The CBDT has issued a draft scheme (attached) introducing
the Arm’s length range where 9 or more comparables are used, and mandatory use
of multiple year data (3 years, and if data not available for one year, 2 years
is permitted).
The range would be within the 40th to 60th
percentile of the data set. If the transfer price margin falls outside the
range, the median would be considered as the ALP and adjustment shall be made
from the median.
If there are less 9 comparables in the set, then the
arithmetic mean and tolerance range of 3% shall apply.
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