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Appropriate Method for finding out Arm's Length price u/s 92 of IT Act.
There are five methods mentioned in the IT Act to prove the Arm's Length price. But also the method to be adopted changes from case to case. I have a newly started manufacturing enterprise which has made a purchase with associated enterprises. But there is no uncontrolled transaction to compare with it. And the company also has incurred loss in the previous year. Which method would be best to ascertain arm's length price for purchase? And how to proceed about it?
Replies (4)
I think always take price of same industry with which transaction is made . However various methods are according to situation and information .
From where to get the same Industry data?
If you are trader then adopt Resale price method using industry margin %, if you are manufacturer use cost plus profits method. Total cost of production and add profit margin of similar products or same products sold by you to outsider
We are in the manufacturing business. But there are no sales made to any AEs. But major junk of the purchases are from AEs. There are no comparable purchases from the non AEs.
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