The Transfer Pricing Officer's adjustment is within three per cent of our price. Can I still claim the tolerance band under the proviso to s.92C(2), or has that gone?
For a transaction undertaken on or after 1 April 2014 the second proviso does not apply, because the third proviso disapplies it — but the band itself has not gone. It has moved into rule 10CA(7) and it now operates only where the arm's length range machinery does not. The third proviso to s.92C(2) reads: "Provided also that where more than one price is determined by the most appropriate method, the arm's length price in relation to an international transaction or specified domestic transaction undertaken on or after the 1st day of April, 2014, shall be computed in such manner as may be prescribed and accordingly the first and second proviso shall not apply." The first proviso was the arithmetical mean rule; the second was the tolerance band — variation not exceeding such percentage not exceeding three per cent of the transaction price as may be notified, in which case the transaction price is deemed to be the arm's length price. The prescribed manner is rule 10CA. Where rule 10CA(4) applies, six or more entries and a method other than profit split or the other method, the answer is the range and there is no band at all: within the range the price is deemed to be the arm's length price under rule 10CA(5), outside it the arm's length price is the median under rule 10CA(6). Where rule 10CA(4) does not apply, rule 10CA(7) gives the arithmetical mean and carries its own proviso in the same words as the old second proviso, and it is under that proviso, read with the third proviso to s.92C(2), that the band is now notified. The current notification is Notification No. 157/2025 dated 6 November 2025, S.O. 5053(E), issued expressly under "the third proviso to sub-section (2) of section 92C of the Income-tax Act, 1961, read with the proviso to sub-rule (7) of rule 10CA of the Income-tax Rules, 1962", and it fixes the variation at one per cent of the transaction price in respect of wholesale trading and three per cent in all other cases, for assessment year 2025-2026.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2014-04-01, reported as Section 92C(2) of the Income-tax Act, 1961, with its three provisos, transcribed from incometaxindia.gov.in/w/section-92c-24 (heading "Computation of arm's length price", Year: 2025) and corroborated on incometaxindia.gov.in/w/section-92c-20 (Year: 2022); the superseded single-proviso text read on incometaxindia.gov.in/w/section-92c-9 (Year: 2005); the notified band read on Notification No. 157/2025, S.O. 5053(E), dated 6 November 2025, on Notification No. 30/2013, S.O. 962(E), dated 15 April 2013, and on the departmental transfer pricing page. It bears on section 92C, section 92C(1), section 92C(2), section Rule 10CA, section Rule 10CA(2), section Rule 10CA(3), section Rule 10B, section Rule 10C(2), section 92CA, section 92CA(3), section 92B, section 92BA, section 92 of the Income Tax Act 1961, in Assessment & Scrutiny and How Tax Law Is Read matters.
Two errors run in opposite directions and both are common. The first is to claim the band on a case governed by the range. Where the dataset has six or more entries there is no three per cent cushion outside the range: rule 10CA(5) deems a price inside the range to be the arm's length price, and rule 10CA(6) takes the median for a price outside it, with nothing in between. A submission that the adjustment is within three per cent of the price is met by the third proviso and gets nowhere. The second error is to assume that because the third proviso disapplies the second proviso the band is dead. It is not. On a dataset of fewer than six entries, or where the most appropriate method is the profit split method or the other method, rule 10CA(7) applies and the notified band applies with it — and the departmental notification is issued under the third proviso read with the rule 10CA(7) proviso, which is how the Central Government has kept the notification power alive after 1 April 2014. The date in the third proviso is the date the TRANSACTION was undertaken, not the assessment year, so a year in which some transactions predate 1 April 2014 and some do not is governed by two different machineries at once. The library holds Steag Energy Services v ACIT and Joseph Mudaliar v DCIT under a tolerance band heading, but those concern the s.50C and s.56(2)(x) bands, which are a different provision with different figures and should not be read across.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
Read aloud by your device. Press again to stop.
Section 92C(2), as printed on the departmental page stamped Year 2025, reads: "(2) The most appropriate method referred to in sub-section (1) shall be applied, for determination of arm's length price, in the manner as may be prescribed : Provided that where more than one price is determined by the most appropriate method, the arm's length price shall be taken to be the arithmetical mean of such prices: Provided further 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 per cent of the latter, as may be notified by the Central Government in the Official Gazette in this behalf, 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 : Provided also that where more than one price is determined by the most appropriate method, the arm's length price in relation to an international transaction or specified domestic transaction undertaken on or after the 1st day of April, 2014, shall be computed in such manner as may be prescribed and accordingly the first and second proviso shall not apply." The departmental page stamped Year 2022 prints the identical text with two footnotes, "[82] See rules 10A, 10AB, 10B, 10C and 10CA." and "[83] See rules 10A, 10AB, 10B, 10C and 10CA.", both re-checked on a second fetch directed at the footnote list. The prescribed manner referred to in the third proviso is rule 10CA, whose sub-rule (7) provides that where sub-rule (4) is not applicable the arm's length price is the arithmetical mean of all the values in the dataset, with a proviso in the same terms as the second proviso to s.92C(2): "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 per cent of the latter, as may be notified by the Central Government in the Official Gazette in this behalf, 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." Notification No. 157/2025/F. No. 500/1/2014-APA-II, S.O. 5053(E), dated 6 November 2025, issued under the third proviso to s.92C(2) read with the proviso to rule 10CA(7), provides that "where the variation between the arm's length price determined under section 92C of the said Act and the price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed, (i) one per cent. of the latter in respect of wholesale trading; and (ii) 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 the assessment year 2025-2026". Notification No. 116/2024/F. No. 500/1/2014-APA-II, S.O. 4571(E), dated 18 October 2024, issued under the same enabling words, notifies the same pair of figures — one per cent of the latter in respect of wholesale trading and three per cent of the latter in all other cases — for assessment year 2024-2025. Notification No. 30/2013/F. No. 500/185/2011-FTD-I, S.O. 962(E), dated 15 April 2013, issued under the second proviso to s.92C(2), had notified the same pair of figures for assessment year 2013-14, and the departmental transfer pricing page quotes the same pair for assessment year 2023-24.
Not a judgment. The statutory position is that the first proviso to s.92C(2), which took the arm's length price to be the arithmetical mean where more than one price was determined, and the second proviso, which deemed the price actually charged to be the arm's length price where the variation did not exceed such percentage not exceeding three per cent of that price as might be notified, are both disapplied by the third proviso in relation to an international transaction or a specified domestic transaction undertaken on or after 1 April 2014, for which the arm's length price is instead to be computed in such manner as may be prescribed, the prescribed manner being rule 10CA; that under rule 10CA the tolerance mechanism survives only through the proviso to sub-rule (7), which operates where sub-rule (4) does not apply; and that the percentage notified under the third proviso read with the proviso to rule 10CA(7) for assessment year 2025-2026 is one per cent in respect of wholesale trading and three per cent in all other cases.
Not a judgment; no judicial reasoning is stated for the section.
Provided also that where more than one price is determined by the most appropriate method, the arm's length price in relation to an international transaction or specified domestic transaction undertaken on or after the 1st day of April, 2014, shall be computed in such manner as may be prescribed and accordingly the first and second proviso shall not apply.
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppFor a transaction undertaken on or after 1 April 2014 the second proviso does not apply, because the third proviso disapplies it — but the band itself has not gone. It has moved into rule 10CA(7) and it now operates only where the arm's length range machinery does not. The third proviso to s.92C(2) reads: "Provided also that where more than one price is determined by the most appropriate method, the arm's length price in relation to an international transaction or specified domestic transaction undertaken on or after the 1st day of April, 2014, shall be computed in such manner as may be prescribed and accordingly the first and second proviso shall not apply." The first proviso was the arithmetical mean rule; the second was the tolerance band — variation not exceeding such percentage not exceeding three per cent of the transaction price as may be notified, in which case the transaction price is deemed to be the arm's length price. The prescribed manner is rule 10CA. Where rule 10CA(4) applies, six or more entries and a method other than profit split or the other method, the answer is the range and there is no band at all: within the range the price is deemed to be the arm's length price under rule 10CA(5), outside it the arm's length price is the median under rule 10CA(6). Where rule 10CA(4) does not apply, rule 10CA(7) gives the arithmetical mean and carries its own proviso in the same words as the old second proviso, and it is under that proviso, read with the third proviso to s.92C(2), that the band is now notified. The current notification is Notification No. 157/2025 dated 6 November 2025, S.O. 5053(E), issued expressly under "the third proviso to sub-section (2) of section 92C of the Income-tax Act, 1961, read with the proviso to sub-rule (7) of rule 10CA of the Income-tax Rules, 1962", and it fixes the variation at one per cent of the transaction price in respect of wholesale trading and three per cent in all other cases, for assessment year 2025-2026. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 92C, section 92C(1), section 92C(2), section Rule 10CA, section Rule 10CA(2), section Rule 10CA(3), section Rule 10B, section Rule 10C(2), section 92CA, section 92CA(3), section 92B, section 92BA, section 92 of the Income Tax Act 1961. It is reported as Section 92C(2) of the Income-tax Act, 1961, with its three provisos, transcribed from incometaxindia.gov.in/w/section-92c-24 (heading "Computation of arm's length price", Year: 2025) and corroborated on incometaxindia.gov.in/w/section-92c-20 (Year: 2022); the superseded single-proviso text read on incometaxindia.gov.in/w/section-92c-9 (Year: 2005); the notified band read on Notification No. 157/2025, S.O. 5053(E), dated 6 November 2025, on Notification No. 30/2013, S.O. 962(E), dated 15 April 2013, and on the departmental transfer pricing page. Two errors run in opposite directions and both are common. The first is to claim the band on a case governed by the range. Where the dataset has six or more entries there is no three per cent cushion outside the range: rule 10CA(5) deems a price inside the range to be the arm's length price, and rule 10CA(6) takes the median for a price outside it, with nothing in between. A submission that the adjustment is within three per cent of the price is met by the third proviso and gets nowhere. The second error is to assume that because the third proviso disapplies the second proviso the band is dead. It is not. On a dataset of fewer than six entries, or where the most appropriate method is the profit split method or the other method, rule 10CA(7) applies and the notified band applies with it — and the departmental notification is issued under the third proviso read with the rule 10CA(7) proviso, which is how the Central Government has kept the notification power alive after 1 April 2014. The date in the third proviso is the date the TRANSACTION was undertaken, not the assessment year, so a year in which some transactions predate 1 April 2014 and some do not is governed by two different machineries at once. The library holds Steag Energy Services v ACIT and Joseph Mudaliar v DCIT under a tolerance band heading, but those concern the s.50C and s.56(2)(x) bands, which are a different provision with different figures and should not be read across. If it applies to you, the first step is this: Fix the date on which the transaction was undertaken. On or after 1 April 2014 the third proviso applies, the first and second provisos to s.92C(2) do not, and the computation is under rule 10CA.
Section 92C(2), as printed on the departmental page stamped Year 2025, reads: "(2) The most appropriate method referred to in sub-section (1) shall be applied, for determination of arm's length price, in the manner as may be prescribed : Provided that where more than one price is determined by the most appropriate method, the arm's length price shall be taken to be the arithmetical mean of such prices: Provided further 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 per cent of the latter, as may be notified by the Central Government in the Official Gazette in this behalf, 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 : Provided also that where more than one price is determined by the most appropriate method, the arm's length price in relation to an international transaction or specified domestic transaction undertaken on or after the 1st day of April, 2014, shall be computed in such manner as may be prescribed and accordingly the first and second proviso shall not apply." The departmental page stamped Year 2022 prints the identical text with two footnotes, "[82] See rules 10A, 10AB, 10B, 10C and 10CA." and "[83] See rules 10A, 10AB, 10B, 10C and 10CA.", both re-checked on a second fetch directed at the footnote list. The prescribed manner referred to in the third proviso is rule 10CA, whose sub-rule (7) provides that where sub-rule (4) is not applicable the arm's length price is the arithmetical mean of all the values in the dataset, with a proviso in the same terms as the second proviso to s.92C(2): "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 per cent of the latter, as may be notified by the Central Government in the Official Gazette in this behalf, 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." Notification No. 157/2025/F. No. 500/1/2014-APA-II, S.O. 5053(E), dated 6 November 2025, issued under the third proviso to s.92C(2) read with the proviso to rule 10CA(7), provides that "where the variation between the arm's length price determined under section 92C of the said Act and the price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed, (i) one per cent. of the latter in respect of wholesale trading; and (ii) 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 the assessment year 2025-2026". Notification No. 116/2024/F. No. 500/1/2014-APA-II, S.O. 4571(E), dated 18 October 2024, issued under the same enabling words, notifies the same pair of figures — one per cent of the latter in respect of wholesale trading and three per cent of the latter in all other cases — for assessment year 2024-2025. Notification No. 30/2013/F. No. 500/185/2011-FTD-I, S.O. 962(E), dated 15 April 2013, issued under the second proviso to s.92C(2), had notified the same pair of figures for assessment year 2013-14, and the departmental transfer pricing page quotes the same pair for assessment year 2023-24. The matter was decided on 2014-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. Not a judgment. The statutory position is that the first proviso to s.92C(2), which took the arm's length price to be the arithmetical mean where more than one price was determined, and the second proviso, which deemed the price actually charged to be the arm's length price where the variation did not exceed such percentage not exceeding three per cent of that price as might be notified, are both disapplied by the third proviso in relation to an international transaction or a specified domestic transaction undertaken on or after 1 April 2014, for which the arm's length price is instead to be computed in such manner as may be prescribed, the prescribed manner being rule 10CA; that under rule 10CA the tolerance mechanism survives only through the proviso to sub-rule (7), which operates where sub-rule (4) does not apply; and that the percentage notified under the third proviso read with the proviso to rule 10CA(7) for assessment year 2025-2026 is one per cent in respect of wholesale trading and three per cent in all other cases.
Not a judgment; no judicial reasoning is stated for the section. In the words reproduced by the source cited on this page: "Provided also that where more than one price is determined by the most appropriate method, the arm's length price in relation to an international transaction or specified domestic transaction undertaken on or after the 1st day of April, 2014, shall be computed in such manner as may be prescribed and accordingly the first and second proviso shall not apply."
It was decided by the CBDT Circulars & Instructions on 2014-04-01 and is reported as Section 92C(2) of the Income-tax Act, 1961, with its three provisos, transcribed from incometaxindia.gov.in/w/section-92c-24 (heading "Computation of arm's length price", Year: 2025) and corroborated on incometaxindia.gov.in/w/section-92c-20 (Year: 2022); the superseded single-proviso text read on incometaxindia.gov.in/w/section-92c-9 (Year: 2005); the notified band read on Notification No. 157/2025, S.O. 5053(E), dated 6 November 2025, on Notification No. 30/2013, S.O. 962(E), dated 15 April 2013, and on the departmental transfer pricing page. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 92C, section 92C(1), section 92C(2), section Rule 10CA, section Rule 10CA(2), section Rule 10CA(3), section Rule 10B, section Rule 10C(2), section 92CA, section 92CA(3), section 92B, section 92BA, section 92, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Not a judgment. The statutory position is that the first proviso to s.92C(2), which took the arm's length price to be the arithmetical mean where more than one price was determined, and the second proviso, which deemed the price actually charged to be the arm's length price where the variation did not exceed such percentage not exceeding three per cent of that price as might be notified, are both disapplied by the third proviso in relation to an international transaction or a specified domestic transaction undertaken on or after 1 April 2014, for which the arm's length price is instead to be computed in such manner as may be prescribed, the prescribed manner being rule 10CA; that under rule 10CA the tolerance mechanism survives only through the proviso to sub-rule (7), which operates where sub-rule (4) does not apply; and that the percentage notified under the third proviso read with the proviso to rule 10CA(7) for assessment year 2025-2026 is one per cent in respect of wholesale trading and three per cent in all other cases. It arises in Assessment & Scrutiny and How Tax Law Is Read matters, on section 92C, section 92C(1), section 92C(2), section Rule 10CA, section Rule 10CA(2), section Rule 10CA(3), section Rule 10B, section Rule 10C(2), section 92CA, section 92CA(3), section 92B, section 92BA, section 92 of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Then ask whether rule 10CA(4) applies. Six or more entries and a method other than the profit split method or the other method means a range and a median, and no tolerance band of any kind. Where rule 10CA(4) does not apply, take the band under the proviso to rule 10CA(7) and cite the notification for the assessment year in question — not the section proviso, which the third proviso has disapplied. Check the class of transaction before taking three per cent. The notified band is one per cent for wholesale trading and three per cent in all other cases, and the departmental transfer pricing page states that wholesale trading is defined by two conditions, purchase cost of finished goods at eighty per cent or more of total cost and average monthly closing inventory at ten per cent or less of sales. Do not carry the s.50C or s.56(2)(x) tolerance band across to a transfer pricing file, or the reverse; they are separate provisions with separate figures and the library's entries on them are not authority here.
Still good law. The section text as stated is the current text so far as I could establish: two departmental editions with "Year:" stamps of 2025 and 2022 print sub-section (2) with all three provisos in identical words, and the Year 2005 edition, which prints a single proviso with a five per cent option, is recorded in the editor_note as stale. Year 2025 is the most recent edition I located and I probed no suffix above /w/section-92c-24, so a later amendment cannot be excluded. Neither current page carries a footnote recording the Act that inserted the third proviso, so the amending instrument is NOT established and is not stated. The notified figures are established for the assessment years named — 2013-14, 2023-24, 2024-25 and 2025-26. No notification for assessment year 2026-27 had been traced on the departmental site as at 18 September 2026, on the search recorded in the editor_note, and the library therefore states no tolerance figure for that year. The band for assessment year 2026-27 must be checked afresh against the Gazette before it is relied on. The assessment year 2023-24 citation carries an internal inconsistency on the departmental page and is relied on only for the figures. I carried out no check of judicial treatment of the third proviso on this pass. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
SOURCING OF THE SECTION TEXT. Sub-section (2) with all three provisos was transcribed from https://www.incometaxindia.gov.in/w/section-92c-24 (Year: 2025) and independently from https://www.incometaxindia.gov.in/w/section-92c-20 (Year: 2022); the two are word for word identical on all three provisos. STALE-PAGE WARNING, found this pass: https://www.incometaxindia.gov.in/w/section-92c-9 (Year: 2005) prints s.92C(2) with ONE proviso only, in the pre-2012 form giving the assessee an option of "a price which may vary from the arithmetical mean by an amount not exceeding five per cent of such arithmetical mean". That five per cent option is not the law for any transaction undertaken on or after 1 April 2014 and is not the law in that form for years before it either, the proviso having been recast; a reader who lands on that page will take away a figure and a mechanism that no longer exist. I took the Year 2025 page. WHAT I COULD NOT ESTABLISH. Neither the Year 2025 nor the Year 2022 page carries any footnote recording the amending Act or the effective date of the THIRD proviso; the Year 2022 page's only footnotes are "[82] See rules 10A, 10AB, 10B, 10C and 10CA." and "[83] See rules 10A, 10AB, 10B, 10C and 10CA.", and the Year 2025 page returned no footnote at all. I therefore do NOT state which Finance Act inserted the third proviso. What the proviso's own words establish is the operative date, 1 April 2014, and that is what `decided_on` carries. THE TOLERANCE FIGURES, AND HOW FAR THEY ARE SOURCED. The brief anticipated that the current figures might not be sourceable. They were. Notification No. 157/2025/F. No. 500/1/2014-APA-II, S.O. 5053(E), dated 6 November 2025, fetched at https://www.incometaxindia.gov.in/documents/d/guest/notification-157-2025-pdf, is issued under "the third proviso to sub-section (2) of section 92C of the Income-tax Act, 1961, read with the proviso to sub-rule (7) of rule 10CA of the Income-tax Rules, 1962" and notifies one per cent in respect of wholesale trading and three per cent in all other cases for assessment year 2025-2026. Two earlier departmental sources corroborate the same pair of figures on the same formula: Notification No. 30/2013/F. No. 500/185/2011-FTD-I, S.O. 962(E), dated 15 April 2013, for assessment year 2013-14, read as a gazette PDF on the departmental site; and the departmental transfer pricing page, which quotes the same one per cent and three per cent for assessment year 2023-24. A DEPARTMENTAL INCONSISTENCY I could not resolve: that transfer pricing page cites the assessment year 2023-24 notification as "S.O.2777(E) No.70/2022, dated 26-6-2023" — a 2022 serial number against a 2023 date — and I could not reach the notification itself to reconcile the two, so I give the citation as the page prints it and rely on it only for the figures, which are corroborated twice over. The notification for the intervening year was subsequently sourced and is now stated: Notification No. 116/2024/F. No. 500/1/2014-APA-II, S.O. 4571(E), dated 18 October 2024, at https://incometaxindia.gov.in/documents/d/guest/notification-116-2024-pdf, issued under the same enabling words and notifying the same one per cent and three per cent for assessment year 2024-2025. AN EARLIER PASS ON THIS ENTRY RECORDED THAT THE ASSESSMENT YEAR 2024-25 NOTIFICATION COULD NOT BE SOURCED; THAT IS WITHDRAWN — it can be, on the /documents/d/guest/ path. A PATH WARNING for anyone repeating this work: these notifications are served at https://incometaxindia.gov.in/documents/d/guest/notification-<n>-<yyyy>-pdf. The /communications/notification/notification-<n>-<yyyy>.pdf and /news/notification-<n>-<yyyy>.pdf paths return 404 for both the 2024 and the 2025 notifications, and a 404 on those paths is a wrong address and not evidence that the notification does not exist. THE ASSESSMENT YEAR 2026-27 NOTIFICATION WAS HUNTED AGAIN ON 18 SEPTEMBER 2026 AND WAS NOT TRACED. As at that date no notification under the third proviso to s.92C(2) read with the proviso to rule 10CA(7) for assessment year 2026-2027 could be found on incometaxindia.gov.in. Where the search went: five WebSearches restricted to that domain, on the operative words of the notification ("does not exceed", "one per cent", "wholesale trading", "assessment year 2026-2027"), on the enabling words ("third proviso to sub-section (2) of section 92C" with "sub-rule (7) of rule 10CA"), and on the subject generally; the only tolerance-band notification any of them returned was Notification No. 157/2025 for assessment year 2025-2026, which the library already holds. The departmental transfer pricing page at https://www.incometaxindia.gov.in/transfer-pricing was fetched on a demand to list every tolerance-band notification it mentions with number, S.O., date, percentages and assessment year, and it returned ONE entry only and nothing for assessment year 2025-26 or 2026-27. The notifications listing at https://www.incometaxindia.gov.in/notifications, the circulars and notifications index at https://incometaxindia.gov.in/pages/communications/index.aspx and https://www.incometaxindia.gov.in/what-s-new were each fetched and each returned navigation furniture only, with no notification list in the fetched content — so those three are addresses that did not work rather than addresses that answered no. The Income-tax Rules, 2026 as notified by G.S.R. 198(E) dated 20 March 2026, read at https://www.incometaxindia.gov.in/documents/d/guest/en-notified-it-rules-2026-20-03-2026-pdf, contain no rule corresponding to rule 10CA in the portion served (rules 1 to 34) and notify no tolerance percentage for any year. On the pattern of the two notifications the library holds — 18 October 2024 for assessment year 2024-25 and 6 November 2025 for assessment year 2025-26 — the assessment year 2026-27 notification would be expected in October or November 2026, which is after the date of this check. NOTHING IN THIS ENTRY SHOULD BE READ AS SAYING THAT NO SUCH NOTIFICATION EXISTS; it says that none had been traced on the departmental site on 18 September 2026. A SEPARATE OBSERVATION FROM THE SAME PASS, recorded because the entry relies on that page: the departmental transfer pricing page now prints its single tolerance entry as "Notification S.O.2777(E) No.70/2022, dated 26-6-2023" against assessment year 2022-23, whereas the earlier pass read the same citation against assessment year 2023-24. The internal inconsistency in the citation itself — a 2022 serial number against a 2023 date — is unchanged, and the assessment year the page attaches it to has now been read two different ways. The page is relied on for nothing but the wholesale trading definition and should not be relied on for the assessment year. The wholesale trading definition in the `what_to_do` line is taken from the departmental transfer pricing page and not from the notification text itself, which I read only in the operative extract quoted above. NOT READ: the Finance Act texts, and the IT (Sixteenth Amdt.) Rules, 2015. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Not a judgment. The statutory position is that the first proviso to s.92C(2), which took the arm's length price to be the arithmetical mean where more than one price was determined, and the second proviso, which deemed the price actually charged to be the arm's length price where the variation did not exceed such percentage not exceeding three per cent of that price as might be notified, are both disapplied by the third proviso in relation to an international transaction or a specified domestic transaction undertaken on or after 1 April 2014, for which the arm's length price is instead to be computed in such manner as may be prescribed, the prescribed manner being rule 10CA; that under rule 10CA the tolerance mechanism survives only through the proviso to sub-rule (7), which operates where sub-rule (4) does not apply; and that the percentage notified under the third proviso read with the proviso to rule 10CA(7) for assessment year 2025-2026 is one per cent in respect of wholesale trading and three per cent in all other cases.
TaxSphere, “Statutory position — s.92C(2): the second proviso tolerance band, and the third proviso which disapplies the first and second provisos for any international transaction or specified domestic transaction undertaken on or after 1 April 2014”, https://taxnotice.vittsphere.com/caselaw/case/statutory-position-92c-2-second-and-third-provisos-tolerance-band-and-1-april-2014/ (validity last checked 2026-09-17)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
The Transfer Pricing Officer has refused our working capital adjustment on the ground that no rule provides for it. Where in the Rules does the right to a working capital or risk adjustment come from, and does anything prescribe how it is computed?
The Transfer Pricing Officer has rejected our margin and adopted the median of his comparables. When is he entitled to go to the median at all, how is the range built, and what happens if he is left with only four or five comparables?
The TPO has taken a three-year weighted average margin for a comparable under Rule 10CA, but the company fails my turnover filter in the two earlier years. Must those years still go into the weighted average?
The Transfer Pricing Officer has thrown out my working capital adjustment saying there is no prescribed method for it. Is he right that there is no prescribed method, and if he is, what does that do to the claim?
