
Topics: Transfer Pricing
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