During an audit for the FY 2010 “Doc Request SA” was requested to submit information and supporting documentation on expense accounts, acquisitions of goods and services, ISC commission accounts paid etc. after the ordinary one-year audit period established by Article 62º-A of the Tax Code had already expired.
The taxpayer filed a complaint arguing that the exception to this one-year period provided for in paragraph 3 of Article 62º-A, referring to the audits carried out in regards of transfer pricing rules, was not applicable, given that the requested information and documentation did not related to transfer pricing.
Decision of the Court
The Court decided in favour of “Doc Request SA”.
“…the complainant was requested to submit information and supporting documentation on expense accounts, acquisitions of goods and services recorded in the Book, charges to the ISC commission accounts paid and unreported airline tickets flown, additions and deductions via affidavit, credits to expense accounts, charges to income accounts and bad debts…, in order to support their use in the company’s own operations and demonstrate that such expenses are proper and/or necessary to maintain the source generating taxable income (principle of causality), in accordance with article 37 of the Income Tax Law; among others; that is, the complainant has been asked for information and documentation that would not involve the application of the transfer pricing rules, taking into account that the Administration has not specified in that request whether the information and documentation requested is related to the application of the aforementioned rules.
In this regard, in accordance with the aforementioned criterion, the exception regulated by numeral 3) of article 62º-A of the Tax Code is only applicable to the requirements requesting information and/or documentation related to the application of the transfer pricing rules, and not those referring to aspects that do not involve the application of said rules; Consequently, the Administration had a period of one year to request from the complainant information and/or documentation referring to aspects other than the application of the transfer pricing rules, and in this case, the notification of the requirement No. 0122170000434 was not made within the period established by law18.
Consequently, considering that the information and/or documentation requested in Demand No. 0122170000434 is not related to the application of the transfer pricing rules, but to other aspects of the tax and period audited, and that said demand was notified to the complainant when the one-year term established by numeral 1 of article 62º-A of the Tax Code had already elapsed, the complaint filed should be declared well-founded, and the Administration should annul the aforementioned demand.”
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