Value of supply in case of supply between distinct persons or related persons
While supply between distinct persons being covered by this rule is workable, supply between ‘ related persons ’ may be excluded from this rule. When a supply is between related persons , the issue is regarding extraneous consideration flowing between them and as such, Rule 1. alone may be sufficient to address this issue. By including ‘related persons’ also in Rule 2 , the availability of this rule will attract all related party supplies to be dragged into valuation review without establishing that there is some extraneous consideration defeating Section 15. And if extraneous consideration is established, then Rule 1 is sufficient
Also, the relief from proviso to Rule 2 is adequate for valuation between distinct persons and not in the case of related persons.
It is suggested the term ‘related persons’ be removed from the scope of Rule 2