State with brief reasons, which method of determination of Arm's Length Price (ALP) will be most appropriate in the following cases: (c) JEF Co. Ltd., is engaged in manufacture of medicines. It manufactured semi-finished
CS Professional · Advanced Tax Laws · PYQS · December 2022
State with brief reasons, which method of determination of Arm's Length Price (ALP) will be most appropriate in the following cases: (c) JEF Co. Ltd., is engaged in manufacture of medicines. It manufactured semi-finished drugs in bulk and sold to related parties located in India and outside India. It adds gross profit mark up on direct and indirect costs of production.
Answer & Explanation:
JEF Co. Ltd. manufactures semi-finished drugs in bulk and sells them to related parties. In case of sale of semi-finished goods to related parties, the most appropriate method is the Cost Plus Method (CPM), in which adjustment of gross profit mark-up is to be made on the direct and indirect costs of production.
Topics: Income Tax Act
Related Questions in this Topic
- Narendra, aged 54 years, is resident and ordinarily resident in India. His income during previous year 2024-25 is ₹ 14,2...
- 'There are certain exclusions from the provisions of General Anti Avoidance Rules (GAAR).' Briefly discuss those exclusi...
- JKL LLP has an income of ₹ 70,00,000 under the head 'profits and gains of business or profession'. One of its businesses...
- With reference to Transfer pricing, discuss under what circumstances, secondary adjustments are applicable under section...
- Z Ltd. is a listed company on recognized stock exchange, registered in Ahmedabad (Gujarat). The management of the compan...