TaxTMI 
TaxTMI 
Determination of arm’s length price under section 165
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....ted to account for differences, if any, between an international transaction or a specified domestic transaction and the comparable uncontrolled transactions or between the enterprises entering into such transactions, which could materially affect the price in the open market; and (iii) the adjusted price arrived at under sub-clause (ii) is taken to be an arm's length price in respect of the property transferred or services provided in the international transaction or the specified domestic transaction; or (b) resale price method, by which, - (i) the price at which property purchased or services obtained by the enterprise from an associated enterprise is resold or are provided to an unrelated enterprise, is identifi....
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....computed according to the same accounting norms) arising from the transfer or provision of the same or similar property or services by the enterprise, or by an unrelated enterprise, in a comparable uncontrolled transaction, or a number of such transactions, is determined; (iii) the normal gross profit mark-up referred to in sub-clause (ii) is adjusted to take into account the functional and other differences, if any, between the international transaction or the specified domestic transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transactions, which could materially affect such profit mark-up in the open market; (iv) the costs referred to in sub-clause (i) are increased ....
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....ircumstances; (III) the combined net profit is then split amongst the enterprises in proportion to their relative contributions, as evaluated under sub-item (II); and (IV) the profit thus apportioned to the assessee is taken into account to arrive at an arm's length price in relation to the international transaction or the specified domestic transaction; (B) residual profit split method, by which, - (I) the combined net profit of the associated enterprises arising from the international transaction or the specified domestic transaction in which they are engaged, is determined; (II) the combined net profit referred to in sub-item (I) may, in the first instance, be partially allocated to each e....
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....ii) arising in comparable uncontrolled transactions is adjusted to take into account the differences, if any, between the international transaction or the specified domestic transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transactions, which could materially affect the amount of net profit margin in the open market; (iv) the net profit margin realised by the enterprise and referred to in sub-clause (i) is established to be the same as the net profit margin referred to in sub-clause (iii); and (v) the net profit margin thus established is then taken into account to arrive at an arm's length price in relation to the international transaction or the specified domesti....
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....ch transactions, are likely to materially affect the price or cost charged or paid in, or the profit arising from, such transactions in the open market; or (b) reasonably accurate adjustments can be made to eliminate the material effects of such differences. (4) The data to be used in analysing the comparability of an uncontrolled transaction with an international transaction or a specified domestic transaction shall be the data relating to the financial year (hereinafter in this rule and in rule 81 referred to as the current year) in which the international transaction or the specified domestic transaction. (5) In a case where the most appropriate method for determination of the arm's length price of an international tra....