Section 24 in The Companies (Cost records and audit) Rules, 2014
24. Related Party Transactions.-
(a)"Related party" means related party as defined under clause 76 of section 2 of the Companies Act, 2013 (18 of 2013).(b)"Normal price" means price charged for comparable and similar products in the ordinary course of trade and commerce where the price charged is the sole consideration of sale and such sale is not made to a related party. Normal price can be construed to be a price at which two unrelated and non-desperate parties would agree to a transaction and where such transaction is not clouded due to the proximity of the parties to the transaction and free from influence though the parties may have shared interest.(c)The basis adopted to determine normal price shall be classified as under:i) Comparable uncontrolled price method;ii) Resale price method;iii) Cost plus method;iv) Profit split method;v) Transactional net margin method; orvi) Any other method, to be specified.(d)In respect of related party transactions or supplies made or services rendered by a company to a company termed "related party relationship" and vice-a-versa, records shall be maintained showing contracts entered into, agreements or understanding reached in respect of -(i)purchase and sale of raw materials, finished goods, rendering of services, process materials and rejected goods including scraps, and other related materials;(ii)utilisation of plant facilities and technical know-how;(iii)supply of utilities and any other services;(iv)administrative, technical, managerial or any other consultancy services;(v)purchase and sale of capital goods including plant and machinery; and(vi)any other payment related to the production of goods or rendering of services under reference.(e)These records shall also indicate the basis followed for arriving at the rates charged or paid for such goods or services so as to enable determination of the reasonableness of such rates in so far as they are in any way related to goods or services under reference.
