Arm's length principle governs transfer pricing for cross border related party dealings, with an exception protecting book based taxable results. Income and expenses from international transactions must be determined with regard to the arm's length price, and cost allocations among associated enterprises for benefits, services or facilities are to follow arm's length valuation where a mutual sharing arrangement exists and the provision involves an international transaction. An exception prevents applying these rules if such determination would reduce taxable income or increase computed losses compared with entries in the taxpayer's books for the relevant financial year.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Arm's length principle governs transfer pricing for cross border related party dealings, with an exception protecting book based taxable results.
Income and expenses from international transactions must be determined with regard to the arm's length price, and cost allocations among associated enterprises for benefits, services or facilities are to follow arm's length valuation where a mutual sharing arrangement exists and the provision involves an international transaction. An exception prevents applying these rules if such determination would reduce taxable income or increase computed losses compared with entries in the taxpayer's books for the relevant financial year.
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