Section 92

Section 92 — the law in short

What the courts have decided on section 92, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• PCIT v S.G. Asia Holdings (India) Pvt Ltd Supreme CourtCuts both ways
  The Assessing Officer worked out the arm's length price himself and added to my income without ever sending the transaction to the Transfer Pricing Officer. Is that adjustment good?
  No, but it does not follow that you keep the money. The Supreme Court held that the Assessing Officer breached the Board's mandatory instructions by not making the reference, so the adjustment could not stand as made. It then refused the Tribunal's remedy of simply deleting the adjustment, and restored the matter to the Assessing Officer so that the reference could be made and the Transfer Pricing Officer could do the work. The defect is one of procedure and the Court cured it by sending the file back.
• DIT v Morgan Stanley & Co Inc Supreme CourtCuts both ways
  Our Indian affiliate is paid at arm's length. Can more profit still be attributed to a PE?
  No, provided the transfer pricing analysis takes into account all the risk-taking functions of the entity that also constitutes the permanent establishment. Anything further would tax the same profits twice. On the facts, back-office work was preparatory or auxiliary and created no fixed place or agency PE, but deputing employees to work in India created a service PE.
• Times Global Broadcasting Company Ltd v Union of India High CourtHelps taxpayerSuperseded by amendment
  The TPO has adjusted a domestic transaction that the Assessing Officer never referred to him and that I never reported in Form 3CEB. Did he have jurisdiction?
  On the law as it stood, no. The Bombay High Court held that s.92CA(2A) and s.92CA(2B), which let the TPO take up a transaction not referred to him and a transaction not reported under s.92E, spoke only of international transactions; specified domestic transactions were conspicuously absent. For a specified domestic transaction the TPO could therefore study only what the Assessing Officer had referred, and the adjustment of Rs 57.54 crores on the demerger creditors was quashed. CAUTION: that gap has since been closed. Both sub-sections were amended by Act No. 15 of 2024 with effect from 1 April 2025 to cover specified domestic transactions as well.
• Bausch & Lomb Eyecare (India) Pvt Ltd v ACIT High CourtHelps taxpayerUnder appeal
  The TPO says my advertising and marketing spend built my foreign parent's brand and has added a mark-up. There is no agreement with the parent about it. Can he do that?
  No. The Delhi High Court held that before Chapter X can be used at all, the Revenue must show an international transaction exists. For advertising, marketing and promotion spend that means showing an agreement, arrangement or understanding with the associated enterprise obliging the Indian company to spend excessively to promote the foreign brand. It cannot be inferred from shareholding, from the incidental benefit to the brand owner, or from the bright line test, which Sony Ericsson had already rejected. There is no machinery provision to identify or price such a transaction. The assessee's appeals were allowed and the Revenue's dismissed.
• Vodafone India Services P Ltd v Union of India High CourtHelps taxpayer
  We issued shares to our foreign parent at a premium the Transfer Pricing Officer says is too low. Can he tax the shortfall as income under the transfer pricing provisions?
  No. The Bombay High Court held that the issue of equity shares at a premium by an Indian company to its non-resident holding company is a capital account transaction that gives rise to no income, so Chapter X cannot be applied at all. Chapter X is a machinery provision for arriving at the arm's length price; the charge must be found in sections 4 and 5 and in one of the heads of income. There being no charge, express or implied, on the premium not received, the reference to the Transfer Pricing Officer, his order, the draft assessment order and the Dispute Resolution Panel's order were quashed as without jurisdiction.
• CIT v Cushman and Wakefield (India) P Ltd High CourtCuts both ways
  The Transfer Pricing Officer says my group companies gave me no benefit and has put the arm's length price at nil. Can he decide that, and can the Assessing Officer still disallow the payment after the reference?
  It depends on who is deciding what. The Delhi High Court held that the jurisdictions are distinct. The Transfer Pricing Officer determines the arm's length price of the referred transaction, and may find it to be nil if a comparable independent entity would pay nothing, but he cannot decide whether services were rendered or whether a benefit accrued - that is disallowance, and it belongs to the Assessing Officer under section 37. Equally, a reference to the Transfer Pricing Officer does not concede the deduction: the Assessing Officer can still verify whether the transactions are real, though he is bound by the arm's length price the Transfer Pricing Officer has approved. Both findings of the Tribunal were set aside and the matter remanded.
• Noida Towers Private Limited v DCIT ITATHelps taxpayerNo later treatment found
  I already disallowed the whole of the interest paid to my associated enterprise under s.94B in my own computation. The TPO has still made a transfer pricing adjustment on the same interest. Can he?
  Not on these facts. Where the assessee had itself added back the entire interest paid to its associated enterprises on non-convertible debentures under s.94B in its computation of income and paid tax on it, the Tribunal held that a further disallowance out of the same interest by way of a transfer pricing adjustment would amount to double taxation of the same income and was not permissible, and it directed the adjustment to be deleted.
• In re Vanenburg Group B.V. Advance RulingHelps taxpayerNo later treatment found
  Our Dutch company is moving its Indian subsidiary's shares to another group company in the Netherlands. If the gain is exempt under the treaty, do we still have to withhold, file a return and do a transfer pricing study?
  No, on all four counts. The Authority ruled that no taxable capital gain arose in India on Vanenburg Group B.V.'s proposed transfer of its shares in Cordys R&D (India) Pvt Ltd to Cordys Holding B.V., because article 13(5) of the India-Netherlands agreement leaves such gains taxable in the Netherlands where the transfer is part of a corporate reorganisation and the alienator holds at least ten per cent of the transferee. It followed that the transferee need not withhold under section 195, that no return was required under section 139, and that the transfer pricing provisions in sections 92 to 92F did not apply. The ruling binds only Vanenburg.
• Statutory position — s.92BA: clause (i) was OMITTED with effect from 1 April 2017, so a s.40A(2)(b) payment is no longer a specified domestic transaction — what survives, the twenty crore threshold, and clause (va) added for s.115BAB companies CBDT Circulars & InstructionsCuts both ways
  The TPO has been asked to benchmark our payments to related parties under s.40A(2)(b). Is that still a specified domestic transaction at all?
  No. Clause (i) of s.92BA — "any expenditure in respect of which payment has been made or is to be made to a person referred to in clause (b) of sub-section (2) of section 40A" — was OMITTED by Act No. 7 of 2017 with effect from 1 April 2017, and the omitted words are set out in an amendment footnote, so there is no doubt what went. What survives is: clause (ii), any transaction referred to in s.80A; clause (iii), any transfer of goods or services referred to in s.80-IA(8); clause (iv), any business transacted between the assessee and another person as referred to in s.80-IA(10); clause (v), any transaction referred to in any other section under Chapter VI-A or s.10AA to which s.80-IA(8) or (10) applies; clause (va), any business transacted between the persons referred to in s.115BAB(6), inserted by Act No. 46 of 2019 with effect from 1 April 2020; and clause (vi), any other transaction as may be prescribed. The whole definition applies only "where the aggregate of such transactions entered into by the assessee in the previous year exceeds a sum of twenty crore rupees" — the word "twenty" having been substituted for "five" by the Finance Act, 2015 with effect from 1 April 2016.
• 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 CBDT Circulars & InstructionsCuts both ways
  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.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.