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Income-tax (16th Amendment), Rules, 2015

Income Tax - 83/2015 - Dated:- 19-10-2015 - MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION NO. 83/2015 (Income-tax) New Delhi, the 19th October, 2015 S.O. 2860 (E).- In exercise of the powers conferred by section 92C read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:- 1. (1) These rules may be called the . (2) They shall co .....

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c) after the proviso, the following proviso shall be inserted, namely:- "Provided further that the first proviso shall not apply while analysing the comparability of an uncontrolled transaction with an international transaction or a specified domestic transaction, entered into on or after the 1st day of April, 2014."; (ii) after sub-rule (4), the following sub-rule shall be inserted, namely:- "(5) In a case where the most appropriate method for determination of the arm's lengt .....

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ii) the data relating to the financial year immediately preceding the current year, if the data relating to the current year is not available at the time of furnishing the return of income by the assessee , for the assessment year relevant to the current year: Provided that where the data relating to the current year is subsequently available at the time of determination of arm's length price of an international transaction or a specified domestic transaction during the course of any assessm .....

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ransaction, the application of the most appropriate method referred to in sub-section (1) of section 92 C results in determination of more than one price, then the arm's length price in respect of such international transaction or specified domestic transaction shall be computed in accordance with the provisions of this rule. (2) A dataset shall be constructed by placing the prices referred to in sub-rule (1) in an ascending order and the arm's length price shall be determined on the bas .....

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g the current year undertaken the same or similar comparable uncontrolled transaction then,- (i) the most appropriate method used to determine the price of the comparable uncontrolled transaction undertaken in the current year shall be applied in similar manner to the comparable uncontrolled transaction or transactions undertaken in the aforesaid period and the price in respect of such uncontrolled transactions shall be determined; and (ii) the weighted average of the prices, computed in accorda .....

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he enterprise undertaking the said uncontrolled transaction, [not being the enterprise undertaking the international transaction or the specified domestic transaction referred to in sub-rule (1)], has in the financial year immediately preceding the said financial year undertaken the same or similar comparable uncontrolled transaction then, - (i) the price in respect of such uncontrolled transaction shall be determined by applying the most appropriate method in a similar manner as it was applied .....

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rms of the proviso to sub-rule (5) of rule 10 B establishes that,- (i) the enterprise has not undertaken same or similar uncontrolled transaction during the current year; or (ii) the uncontrolled transaction undertaken by an enterprise in the current year is not a comparable uncontrolled transaction, then, irrespective of the fact that such an enterprise had undertaken comparable uncontrolled transaction in the financial year immediately preceding the current year or the financial year immediate .....

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) where the prices have been determined using the method referred to in clause (b) of sub-rule (1) of rule 10 B , the weighted average of the prices shall be computed with weights being assigned to the quantum of sales which has been considered for arriving at the respective prices; (ii) where the prices have been determined using the method referred to in clause (c) of sub-rule (1) of rule 10 B , the weighted average of the prices shall be computed with weights being assigned to the quantum of .....

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pplied is a method other than the method referred to in clause (d) or clause (f) of sub-section (1) of section 92 C and the dataset constructed in accordance with sub-rule (2) consists of six or more entries, an arm's length range beginning from the thirty-fifth percentile of the dataset and ending on the sixty-fifth percentile of the dataset shall be constructed and the arm's length price shall be computed in accordance with sub-rule(5) and sub-rule (6). (5) If the price at which the in .....

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), the arm's length price shall be taken to be the median of the dataset. (7) In a case where the provisions of sub-rule (4) are not applicable, the arm's length price shall be the arithmetical mean of all the values included in the dataset: Provided that, if the variation between the arm's length price so determined and price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed such percentage not exceeding three perce .....

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s included in the dataset are equal to or less than such value: Provided that, if the number of values that are equal to or less than the aforesaid value is a whole number, then the thirty-fifth percentile shall be the arithmetic mean of such value and the value immediately succeeding it in the dataset; (b) "the sixth-fifth percentile" of a dataset, having values arranged in an ascending order, shall be the lowest value in the dataset such that at least sixty five percent. of the value .....

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ataset are equal to or less than such value: Provided that, if the number of values that are equal to or less than the aforesaid value is a whole number , then the median shall be the arithmetic mean of such value and the value immediately succeeding it in the dataset. IIIustration 1.- The data for the current year of the comparable uncontrolled transactions or the entities undertaking such transactions is available at the time of furnishing return of income by the assessee and based on the same .....

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Year 1 Year 2 Year 3 [Current Year] Aggregation of OC and OP Weighted Average 1 2 3 4 5 6 7 1 A OC = 100 OP = 12 OC = 150 OP = 10 OC = 225 OP = 35 Total OC = 475 Total OP = 57 OP/OC = 12% 2 B OC = 80 OP = 10 OC = 125 OP = 5 OC = 100 OP = 10 Total OC = 305 Total OP = 25 OP/OC = 8.2% 3 C OC = 250 OP = 22 OC = 230 OP = 26 OC = 250 OP = 18 Total OC = 730 Total OP = 66 OP/OC = 9% 4 D OC = 180 OP = (-)9 OC = 220 OP = 22 OC = 150 OP = 20 Total OC = 550 Total OP = 33 OP/OC = 6% 5 E OC = 140 OP = 21 OC .....

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le shall be computed in the following manner, namely: Total no. of data points in dataset * (35/100) Total no. of data points in dataset * (65/100) Thus, the data place of the thirty-fifth percentile = 7*0.35 = 2.45. Since this is not a whole number, the next higher data place, i.e; the value at the third place would have at least thirty five percent. of the values below it. The thirty-fifth percentile is therefore value at the third place, i.e, 8.2%. The data place of the sixth-fifth percentile .....

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ess than or equal to 10.57%, it is within the range. The transaction price in such cases will be deemed to be the arm's length price and no adjustment shall be required. However, if the transaction price is outside the arm's length range, say 6.2%, then for the purpose of determining the arm's length price the median of the dataset shall be first determined in the following manner: The data place of median is calculated by first computing the total number of data point in the data se .....

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he return of income by the assessee and the data of the financial year preceding the current year has been used to identify comparable uncontrolled transactions undertaken by enterprises B and D. Further, if the enterprises have also undertaken comparable uncontrolled transactions in earlier years as detailed in the table, the weighted average and dataset shall be computed as below: Sl. No. Name Year 1 Year 2 Year 3 [Current Year] Aggregation of OC and OP Weighted Average 1 2 3 4 5 6 7 1 A OC = .....

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150 OP = 21 OC = 130 OP = 12 OC = 155 OP = 13 Total OC = 435 Total OP = 46 OP/OC = 10.57% From the above, the dataset will be constructed as follows: S.I. No. 1 2 3 4 5 6 7 Values (-)5% 7.31% 9% 10% 10.57% 11.9% 12% If during the course of assessment proceedings, the data of the current year is available and the use of such data indicates that B has failed to pass any qualitative or quantitative filter or for any other reason the transaction undertaken is not a comparable uncontrolled transactio .....

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22 OC = 230 OP = 26 OC = 250 OP = 18 Total OC = 730 Total OP = 66 OP/OC = 9% 3 D OC = 220 OP = 22 OC = 150 OP = 20 Total OC = 370 Total OP = 42 OP/OC = 11.35% 4 E OC = 100 OP = (-) 5 Total OC = 100 Total OP = (-)5 OP/OC = (-)5% 5 F OC = 160 OP = 21 OC = 120 OP = 14 OC = 140 OP = 15 Total OC = 420 Total OP = 50 OP/OC = 1.9 % 6 G OC = 150 OP = 21 OC = 130 OP = 12 OC = 155 OP = 13 Total OC = 435 Total OP = 46 OP/OC = 10.57% 7 H OC = 150 OP = 12 OC = 80 OP = 10 Total OC = 230 Total OP = 22 OP/OC = 9 .....

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