Transfer Pricing provisions do not apply if the AE is assessed in India & there is no chance of shifting of profits outside India or erosion of tax base

IJM (India) Infrastructure Ltd vs. ACIT (ITAT Hyderabad)

(iv) The object behind enactment of transfer pricing regulations is to prevent shifting of profits outside India as is brought out by Morgan Stanley 292 ITR 416 (SC) & Circular No. 14 to the Finance Act 2001. In the present case, there is no possibility of shifting of profits outside India or erosion of country’s tax base because the PE profits of the AE are assessable to tax in India. Therefore, the transactions with the AEs are outside the purview of the transfer pricing regulations