Amended and updated notes on section 92F of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to definitions of certain terms relevant to computation of arm’s length price, etc.
Chapter X (Sections 92 to 94B) of the Income Tax Act 1961 deals with the provisions related to special provisions relating to avoidance of tax. Section 92F of IT Act 1961-2020 provides for definitions of certain terms relevant to computation of arm’s length price, etc.
Recently, we have discussed in detail section 92E (Report from an accountant to be furnished by persons entering into international transaction or specified domestic transaction) of IT Act 1961. Today, we learn the provisions of section 92F of Income-tax Act 1961. The amended provision of section 92F is effective for financial year 2020-21 relevant to the assessment year 2021-22.
In this article, you will learn detail of the provisions of section 92F of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962, regulations, notifications, circulars, orders and Press Release by CBDT, Income Tax Department and the Ministry of Law and Justice, Government of India.
Section-92F: Definitions of certain terms relevant to computation of arm’s length price
In sections 92, 92A, 92B, 92C, 92D and 92E, unless the context otherwise requires,—
(i) “accountant” shall have the same meaning as in the Explanation below sub-section (2) of section 288;
(ii) “arm’s length price” means a price which is applied or proposed to be applied in a transaction between persons other than associated enterprises, in uncontrolled conditions;
(iii) “enterprise” means a person (including a permanent establishment of such person) who is, or has been, or is proposed to be, engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or know-how, patents, copyrights, trade-marks, licences, franchises or any other business or commercial rights of similar nature, or any data, documentation, drawing or specification relating to any patent, invention, model, design, secret formula or process, of which the other enterprise is the owner or in respect of which the other enterprise has exclusive rights, or the provision of services of any kind, or in carrying out any work in pursuance of a contract, or in investment, or providing loan or in the business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate, whether such activity or business is carried on, directly or through one or more of its units or divisions or subsidiaries, or whether such unit or division or subsidiary is located at the same place where the enterprise is located or at a different place or places;
(iiia) “permanent establishment“, referred to in clause (iii), includes a fixed place of business through which the business of the enterprise is wholly or partly carried on;
(iv) “specified date” means the date one month prior to the due date for furnishing the return of income under sub-section (1) of section 139 for the relevant assessment year;
[Clause (iv) of section 92F has been amended w.e.f. 01.04.2020 by the Finance Act 2020]
(v) “transaction” includes an arrangement, understanding or action in concert,—
- (A) whether or not such arrangement, understanding or action is formal or in writing; or
- (B) whether or not such arrangement, understanding or action is intended to be enforceable by legal proceeding.