The variation between Arm’s Length Price as per Section 92C and the the price at which International & Specified Domestic Transaction undertaken has Notified by CBDT

In exer­cise the pow­er con­ferred by the sec­ond pro­vi­so to sub-sec­tion (2) of sec­tion 92C of Income Tax Act, 1961, the Cen­tral Gov­ern­ment here­by noti­fied that where the vari­a­tion between the arm’s length price deter­mined under sec­tion 92C and the price at which the inter­na­tion­al trans­ac­tion or spec­i­fied domes­tic trans­ac­tion has actu­al­ly been under­tak­en does not exceeds 1% of the lat­ter in respect of the whole­sale trad­ing and 3% of the lat­ter in all oth­er cas­es, the price at which the inter­na­tion­al trans­ac­tion or spec­i­fied domes­tic trans­ac­tion has actu­al­ly been under­tak­en shall be deemed to be the arm’s length price for the assess­ment year 2014–15.

The “Whole­sale trad­ing” used in the above para­graph means: An inter­na­tion­al trans­ac­tion or spec­i­fied domes­tic trans­ac­tion of trad­ing in goods, which ful­filled the fol­low­ing conditions,

• Pur­chase cost of the fin­ished goods is 18% or more of the total cost per­tain­ing to such trad­ing activ­i­ties; and
• aver­age month­ly clos­ing inven­to­ry of such goods is 10% or less of sales per­tain­ing to such trad­ing activities.

The details of such notice have giv­en in the below attachment:

notification45_2014