(1) To determine the arm’s length price in respect of international transactions in accordance with the most suitable method among the following methods based on the nature of the transaction, availability of reliable information, activities performed, employed resources, accepted risks assumed or other factors prescribed by law, namely:-

(a) Comparable uncontrolled price method;

(b) Resale price method;

(c) Cost plus method;

(d) Profit split method;

(e) Transactional net margin method;

(f) Any other method, in which case evidence can be provided that-

(i) it is not reasonably practicable to apply any of the methods mentioned in clauses (a) to (e) for determining the arm’s length price of an international transaction; and

(ii) the method provides consistent results with arm’s length pricing.

(2) In cases where any method other than the method specified in clause (d) or (f) of sub-section (1) is applied as the most appropriate method and the arm’s length price dataset contains 6 (six) or more entries, (thirty) to 70 (seventy) percentile of the said data set and arm’s length price shall be determined according to the following conditions, namely:-

(a) If the price at which the actual international transaction takes place is within the above-mentioned range, the said price shall be treated as arm’s length price;

(b) If the price at which the actual international transaction took place is not within the above range, the median of the dataset shall be the arm’s length price;

(c) If the arm’s length price dataset has less than six entries, the arm’s length price shall be the arithmetic mean of all values in the dataset.

(3) The most suitable method mentioned in sub-section (1) for determining the arm’s length price shall be applicable in the manner prescribed by the rules:

Provided that the total income received as a result of the arm’s length price determined under this section for any international transaction shall not be less than the total income which would have been received if the price at which the international transaction was actually completed had been deemed to have been charged or paid.

(4) Where, in assessing any tax under section 10, the Deputy Commissioner of Taxes is of the opinion that,-

(a) the value charged or paid by the taxpayer for international transactions is not determined in accordance with subsections (1) and (3);

(b) the taxpayer has failed to keep information, documents or records in accordance with section 237; or

(c) the information or data on which the arm’s length price has been determined by the taxpayer is not reliable or accurate, In that case the Deputy Commissioner of Taxes may determine the arm’s length price of the international transaction in accordance with the provisions of sub-sections (1) and (3) on the basis of the information or documents or evidence available to him.

(5) In the case of determination of arm’s length price under sub-section (4), the Deputy Commissioner of Taxes shall, on the basis of the information or documents or evidence available to him, issue a notice as to why the arm’s length price shall not be determined and give the taxpayer an opportunity to show cause within the date and time specified in the notice.

(6) In cases where the arm’s length price is determined under this sub-section (4) of section 236, the Commissioner of Taxes shall, by order in writing, take into account the arm’s length price so determined and commence computation of the total income of the taxpayer.