Rule 77: Transfer-pricing definitions
Rule 77 supplies the definitions used in the arm’s-length-price rules that follow. It clarifies that the scope extends to intangible property, financial services and closely linked transactions, with specific treatment for domestic-transaction enterprises.
Official notified Income-tax Rules, 2026Need advice on Rule 77?
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Bare law
Rule 77 - Meaning of expressions used in determination of arm's length price
For the purpose of this rule and rules 78 to 84, — (a) ―associated enterprise‖ shall have the meaning assigned to it in section 162; (b) ―enterprise‖ shall have the meaning assigned to it in section 173(b) and shall, for the purposes of a specified domestic transaction, include a unit, or an enterprise, or an undertaking or a business of a person who undertakes such transaction; (c) ―property‖ includes goods, articles or things, and intangible property; (d) ―services‖ include financial services; (e) ―transaction‖ includes a number of closely linked transactions; and (f) ―uncontrolled transaction‖ means a transaction between enterprises other than associated enterprises, whether resident or non-resident.
Rule breakdown
Read associated enterprise with section 162
The rule adopts the associated-enterprise meaning from section 162. Establish that statutory relationship from the actual ownership, control and other relevant facts.
A commercial label such as group company or independent vendor should not replace the legal analysis.
Identify the relevant enterprise for domestic transactions
Enterprise adopts section 173(b)’s meaning and, for a specified domestic transaction, includes a unit, enterprise, undertaking or business of the person undertaking the transaction.
Identify the actual unit or business involved rather than assuming the entire legal entity is always the appropriate unit of analysis.
Property and services have a broad scope
Property includes goods, articles or things and intangible property. Services include financial services.
Map the real transaction and the rights, functions or services supplied; do not omit an intangible or financial-service arrangement simply because no physical goods moved.
Closely linked transactions and independent comparators
Transaction includes a number of closely linked transactions. An uncontrolled transaction is between enterprises other than associated enterprises, whether resident or non-resident.
The inclusion of linked transactions does not mean every unrelated arrangement should be bundled. Record why transactions are closely connected and assess comparability under the following rules.
Key takeaways
Statutory relationship
Associated enterprise refers to section 162.
Broad transaction scope
Intangibles and financial services are included.
Resident comparators possible
An uncontrolled transaction can involve resident or non-resident enterprises.
Practical checklist
- Verify the section 162 relationship.
- Identify the actual unit, property or service involved.
- Document why any transactions are treated as closely linked.
Avoid
- Do not omit intangibles merely because they are not physical assets.
- Do not equate every unrelated-party transaction with a reliable comparable without analysis.
FAQs
Are intangible rights outside the property definition?
No. The definition expressly includes intangible property.
Must an uncontrolled transaction be between non-residents?
No. The definition permits resident or non-resident enterprises, provided they are not associated enterprises.
Can closely linked transactions be considered together?
The transaction definition includes a number of closely linked transactions; the actual linkage and subsequent method requirements still need analysis.
Glossary
- Uncontrolled transaction
- A transaction between enterprises other than associated enterprises, whether resident or non-resident.
- Closely linked transactions
- The multiple connected transactions included within the rule’s transaction definition.