Section 92 of Income Tax Act "Computation of income from international transaction having regard to arm's length price"
92. (1) Any income arising from an international
transaction shall be computed having regard to the arm's
length price.
Explanation.-For the removal of doubts, it is hereby
clarified that the allowance for any expense or interest
arising from an international transaction shall also be
determined having regard to the arm's length price.
(2) Where in an international transaction or specified
domestic transaction, two or more associated enterprises
enter into a mutual agreement or arrangement for the
allocation or apportionment of, or any contribution to, any
cost or expense incurred or to be incurred in connection
with a benefit, service or facility provided or to be
provided to any one or more of such enterprises, the cost or
expense allocated or apportioned to, or, as the case may be,
contributed by, any such enterprise shall be determined
having regard to the arm's length price of such benefit,
service or facility, as the case may be.
(2A) Any allowance for an expenditure or interest or
allocation of any cost or expense or any income in relation
to the specified domestic transaction shall be computed
having regard to the arm's length price.
(3) The provisions of this section shall not apply in a case
where the computation of income under sub-section (1) or
sub-section (2A) or the determination of the allowance for
any expense or interest under sub-section (1) or sub-section
(2A), or the determination of any cost or expense allocated
or apportioned, or, as the case may be, contributed under
sub-section (2) or sub-section (2A), has the effect of
reducing the income chargeable to tax or increasing the
loss, as the case may be, computed on the basis of entries
made in the books of account in respect of the previous year
in which the international transaction or specified domestic
transaction was entered into.