Arm's length price determination by most appropriate method governs transfer pricing adjustments and AO computation of income. An arm's length price is the market price between unrelated parties in uncontrolled conditions and must be determined by the most appropriate method listed in section 92C (CUP, RPM, CPM, PSM, TNMM or prescribed methods) on a transaction by transaction basis. Where multiple ALPs arise, the arithmetical mean is used subject to notified tolerance; if within tolerance the actual price is deemed arm's length, otherwise the mean applies and adjustments follow. The Assessing Officer may determine ALP when price computation, data reliability, documentation under section 92D, or furnished information are deficient, with an opportunity of hearing; AO determined ALP affects computation of total income with specified deduction exclusions.
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Arm's length price determination by most appropriate method governs transfer pricing adjustments and AO computation of income.
An arm's length price is the market price between unrelated parties in uncontrolled conditions and must be determined by the most appropriate method listed in section 92C (CUP, RPM, CPM, PSM, TNMM or prescribed methods) on a transaction by transaction basis. Where multiple ALPs arise, the arithmetical mean is used subject to notified tolerance; if within tolerance the actual price is deemed arm's length, otherwise the mean applies and adjustments follow. The Assessing Officer may determine ALP when price computation, data reliability, documentation under section 92D, or furnished information are deficient, with an opportunity of hearing; AO determined ALP affects computation of total income with specified deduction exclusions.
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