Ayush Motors Limited an Indian Company declared income of ₹ 300 crore computed in accordance with Chapter IV-D but before making any adjustments in respect of the following transactions for the previous year 2020-21. (i)

Any income arising from an international transaction, where two or more associated enterprises' enter into a mutual agreement or arrangement shall be computed having regard to arm's length price as per the provisions of Chapter X of the Income-tax Act, 1961. Section 92A defines an "associated enterprise" and sub-section (2) of this section speaks of the situations when the two enterprises shall be deemed to associated enterprises. Applying the provisions of section 92A(2)(a) to (m) to the given facts, it is clear that "Ayush Motors Ltd." is associated enterprises with: Rida Ltd. as per section 92A(2)(a), because this company holds shares carrying more than 26% of the voting power in Ayush Motors Ltd.; Kyoto Ltd. as per section 92A(2)(g), since this company is the sole owner of the technology used by Ayush Motors Ltd. in its manufacturing process; Dorf Ltd. as per section 92 A(2)(c), since this company has financed an amount which is more than 51% of the book value of total assets of Ayush Motors Ltd. Hence all the transactions entered into by Ayush Motors Ltd. with different companies are covered under international transaction with associated enterprises. Computation of Total Income of Ayush Motors Ltd. for A.Y. 2021-22 Particulars Amount (in crore) Income of Ayush Motors Ltd. as computed under Chapter IV D, prior to adjustments as per Chapter X 300.00 Add: Difference on account of adjustment in the value of international transactions: (i) Difference for lesser price of Car sold @ $ 200 each for 10,000 Cars ($ 200 x 10,000 x ₹ 63) 12.60 (ii) Difference for excess payment of Royalty of $ 30,00,000 ($ 30,00,000 x ₹ 63) 18.90 (iii) Difference for excess interest paid on loan of EURO 1,000 crores (EURO 100 crores x ₹ 84) 840.00 Total Income 1,171.50 The difference for excess payment of royalty has been added back presuming that the manufacture of cars by Ayush Motors Ltd. is wholly dependent on the use of know-how owned by Kyoto Ltd. Note: It is presumed that Ayush Motors Ltd. has not entered into an Advance Pricing Agreement or opted to be subject to Safe Harbour Rules.