Arm's length price determination allows limited acceptance of actual transaction price; AO may redetermine ALP after show-cause.
Arm's length price must be determined using specified transfer pricing methods or other Board prescribed methods, selecting the most appropriate method based on transaction nature, functions and prescribed factors. If a single method yields one price that price governs; a notified tolerance permits acceptance of the actual transaction price in specified cases. The Assessing Officer may determine the arm's length price during assessment where documentation, reliability, or compliance with notice requirements is deficient, but must first give the taxpayer a show cause notice before recomputing total income on that basis.