Valuation

[Snehal Kulkarni]

Suppose, ABC is one of the Group Companies who manufactures the Electric Goods which are tailor-made in nature and manufacture as per the end user's requirement . Under this ABC company, there are many subsidiary, associate Companies and also have some Joint Ventures. This ABC is getting Orders from group companies as well as subsidiary/associate/JV companies. Also from the independent buyer. Kindly guide us on the Type of Valuation to be adopted for Subsidiary/Associate/JV & group companies

[Rama Krishana]

In general in taxation instead of the term "group companies" the concept, "related parties" or "associted parties" are being used. Under differnent tax laws differnt valuation methods have been prescribed. For an example, under central exicse, Rule 9 and Rule 10 of the Central Excise Valuation (Determination of Price of Excisable goods) Rules, 2000 provide methods of valuation when sale is made to related parties or through interconnected undertakings.

[NANDKUMAR SAGWEKAR]

This is a related party transactions I think value for the purpose should 110% of Cost of Production as per CAS 4 issued by Institute of Cost and Works Accountants of India

AI Summary

ABC Seeks Clarity on Valuation for Related Party Transactions; Refer to Central Excise Rules 9 & 10, CAS 4. ABC, a company manufacturing tailor-made electric goods, seeks guidance on valuation methods for transactions with its subsidiary, associate, joint venture, and group companies, as well as independent buyers. One respondent clarifies that 'related parties' is the appropriate term used in tax contexts, and refers to valuation methods under Central Excise Rules 9 and 10 for related parties. Another respondent suggests that for related party transactions, the value should be 110% of the cost of production, as per CAS 4 from the Institute of Cost and Works Accountants of India.