12. In section 92C of the Income-tax Act, in sub-section (2), in the second proviso, for the words "five per cent. of the latter", the words "such percentage of the latter, as may be notified by the Central Government in the Official Gazette in this behalf" shall be substituted with effect from the 1st day of April, 2012.
Notes on Clauses:
Clause 12 seeks to amend section 92C of the Income-tax Act, relating to computation of arm’s length price.
Under the existing provisions contained in sub-section (2) of the aforesaid section, where more than one price is determined by the most appropriate method, then the arm’s length price shall be taken to be arithmetical mean of such price. Further, the second proviso to the said sub-section provides that if the variation between the arm’s length price as determined and price at which the international transaction has actually been undertaken does not exceed five per cent. of the latter, the price at which the international
transaction has actually been undertaken shall be deemed to be the arm’s length price.
It is proposed to amend the second proviso to said sub-section (2) so as to provide that the allowable variation will be such percentage as may be notified by the Central Government in this behalf.
This amendment will take effect from 1st April, 2012 and will, accordingly, apply in relation to the assessment year 2012-2013 and subsequent years.
