Under Section 92 ITA 1961 (TRANSFER PRICING), transactions between ASSOCIATED ENTERPRISES must be at:
Answer & Solution
Correct answer: D.
1. Section 92 Income Tax Act 1961 — TRANSFER PRICING — requires transactions between ASSOCIATED ENTERPRISES (defined Section 92A) to be at ARM'S LENGTH PRICE (ALP).
2. Section 92C prescribes 5 METHODS for determining ALP:
3. (i) CUP — Comparable Uncontrolled Price method;
4. (ii) RPM — Resale Price Method;
5. (iii) CPM — Cost Plus Method;
6. (iv) PSM — Profit Split Method;
7. (v) TNMM — Transactional Net Margin Method.
8. Section 92D — DOCUMENTATION requirements: Master File (Form 3CEAA), Country-by-Country Report (Form 3CEAD), Local File.
9. Section 92CA — TRANSFER PRICING OFFICER (TPO) determines ALP if AO refers.
10. ADVANCE PRICING AGREEMENT (APA) under Section 92CC (unilateral, bilateral, multilateral).
11. SAFE HARBOUR RULES (Rule 10TA-TG) for certain transactions.
12. Hence option B is correct.
_Source: CS Executive Paper 4 Tax Laws (ICSI BoS) + Income Tax Act 1961 + CGST Act 2017 — Income Tax Act 1961, Sections 92-92F (Transfer Pricing)_
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