New Delhi, Jan. 17 -- The income tax department has a backup plan if things don't go its way when making a demand on companies - a safety net in the form of protective notices. The revenue department has started issuing two sets of tax demand notices to one company, a move that has stumped multinationals already fighting transfer pricing cases, apart from potentially increasing their legal burden. The second, protective notice gets triggered only if a company successfully contests the initial demand for tax payable under transfer pricing. Industry experts said such notices have been issued in several transfer pricing cases, ranging from royalty payments to advertising, marketing and promotion (AMP) expenses.
While the first tax demand may ...