CMA Final · Direct Tax Laws and International Taxation · Business Restructuring

Under the Income-tax Act, 2025, the definition of 'international transaction' in the transfer pricing chapter specifically lists a transaction of business restructuring or reorganisation entered into by an enterprise with an associated enterprise. Which statement about this clause is correct?

A business restructuring or reorganisation between associated enterprises is an international transaction regardless of whether it affects profit, income, losses or assets at the time of the transaction or at any future date. No impact on profits needs to be shown, and one party must be non-resident.

1. AIt applies only if the restructuring changes the profit, income, losses or assets of the enterprises at the time of the transaction
2. BIt applies irrespective of whether the restructuring has any bearing on profit, income, losses or assets at the time or at any future dateCorrect
3. CIt applies only if the restructuring results in a loss to the Indian enterprise
4. DIt applies only if both associated enterprises are non-residents