Income Tax Act, 1961
Section 92C: Computation of arm’s length price.—(1) The arm’s length price in relation to an
92C. Computation of arm’s length price.—(1) The arm’s length price in relation to an
1[international transaction or specified domestic transaction] shall be determined by any of the following
methods, being the most appropriate method, having regard to the nature of transaction or class of
transaction or class of associated persons or functions performed by such persons or such other relevant
factors as the Board may prescribe, namely:—
(a) comparable uncontrolled price method;
(b) resale price method;
(c) cost plus method;
(d) profit split method;
(e) transactional net margin method;
(f) such other method as may be prescribed by the Board.
(2) The most appropriate method referred to in sub-section (1) shall be applied, for determination of
arm’s length price, in the manner as may be prescribed:
2[Provided that where more than one price is determined by the most appropriate method, the arm’s
length price shall be taken to be the arithmetical mean of such prices:
Provided further that if the variation between the arm’s length price so determined and price at which
the 1[international transaction or specified domestic transaction] has actually been undertaken does not
exceed 3[such percentage 4[not exceeding three per cent.] of the latter], as may be notified] by the Central
Government in the Official Gazette in this behalf, the price at which the 1[international transaction or
specified domestic transaction] has actually been undertaken shall be deemed to be the arm’s length
price:]
5[Provided also that where more than one price is determined by the most appropriate method, the
arm’s length price in relation to an international transaction or specified domestic transaction undertaken
on or after the 1st day of April, 2014, shall be computed in such manner as may be prescribed and
accordingly the first and second proviso shall not apply.]
6[Explanation.—For the removal of doubts, it is hereby clarified that the provisions of the second
proviso shall also be applicable to all assessment or reassessment proceedings pending before an
Assessing Officer as on the 1st day of October, 2009.]
7[(2A) Where the first proviso to sub-section (2) as it stood before its amendment by the Finance (No.
2) Act, 2009 (33 of 2009), is applicable in respect of an international transaction for an assessment year
and the variation between the arithmetical mean referred to in the said proviso and the price at which such
transaction has actually been undertaken exceeds five per cent of the arithmetical mean, then, the assessee
shall not be entitled to exercise the option as referred to in the said proviso.]
8[(2B) Nothing contained in sub-section (2A) shall empower the Assessing Officer either to assess or
reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made
or otherwise increasing the liability of the assessee under section 154 for any assessment year the
proceedings of which have been completed before the 1st day of October, 2009.]
(3) Where during the course of any proceeding for the assessment of income, the Assessing Officer is,
on the basis of material or information or document in his possession, of the opinion that—
(a) the price charged or paid in an 1[internationaltransaction or specified domestic transaction]
has not been determined in accordance with sub-sections (1) and (2); or
The arm’s length price in relation to an
1[international transaction or specified domestic transaction] shall be determined by any of the following
methods, being the most appropriate method, having regard to the nature of transaction or class of
transaction or class of associated persons or functions performed by such persons or such other relevant
factors as the Board may prescribe, namely:—
comparable uncontrolled price method;
resale price method;
cost plus method;
profit split method;
transactional net margin method;
such other method as may be prescribed by the Board.
The most appropriate method referred to in sub-section
shall be applied, for determination of
arm’s length price, in the manner as may be prescribed:
2[Provided that where more than one price is determined by the most appropriate method, the arm’s
length price shall be taken to be the arithmetical mean of such prices:
Provided further that if the variation between the arm’s length price so determined and price at which
the 1[international transaction or specified domestic transaction] has actually been undertaken does not
exceed 3[such percentage 4[not exceeding three per cent.] of the latter], as may be notified] by the Central
Government in the Official Gazette in this behalf, the price at which the 1[international transaction or
specified domestic transaction] has actually been undertaken shall be deemed to be the arm’s length
price:]
5[Provided also that where more than one price is determined by the most appropriate method, the
arm’s length price in relation to an international transaction or specified domestic transaction undertaken
on or after the 1st day of April, 2014, shall be computed in such manner as may be prescribed and
accordingly the first and second proviso shall not apply.]
6[Explanation.—For the removal of doubts, it is hereby clarified that the provisions of the second
proviso shall also be applicable to all assessment or reassessment proceedings pending before an
Assessing Officer as on the 1st day of October, 2009.]
7[
Where the first proviso to sub-section
as it stood before its amendment by the Finance (No.
2) Act, 2009 (33 of 2009), is applicable in respect of an international transaction for an assessment year
and the variation between the arithmetical mean referred to in the said proviso and the price at which such
transaction has actually been undertaken exceeds five per cent of the arithmetical mean, then, the assessee
shall not be entitled to exercise the option as referred to in the said proviso.]
8[
Nothing contained in sub-section
shall empower the Assessing Officer either to assess or
reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made
or otherwise increasing the liability of the assessee under section 154 for any assessment year the
proceedings of which have been completed before the 1st day of October, 2009.]
Where during the course of any proceeding for the assessment of income, the Assessing Officer is,
on the basis of material or information or document in his possession, of the opinion that—
the price charged or paid in an 1[internationaltransaction or specified domestic transaction]
has not been determined in accordance with sub-sections
and