What are the options available to Beta Ltd., if it accepts enhancement to total income made on account of determination of Arm's length price by the…

If Beta Ltd. accepts the enhancement to total income made on account of determination of Arm's length price by the TPO, it has to make a secondary adjustment under section 92CE if the primary adjustment exceeds 1crore. In the present case, the primary adjustment would be USD 2,10,000 (700 pieces of computers x USD 300 (USD 1400 – USD 1100) which exceeds 1crore. Accordingly, the excess money i.e., USD 2,10,000 available with Robert Inc. has to be repatriated to India within 90 days of the date of the order of the Assessing Officer. In case of non-repatriation, USD 2,10,000 would be deemed as an advance made by the Beta Ltd. to its associated enterprise, Robert Inc. Interest would be calculated on such advance at the rate of six-month LIBOR as on 30th September of the relevant previous year + 3%, since the international transaction is denominated in foreign currency. Alternatively, Beta Ltd. can opt to pay additional income-tax @ 20.9664% (tax @18% plus surcharge @12% plus cess@4%). In such case, Beta Ltd. will not be required to make the secondary adjustment and compute interest up to the payment of tax from such date.