Taxation in international transactions

hi yogita

not only u most of the ca r confused on this topic

Yoghita,

a very wide topic it is.  Question is what is the purpose of the endevor to understand ALP.  If the endevor is restricted to exam preparation, just stick to reference books.

If the interest is professional, then bear a few factors in mind:

1.  Determination of ALP varies from industry to industry, company to company and country to country.

2.  There are methods acceptable to the income-tax department with acceptable variation between actual transaction value and ALP without attracting additions to income

3.  ALP is as much as a tax concept as a costing concept.  You need to spend time in going through several transfer pricing studies to understand the length and breadth of the concept.  Thorough understanding of the industry practices shall help you a lot on this.

To start with use this website https://www.transferpricing-india.com/Arms_Length.htm

and thereafter start reading transfer pricing commentories like OECD etc.