TaxTMI 
TaxTMI 
Draft scheme of the proposed rules for computation of Arm’s Length Price (ALP) of an International Transaction or Specified Domestic Transaction undertaken on or after 01.04.2014
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.... of Direct Taxes 21^st May, 2015 Subject: - Draft scheme of the proposed rules for computation of Arm's Length Price (ALP) of an International Transaction or Specified Domestic Transaction undertaken on or after 01.04.2014. Section 92C of the Income Tax Act, 1961 (the "Act") provides for computation of Arm's Length Price (ALP) of an international transaction or specified domestic tr....
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....ter the 1st day of April, 2014 shall be computed in such manner as may be prescribed. 3. Therefore, the manner of computation of ALP is proposed to be provided through the amendment of Income-tax Rules. The proposed mechanism and conditions under which the multiple year data and 'range' concept would be used for determination of ALP shall be as under: - A. Adoption of the R....
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....oints; c) For calculating the weighted average, the numerator and denominator of the chosen Profit Level Indicator (PLI) would be aggregated for all the years for every comparable entity and the margin would be computed thereafter; and d) The data points lying within the 40th to 60th percentile of the data set of series would constitute the range. iii. If the transfer pr....
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....a for 3 years for any of the following reasons: - • Data of the current year of the comparables may not be available on the databases at the time of filing of returns of income by taxpayers; • A comparable may fail to clear a quantitative filter in any one out of the three years; and • A comparable may have commenced operations only in the last two years or m....