Government panel to vet tax dispute of foreign firms

 
The panels will be based at eight places across the country having jurisdiction over their respective areas, a notification by the Central Board of Direct Taxes said.

Finance Minister Pranab Mukherjee in Budget 2009-10 speech had proposed setting up of an alternate dispute resolution mechanism for transfer pricing disputes. Any assessee who has a tax issue can file an application to the panel against the draft order and then get a date for hearing. The issue will be heard by the panel and then an order passed, the notification rules said.

In case, after the directions are issued and there is any mistake or error is apparent, the panel may, suo motu, or on an application from the eligible assessee or the assessing officer, rectify such mistake or error, and also direct the assessing officer to modify the assessment order accordingly.

“Any appeal against the Assessment Order passed in pursuance of the directions of the panel shall be filed before the Appellate Tribunal,” it said. However, the procedure and rules notification did not mention as to when the members of the dispute resolution panel would be appointed.  The government is also planning to come out with safe harbour rules to reduce the impact of judgemental errors in determining transfer price in international transactions. These rules give guidelines as to what should be the criteria for accepting the transfer pricing.