The Department of Revenue vide notification dated 29th October, 2021 has 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 exceed one percent of the latter in respect of wholesale trading and three per cent. 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 Assessment Year 2021-2022.
The notification provides for tolerance range of one per cent. for wholesale trading and three percent in all other cases for assessment year 2021-2022. It is certified that none will be adversely affected by the retrospective effect being given to the notification.
“Wholesale trading” includess an international transaction or specified domestic transaction of trading in goods, which fulfils the following conditions, namely:-
(i) purchase cost of finished goods is eighty per cent. or more of the total cost pertaining to such
trading activities; and
(ii) average monthly closing inventory of such goods is ten per cent. or less of sales pertaining to such trading activities.
