Their is a threshold limit in case of domestic transactions ie Rs 5 crores. Whether this limit should be considered on annual basis or in totality. eg  One party opening balance is Rs 3.5 crores & during the year the transaction is of Rs 2.5 Crore and the outstanding balance in that party account exceeds Rs 5 crores. Whether this case falls in the ambit of Transfer Pricing or not ??

Dear Ashish,

The limit of 5 crore is to be calculated on annual basis. As the transaction held in the previous year does not exceed 5 crore, therefore this section does not apply in your case.

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TaxReply.com

But in my case like in FY  14-15  the outstanding balance in party account  exceeds  Rs 5 Crores (ie 5.5 crore) . What is the situation in case of FY 14-15

The outstanding balance must have come from previous years' transactions. If it is the result of only the previous year then the previous year would have been covered. If arising over more than one year then none of the previous years would have been covered.

The test is the transaction amount and not liquidation of outstanding receivables. Accordingly only because during one year, the outstanding of more than 5 crores was liquidated but the transactions per se were less than the threshold amount does not mean that the section is applicable. This is my opinion

Dear Ashish,

As already advised by Ajay, you need not to consider the opening balance of party for applicability of section 92BA. Just check the fresh transactions executed in the relevant financial year and if that exceeds 5 crore then section 92BA is applicable.

Kind Regards
TaxReply.com 

Thanks everyone for their valuable suggestions.