Transfer Price

Transfer Price – Purchase amounting to Rs.
1,80,30,53,058/-
Transfer Pricing analysis for purchases made from FY 2015 - 2016 to FY 2022 -2023 (till
October 17, 2023) through Purchase Register (Movement Type considered are 105, 106,
122 and Z22 from MB51) exported from SAP, has revealed a variance in pricing of raw
material compared to arm's length principles. An overall difference of Rs. 1,80,30,53,058/- has
been identified while analysing the data where purchase prices of these materials exceed the
arm's length price.
• The analysis covers purchases made over eight years, providing a comprehensive
perspective on pricing trends.
• The identified difference of Rs. 1,80,30,53,058/- represents a significant deviation from
arm's length principles and warrants further investigation.
Out of the total difference of Rs. 1,80,30,53,058/-, an amount of Rs. 1,52,03,78,518/- relates
to Inter-Unit transfer while the remaining amount of Rs. 28,17,58,454/- related to purchases
made from related parties. For Inter-Unit transfer, Section 92 (2A) of the Income Tax Act,
1961 while for the purchases made from related parties, Section 40A (2) of the Income Tax
Act, 1961 will be applicable.
Detailed bifurcation of the same is provided below: -
Transfer
Price_Consol.xlsb
Summary of Transfer Pricing: -
Financial Year TE00 TP00 TS00 TT00 TY00 Grand Total

FY 2015-16 - 14,162 - 107,947,701 19,291,829 127,253,692
FY 2016-17 3,785,314 1,912 926 144,115,708 54,166,473 202,070,332
FY 2017-18 1,981,484 2,146 2,032,857 292,297,811 34,671,764 330,986,062
FY 2018-19 - 2,011 2,267,500 163,467,720 8,637,026 174,374,257
FY 2019-20 - 16,974 104,915 146,494,960 3,234,659 149,851,508
FY 2020-21 - 20,986 2,777 239,780,305 1,512,463 241,316,530
FY 2021-22 - 221,967 996 211,627,268 2,841,535 214,691,767
FY 2022-23 197,207 14,252,000 2,345,165 124,226,064 87,964,274 228,984,710
FY 2023-24 - - - 132,757,186 767,013 133,524,198
Grand Total 5,964,005 14,532,158 6,755,136 1,562,714,723 213,087,035 1,803,053,058
As per Section 40A (2) of the Income Tax Act, 1961, Where a person has incurred any revenue
expenditure on goods, services or facilities and payment for the same is made to a related
person or a person who has substantial interest in the business of the assessee, that portion of
the expenditure which is excessive or unreasonable (having regard to the FMV of the goods,
services or facilities) shall be disallowed.
As per the provisions of Clause (b) of Section 40A (2) of the Income Tax Act, 1961, the
following person shall be deemed to be related party, namely: -
• Any director of the company, partner of the firm, or member of the association
or family, or any relative of such director, partner, or member;
• Any individual who has a substantial interest in the business or profession of the
assessee, or any relative of such individual;
• A company, firm, association of persons or Hindu undivided family having a

substantial interest in the business or profession of the assessee or any director,
partner or member of such company, firm, association, or family, or any relative
of such director, partner, or member;
• A company, firm, association of persons or Hindu undivided family of which a

director, partner, or member, as the case may be, has a substantial interest in the
business or profession of the assessee or any director, partner or member of such
company, firm, association or family or any relative of such director, partner or
member;
• Where the assessee being a company, firm, association of persons or Hindu

undivided family, or any director of such company, partner of such firm or
member of the association or family, or any relative of such director, partner, or
member, has a substantial interest in the business or profession of that person.
For the purposes of this sub-section, a person shall be deemed to have a Substantial Interest
in a business or profession, if: -
• in a case where the business or profession is carried on by a company, such person is,
at any time during the previous year, the beneficial owner of shares (not being shares
entitled to a fixed rate of dividend whether with or without a right to participate in
profits) carrying not less than twenty per cent of the voting power; and
• in any other case, such person is, at any time during the previous year, beneficially
entitled to not less than twenty per cent of the profits of such business or profession.
Related Parties on whom Section 40A (2) of the Income Tax Act, 1961
is applicable: -
Vendor Vendor Name Financial Year Total Deviation

710145 ASIAN TRADING CORPORATION FY 2016-17 8,526,249
710312 ASIAN COTSPIN PRIVATE LIM FY 2016-17 10,527,038
710842 CITRUS GLOBAL ENTERPRISES FY 2022-23 111,523,433
720111 IOL CHEMICALS AND PHARMAC FY 2021-22 208,384
750257 NARMADA INRABUILD LIMITED FY 2015-16 6,149,171
750258 TRIDENT EPC LIMITED FY 2022-23 487,469
GC40 NARMADA INRABUILD LIMITED FY 2015-16 508,690
GI00 GREEN INDIA ENTERPRISE LI FY 2015-16 11,515,588
LP10 LOTUS HOMETEXTILES LIMITE FY 2019-20 195,399
LP10 LOTUS HOMETEXTILES LIMITE FY 2022-23 3,104,439
LP13 LOTUS HOMETEXTILES LIMITE FY 2015-16 1,022,159
Grand Total 281,758,454
As per Section 92 (2) of the Income Tax Act, 1961, Where in an international transaction or
specified domestic transaction, two or more associated enterprises enter into a mutual
agreement or arrangement for the allocation or apportionment of, or any contribution to, any
cost or expense incurred or to be incurred in connection with a benefit, service or facility
provided or to be provided to any one or more of such enterprises, the cost or expense allocated
or apportioned to, or, as the case may be, contributed by, any such enterprise shall be
determined having regard to the arm’s length price of such benefit, service or facility, as the
case may be.
As per Section 92 (2A) of the Income Tax Act, 1961, Any allowance for an expenditure or
interest or allocation of any cost or expense or any income in relation to the specified domestic
transaction shall be computed having regard to the arm's length price.
Specified Domestic Transaction: - For the purposes of this section and sections 92, 92C, 92D
and 92E, Section 92BA defines the meaning of Specified Domestic Transactions. "Specified
Domestic Transaction" in case of an assessee means any of the following transactions, not
being an international transaction, namely: -
• Omitted
• any transaction referred to in section 80A;
• any transfer of goods or services referred to in sub-section (8) of section 80-IA;
• any business transacted between the assessee and other person as referred to in sub-
section (10) of section 80-IA;
• any transaction, referred to in any other section under Chapter VI-A or section 10AA,
to which provisions of sub-section (8) or sub-section (10) of section 80-IA are
applicable; or
• any business transacted between the persons referred to in sub-section (6) of section
115BAB;
• any business transacted between the assessee and other person as referred to in sub-
section (4) of section 115BAE;
• any other transaction as may be prescribed,
and where the aggregate of such transactions entered into by the assessee in the previous year
exceeds a sum of twenty crore rupees.
A brief explanation of the same has been provided with the help of a
flow chart below: -
Transfer Pricing: - It is an accounting practice that represents the price that one division
in a company charges another division for goods and services provided.
Arm Length Price: - The price at which a willing buyer and a willing unrelated seller
would freely agree to transact or a trade between related parties that is conducted as if they
were unrelated, so that there is no conflict of interest in the transaction.
Inter-Unit Entities on whom Section 92 (2) of the Income Tax Act, 1961
is applicable: -
Division Vendor Vendor Name Financial Year Total Deviation
TS00 TY00 TRIDENT LIMITED (YD) FY 2017-18 689,564
TT00 TP00 TRIDENT LIMITED (PCD) FY 2015-16 278,909
TT00 TS00 TRIDENT LIMITED -SHEETING FY 2020-21 340,768
TT00 TT00 TRIDENT LIMITED (TTD) FY 2015-16 240,285
TT00 TT00 TRIDENT LIMITED (TTD) FY 2020-21 2,979,139
TT00 TT01 TRIDENT LIMITED (TTD-1) FY 2022-23 217,455
TT00 TT01 TRIDENT LIMITED (TTD-1) FY 2023-24 1,405,062
TT00 TT50 TRIDENT LIMITED (TTB) FY 2015-16 16,096,820
TT00 TT50 TRIDENT LIMITED (TTB) FY 2020-21 146,245
TT00 TT50 TRIDENT LIMITED (TTB) FY 2022-23 274,118
TT00 TY00 TRIDENT LIMITED (YD) FY 2015-16 84,804,497
TT00 TY50 TRIDENT LIMITED (YDB) FY 2015-16 6,485,992
TT00 TY50 TRIDENT LIMITED (YDB) FY 2016-17 235,038
TT00 TY55 TRIDENT BUDHNI YARN 5 FY 2020-21 135,742
TY00 TY00 TRIDENT LIMITED (YD) FY 2019-20 138,559
TY00 TY00 TRIDENT LIMITED (YD) FY 2021-22 874,164
TY00 TY00 TRIDENT LIMITED (YD) FY 2022-23 10,172,682
TY00 TY50 TRIDENT LIMITED (YDB) FY 2016-17 319,754
TY00 TY50 TRIDENT LIMITED (YDB) FY 2020-21 1,494,658
Grand Total 1,520,378,518
Division Wise Summary: -
1. TP00 – Trident Paper Division
Total purchases made at TP00 - Trident Paper Division from FY 2015-16 to FY 2022-23 and FY
2022-23 till 17th October 2023 amounts to Rs. 36,64,98,82,521/-. Out of Total Purchases,
purchases made through related entities amounted to Rs. 13,35,97,619/- which were over and
above 2% of arm length price.
➢ During FY 2015-16, total purchases amounted to Rs. 3,54,14,80,534/-. Out of total

purchases, purchases made through related entities amounted to Rs. 1,32,772/- which were
over and above 2% of the Arm Length Price. Purchases made within Arm Length Price
and 2% above the Arm Length Price of Materials were excluded. The total deviations over
and above 2% of Arm Length Price amounts to Rs. 14,162/-.

purchases, purchases made through related entities amounted to Rs. 23,592/- which were




purchases, purchases made through related entities amounted to Rs. 11,32,339/- which
were over and above 2% of the Arm Length Price. Purchases made within Arm Length
Price and 2% above the Arm Length Price of Materials were excluded. The total deviations
over and above 2% of Arm Length Price amounts to Rs. 2,21,967/-.

purchases, purchases made through related entities amounted to Rs. 13,19,02,190/- which
over and above 2% of Arm Length Price amounts to Rs. 1,42,52,000/-.
Summary of Paper Division is provided below: -
Financial Year Total Purchases Transfer Pricing Total Deviation

FY 2015-16 3,54,14,80,534 1,32,772 14,162
FY 2016-17 3,31,14,64,025 23,592 1,912
FY 2017-18 3,34,10,48,061 15,011 2,146
FY 2018-19 6,73,12,05,368 7,994 2,011
FY 2019-20 4,23,77,71,217 1,47,371 16,974
FY 2020-21 3,45,21,72,298 2,36,350 20,986
FY 2021-22 4,88,34,31,027 11,32,339 2,21,967
FY 2022-23 7,15,13,09,991 13,19,02,190 1,42,52,000
Grand Total 36,64,98,82,521 13,35,97,619 1,45,32,158
2. TE00 – Trident Energy Division
Total purchases made at TE00 - Trident Energy Division from FY 2015-16 to FY 2022-23 and
FY 2022-23 till 17th October 2023 amounts to Rs. 5,53,95,50,240.35/-. Out of Total Purchases,
purchases made through related entities amounted to Rs. 5,75,32,729/- which were over and above
2% of Arm Length Price.

purchases, purchase made through related entities amounted to Rs. 2,60,56,565/- which
were over and above 2% of the Arm Length Price. Purchase made within Arm Length


purchases, purchase made through related entities amounted to Rs. 16,78,440/- which were
over and above 2% of the Arm Length Price. Purchase made within Arm Length Price and
2% above the Arm Length Price of Materials were excluded. The total deviations over and
above 2% of Arm Length Price amounts to Rs. 1,97,207/-.
Summary of Energy Division is provided below: -

FY 2016-17 1,28,84,04,196 2,60,56,565 37,85,314
FY 2017-18 1,41,04,45,940 2,97,97,724 19,81,484
FY 2022-23 2,84,07,00,103 16,78,440 1,97,207
Grand Total 5,53,95,50,240 5,75,32,729 59,64,005
3. TY00 – Trident Yarn Division
Total purchases made at TY00 - Trident Yarn Division from FY 2015-16 to FY 2022-23 and FY
2022-23 till 17th October 2023 amounts to Rs. 1,70,71,55,32,646/-. Out of Total Purchases,
purchases made through related entities amounted to Rs. 3,86,74,43,293/- which were over and
above 2% of Arm Length Price.






purchases, purchase made through related entities amounted to Rs. 1,32,98,90,866/- which

Summary of Yarn Division is provided below: -

FY 2015-16 17,74,68,42,588 38,00,30,035 1,92,91,829
FY 2016-17 14,69,28,77,306 90,55,91,802 5,41,66,473
FY 2017-18 19,22,33,39,590 78,03,48,354 3,46,71,764
FY 2018-19 18,80,79,50,538 29,80,81,729 86,37,026
FY 2019-20 15,59,91,32,134 9,44,17,200 32,34,659
FY 2020-21 17,19,20,15,742 1,33,36,249 15,12,463
FY 2021-22 28,89,68,03,040 3,65,12,674 28,41,535
FY 2022-23 24,63,76,67,635 1,32,98,90,866 8,79,64,274
FY 2023-24 13,91,89,04,074 2,92,34,383 7,67,013
Grand Total 1,70,71,55,32,646 3,86,74,43,293 21,30,87,035
4. TT00 – Trident Towel Division
Total purchases made at TT00 - Trident Towel Division from FY 2015-16 to FY 2022-23 and FY
2022-23 till 17th October 2023 amounts to Rs. 96,06,96,98,182/-. Out of Total Purchases,
purchases made through related entities amounted to Rs. 13,57,30,19,676/- which were over and








Summary of Towel Division is provided below: -

FY 2015-16 9,60,89,65,830 1,39,28,14,933 10,79,47,701
FY 2016-17 10,63,73,66,110 1,58,86,87,941 14,41,15,708
FY 2017-18 9,76,49,18,956 3,16,00,83,444 29,22,97,811
FY 2018-19 11,62,28,45,940 1,39,90,91,748 16,34,67,720
FY 2019-20 10,14,89,02,541 1,25,00,80,777 14,64,94,960
FY 2020-21 11,39,62,04,426 1,41,47,52,108 23,97,80,305
FY 2021-22 14,89,68,94,945 1,29,48,53,674 21,16,27,268
FY 2022-23 12,30,98,66,868 1,00,16,47,215 12,42,26,064
FY 2023-24 5,68,37,32,565 1,07,10,07,836 13,27,57,186
Grand Total 96,06,96,98,182 13,57,30,19,676 1,56,27,14,723
5. TS00 – Trident Sheeting Division
Total purchases made at TS00 - Trident Sheeting Division from FY 2015-16 to FY 2022-23
and FY 2022-23 till 17th October 2023 amounts to Rs. 6,084,203,524/-. Out of Total Purchases,
purchases made through related entities amounted to Rs. 125,729,681/- which were over and
➢ During FY 2017-18, total purchases amounted to Rs. 602,712,172/-. Out of total

Price and 2% above the Arm Length Price of Materials were excluded. The total
deviations over and above 2% of Arm Length Price amounts to Rs. 2,032,857/-.
➢ During FY 2018-19, total purchases amounted to Rs. 1,390,869,166/-. Out of total

➢ During FY 2019-20, total purchases amounted to Rs. 917,048,980/-. Out of total

deviations over and above 2% of Arm Length Price amounts to Rs. 104,915/-
➢ During FY 2022-23, total purchases amounted to Rs. 3,173,573,206/-. Out of total

Summary of Sheeting Division is provided below: -

FY 2017-18 602,712,172 33,906,752 2,032,857
FY 2018-19 1,390,869,166 74,675,510 2,267,500
FY 2019-20 917,048,980 1,041,885 104,915
FY 2022-23 3,173,573,206 16,105,534 2,345,165
Grand Total 6,084,203,524 125,729,681 6,750,437
Steps that are followed for evaluating transfer price are: -
Step 1: - Download MB51 data from SAP for selected movement types i.e. 105, 106, 122 and
Z22 in a spreadsheet.
Step 2: - Add a duplicate column for both, “Quantity” and “Amt.in Loc.Cur.”
Snapshots for Duplicate Columns: -
Image 1 Image 2
Step 3: - Convert the duplicate Column (which were created in Step 2) “Quantity” and “Amt.in
Loc.Cur.” in absolute values (Positive value) to identify duplicate line items as shown in
“Image 1” and “Image 2”. These absolute values are used in making “Unique Code” using the
“Concatenate Function” in Step 4.
Step 4: - Create a “Unique code” by concatenating the below-mentioned columns with the
formula: -
=CONCATENATE (Material,Vendor,Document Date,Quantity,Amt.in Loc.Cur.,Goods

Receipt/Issue Slip)
• Material
• Vendor
• Document Date
• Quantity
• Amt.in Loc.Cur.
• Goods Receipt/Issue Slip
Snapshot of Unique Code: -
Step 5: - Clear all the line items that are being set off against each other through Movement
Types (106, 122 and Z22).
Step 6: - Replace the existing Unique Code available in above data with a new Unique Code
containing: -
• Material
• Financial Year
• Quarter
This Unique Code is formed with a view to find the average price of Material on Quarterly
Basis for comparative comparisons between related and non-related entities.
Following formula is used to form unique code: -
=Concatenate (Material,Financial Year,Quarter)

A snapshot of the same is provided below: -
Step 7: - Bifurcate the vendor names as related and non-related entities and analyse data for
only those quarters in which material has been purchased from both related and non-related
entities for same material code.
A snapshot of the same is provided below: -

Step 8: - Calculate average price of each material independently by dividing total amount of
purchases with the total quantity purchased as shown in column namely “Average Purchase
Price” in the below snapshot.
Step 9: - Calculate weighted average price of raw material on quarterly basis for every unique
code as mentioned in column “Average Purchase Price for the corresponding quarter” only for
non-related entities.
A snapshot showing calculation of average purchase price for corresponding quarter is attached
below: -
Step 10: - Now, compare the “average purchase price” (Calculated in Step 8) in which the
material was purchased with the “weighted average purchase price during corresponding
quarter” (Calculated in Step 9) to note deviations in the following data set, if any.
Deviations are found using these two formulae: -

Deviation in Percentage terms
(Average Purchase Price – Average Purchase Price during corresponding quarter)

Average Purchase Price during corresponding quarter
Deviation in Absolute terms
=(Average Purchase Price – Average Purchase Price during corresponding quarter) * Total
Quantity Purchased
Step 11: - After getting the values of deviations in Step 10, Consider values that are over and
above 2% of the Arm Length Price in order to obtain final sheet.

Transfer Price

Uploaded by

Copyright:

Available Formats

Transfer Price

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Transfer Price

Uploaded by

Copyright:

Available Formats

Transfer Price – Purchase amounting to Rs.

Detailed bifurcation of the same is provided below: -

Summary of Transfer Pricing: -

Financial Year TE00 TP00 TS00 TT00 TY00 Grand Total

• A company, firm, association of persons or Hindu undivided family having a

• A company, firm, association of persons or Hindu undivided family of which a

• Where the assessee being a company, firm, association of persons or Hindu

Vendor Vendor Name Financial Year Total Deviation

1. TP00 – Trident Paper Division

➢ During FY 2015-16, total purchases amounted to Rs. 3,54,14,80,534/-. Out of total

➢ During FY 2016-17, total purchases amounted to Rs. 3,31,14,64,025/-. Out of total

➢ During FY 2017-18, total purchases amounted to Rs. 3,34,10,48,061/-. Out of total

➢ During FY 2018-19, total purchases amounted to Rs. 6,73,12,05,368/-. Out of total

➢ During FY 2019-20, total purchases amounted to Rs. 4,23,77,71,217/-. Out of total

➢ During FY 2021-22, total purchases amounted to Rs. 4,88,34,31,027/-. Out of total

➢ During FY 2022-23, total purchases amounted to Rs. 7,15,13,09,991/-. Out of total

Summary of Paper Division is provided below: -

Financial Year Total Purchases Transfer Pricing Total Deviation

➢ During FY 2016-17, total purchases amounted to Rs. 1,28,84,04,196/-. Out of total

➢ During FY 2017-18, total purchases amounted to Rs. 1,41,04,45,940/-. Out of total

➢ During FY 2022-23, total purchases amounted to Rs. 2,84,07,00,103/-. Out of total

Summary of Energy Division is provided below: -

Financial Year Total Purchases Transfer Pricing Total Deviation

➢ During FY 2015-16, total purchases amounted to Rs. 17,74,68,42,588/-. Out of total

➢ During FY 2016-17, total purchases amounted to Rs. 14,69,28,77,306/-. Out of total

➢ During FY 2018-19, total purchases amounted to Rs. 18,80,79,50,538/-. Out of total

➢ During FY 2019-20, total purchases amounted to Rs. 15,59,91,32,134/-. Out of total

➢ During FY 2020-21, total purchases amounted to Rs. 17,19,20,15,742/-. Out of total

➢ During FY 2022-23, total purchases amounted to Rs. 24,63,76,67,635/-. Out of total

➢ During FY 2023-24, total purchases amounted to Rs. 13,91,89,04,074/-. Out of total

Summary of Yarn Division is provided below: -

Financial Year Total Purchases Transfer Pricing Total Deviation

➢ During FY 2015-16, total purchases amounted to Rs. 9,60,89,65,830/-. Out of total

➢ During FY 2016-17, total purchases amounted to Rs. 10,63,73,66,110/-. Out of total

➢ During FY 2017-18, total purchases amounted to Rs. 9,76,49,18,956/-. Out of total

➢ During FY 2018-19, total purchases amounted to Rs. 11,62,28,45,940/-. Out of total

➢ During FY 2019-20, total purchases amounted to Rs. 10,14,89,02,541/-. Out of total

➢ During FY 2021-22, total purchases amounted to Rs. 14,89,68,94,945/-. Out of total

➢ During FY 2022-23, total purchases amounted to Rs. 12,30,98,66,868/-. Out of total

➢ During FY 2023-24, total purchases amounted to Rs. 5,68,37,32,565/-. Out of total

Summary of Towel Division is provided below: -

Financial Year Total Purchases Transfer Pricing Total Deviation

➢ During FY 2017-18, total purchases amounted to Rs. 602,712,172/-. Out of total

➢ During FY 2018-19, total purchases amounted to Rs. 1,390,869,166/-. Out of total

➢ During FY 2019-20, total purchases amounted to Rs. 917,048,980/-. Out of total

➢ During FY 2022-23, total purchases amounted to Rs. 3,173,573,206/-. Out of total

Summary of Sheeting Division is provided below: -

Snapshots for Duplicate Columns: -

=CONCATENATE (Material,Vendor,Document Date,Quantity,Amt.in Loc.Cur.,Goods

Following formula is used to form unique code: -

=Concatenate (Material,Financial Year,Quarter)

A snapshot of the same is provided below: -

Deviations are found using these two formulae: -

(Average Purchase Price – Average Purchase Price during corresponding quarter)

You might also like