Section 173
Section 173: definitions for the transfer pricing provisions
Section 173 collects the key definitions used across the transfer pricing chapter - arm's length price, enterprise, permanent establishment, specified date and transaction - and applies them to Sections 161, 162, 163, 165, 171 and 172.
This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.
Scope
These definitions apply for the purposes of this section and Sections 161, 162, 163, 165, 171 and 172, unless the context otherwise requires.
Arm's length price
"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.
Enterprise
"Enterprise" means a person (including a permanent establishment of that person) who is, has been, or is proposed to be engaged in any activity relating to:
- production, storage, supply, distribution, acquisition or control of articles or goods;
- know-how, patents, copyrights, trade-marks, licences, franchises or similar business/commercial rights;
- data, documentation, drawing or specification relating to a patent, invention, model, design, secret formula or process owned (or exclusively rightful) to another enterprise;
- provision of services of any kind;
- carrying out work under a contract;
- investment or providing loan; or
- business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of another body corporate, whether carried on directly or through units, divisions or subsidiaries, at the same or different locations.
Permanent establishment, specified date and transaction
| Term | Meaning under Section 173 |
|---|---|
| Permanent establishment | Includes a fixed place of business through which the business of the enterprise is wholly or partly carried on |
| Specified date | The date one month before the due date for furnishing the return of income under Section 263(1) for the relevant tax year |
| Transaction | Includes an arrangement, understanding or action in concert, whether or not formal or in writing, and whether or not intended to be legally enforceable |
Frequently asked questions
Which sections rely on the definitions in Section 173?
Sections 161, 162, 163, 165, 171 and 172, in addition to Section 173 itself.
What is the "specified date" for the accountant's report under Section 172?
One month before the due date for furnishing the return of income under Section 263(1) for the relevant tax year.
Does "transaction" require a written or legally enforceable agreement?
No - it includes an arrangement, understanding or action in concert, whether or not formal or in writing, and whether or not intended to be enforceable by legal proceedings.
Related sections
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Talk to our tax team about transfer pricing complianceLast updated 9 September 2026