Transfer Pricing: Advance Pricing Arrangement (HK)
» 172.0 KiB - 750 hits - April 13, 2012

  Deloitte Consulting India Pvt. Ltd vs. DCIT (ITAT Mumbai)
» 202.5 KiB - 222 hits - March 30, 2012

The TPO is empowered to determine the ALP at “nil” because the assessee has not established before the TPO that the payments made towards marketing cost allocation were commensurate to the volume and quality service and that such costs are comparable. When commensurate benefit against the payment of services is not derived, then the TPO is justified in making an adjustment under ALP

  Transwitch India Pvt. Ltd vs. DCIT (ITAT Delhi)
» 136.4 KiB - 113 hits - March 30, 2012

The claim for abnormal expenses (comparability adjustment) cannot be denied on the ground that it was not included in the TP Study because s. 92CA(3) requires the TPO to take into consideration all the evidence which the assessee may produce during the course of hearing.

  Johnson Matthey India Private Ltd vs. DCIT (ITAT Delhi)
» 124.1 KiB - 151 hits - March 29, 2012

The accounting of the assessee shows that the cost of raw material is a value added cost and not as a pass through cost. Even the AE which are using the precious precision metal for manufacturing catalyst raw material and they are also accounting the precious precision metal in the same manner as the assessee is doing. AE also do not treat it as a pass through cost. All these facts show that the assessee’s claim to treat the cost of purchase of precious metal as a pass through cost has no basis. In view of this, we are unable to agree with the assessee’s contention that cost of purchase of precious metal should not be added to the cost. In our considered view, it must be a part of the cost base for computing the profit element.

  DCIT vs. Roche Diagnostics India P. Ltd (ITAT Mumbai)
» 98.2 KiB - 93 hits - March 14, 2012

It is important to mention that the proviso to section 92C(2) has been enshrined to make the assessee’s declared price as acceptable if the ALP so determined is within plus minus 5% range of such price. It is not in the nature of any standard deduction or standard addition which has to be invariably allowed or made. Only if the price charged by the assessee is within plus minus 5% of the average profit of comparable cases, that this benefit of plus minus 5% is to be granted. In case it is beyond such plus minus 5% range, then the difference between the assessee’s price and ALP calls for addition. We make it clear that if the average price of uncontrolled transactions is say `100 and the assessee has paid `104 or `105 then no addition is called for as it falls within +5% range. If however the assessee has paid `106, then addition for `6 is warranted irrespective of any benefit for plus minus 5%.

  Centillium India Pvt. Ltd. vs. DCIT (ITAT Bangalore)
» 142.5 KiB - 91 hits - February 29, 2012

(i) the operating revenue and the operating cost of the transactions relating to associated enterprises only shall be considered; (ii) the comparables having the turnover of more than Rs.1 crore, but, less than Rs.200 crores only shall be taken into consideration; (iii) all the information relating to comparables which were sought to be used against the appellant shall be furnished to the appellant; (iv) to consider the objections of the appellant that relate to additional comparables sought to be adopted by the TPO and to pass a detailed order; and (v) to give the standard deduction of 5% under the proviso to s.92C(2) of the Act.

  Maersk Global Service Centres (India) Pvt. Ltd vs. ACIT (ITAT Mumbai)
» 146.5 KiB - 108 hits - February 29, 2012

we are of the considered view that matter is required to be restored to AO to work out margin of profit at ALP of all 30 comparable companies of transactions with AEs and also to give working capital adjustment. It was submitted before us that if above rectification are carried out the variation/difference will not exceed 5% of such arithmetic mean. If so, no addition by way of adjustment has to be made as per Sec. 92C(2) of I.T. Act.

  ACIT vs. Frost & Sullivan (I) Pvt. Ltd (ITAT Mumbai)
» 132.8 KiB - 78 hits - February 24, 2012

There is no basis for only excluding the loss making companies and not excluding the high profit making companies or companies which are not at all comparable considering their size, volume of turnover and other factors. In our opinion, the whole exercise of selecting the comparables by the TPO is not proper and is in a haphazard manner

  Timken Engineering & Research India Pvt. Ltd vs. DCIT (ITAT Bangalore)
» 134.8 KiB - 80 hits - February 24, 2012

The issue of standard deduction of 5% as provided under the proviso to section 92A(2) before making adjustment for price is squarely covered by various orders of the Tribunal namely, M/s Genisys Integrating Systems (India) Pvt. Ltd., M/s Sap Labs India Pvt. Ltd. v ACIT 2010-TII-44- Page 15 of 31 ITA No.15 974 & 983/Bang/2008 ITT-BANG-TP, Philips Software Centre Pvt. Ltd. 26 SOT 226 and MSS India Private Limited 32 SOT 132.

  DCIT vs. Indo American Jewellery Limited (ITAT Mumbai)
» 65.3 KiB - 78 hits - February 22, 2012

If the international transaction is that of `lending or borrowing money’, the arm’s length price is gauged qua the `interest’. When the international transaction is that of `sale’, the interest aspect is embedded in it. There can be no separate international transaction of `interest’ in the international transaction of `sale’. Early or late realization of sale proceeds is only incidental to the transaction of sale, but not a separate transaction in itself. If the ALP in respect of an international transaction of `sale’ is determined, then there can be no question of treating the non-receipt of interest in such sale transaction as a separate international transaction warranting any further adjustment

  ACIT vs. Global One India Pvt . Ltd (ITAT Delhi)
» 116.6 KiB - 49 hits - February 17, 2012

For penalty u/s 271G, there is no authority u/s 92D(3) with the T.P.O. to require the assessee to furnish non-specified information or such information or document already filed by the assessee or use of the provision, without asking the assessee to support first its ALP of International transactions. In nutshell, application of mind to ascertain and consideration of material on record and to see what further information on specific points is required, is essential before issuing notice u/s 92D(3) of the Act to the assessee. It is not a routine notice, which can be casually issued calling for any information or all prescribed information. Where the assessee has “option” to select relevant information, it is not a notice u/s 92D(3) as “option” and word “require” do not go together.

  ACIT vs. SSL-TTK Ltd (ITAT Chennai)
» 63.4 KiB - 31 hits - February 15, 2012

Assessee had made substantial compliance with the requirements by filing information on 12 out of 16 items required. The specific failure of the assessee, if any, has not been pointed out by the Assessing Officer. If the Revenue alleges that there has been failure of the assessee with regard to production of any of the record, it was required to point out which record it had failed to produce and whether such record was one which was prescribed under Section 92D(1) to be maintained by an assessee in respect of the international transactions entered into by it. It is also not disputed that finally the arm’s length price adopted by the assessee was accepted by the TPO. This, in other words, would mean that even of we presume there was a procedural violation, it was a benign one. Looked from any angle, we are of the opinion that this was not a fit case for levy of penalty under Section 271G of the Act.

  Bayer Bio Science Pvt Ltd vs. ACIT (ITAT Mumbai)
» 124.8 KiB - 348 hits - February 8, 2012

Engineers India Ltd, a PSU dealing in engineering consultancy, is not at all engaged in low risk contract research work and it cannot be a valid comparable for this purpose. Once EIL is excluded from the list of comparables, the arithmetic of mean of the remaining comparables will be within 5% range of the ALP margin adopted by the assessee (Tevapharm India Pvt Ltd Vs ACIT followed)

  Hinduja Ventures Ltd vs. ACIT (ITAT Mumbai)
» 103.6 KiB - 357 hits - January 31, 2012

the net profit margin is to be considered qua the comparable uncontrolled transaction or number of such uncontrolled transactions. Uncontrolled transaction has been defined in Rule 10A(a) to mean “a transaction between enterprises other than associate enterprises, whether resident or non-resident”. Rule 10B(1)(e) in juxtaposition to Rule 10A(a). The position which emerges is that in applying the TNMM, net profit margin realized from a comparable uncontrolled transaction is to be taken into consideration. The conditions thus envisaged for making a case as comparable for this purpose, should not only be comparable but also have uncontrolled transaction. These twin conditions need to be cumulatively satisfied. If such other case is only comparable but has controlled transaction or vice-versa, it shall fall outside the ambit of list of comparable cases.

  Lason India Pvt. Ltd vs. ACIT (ITAT Chennai)
» 62.1 KiB - 55 hits - January 30, 2012

The assessee has followed a scientific system wherein the assessee is providing for depreciation on a more real time basis. The assessee is in fact not providing technical depreciation influenced by Income-tax Rules. The assessee is providing for more or less the actual depreciation. This actual depreciation is more relevant in working out the operating profit of the assessee. Therefore, we find that no adjustment is called for in the quantum of depreciation provided by the assessee in its operating account so as to work out its operating profit for the purpose of determining the Arm’s Length Price (ALP).

  Kodiak Networks (India) Pvt Ltd vs. ACIT (ITAT Bangalore)
» 295.1 KiB - 275 hits - January 27, 2012

Under Rule 10D (4) the information and documents should as far as possible be contemporaneous and should exists latest by the ‘specified date’ specified in s. 92F (4) i.e. the due date for filing the ROI. There is no cut-off date upto which only the information available in public domain can be taken into consideration by the TPO while making the transfer pricing adjustments and arriving at the ALP. The assessee's argument that s.92D and Rule 10D is defeated if the TPO takes the data which is available in the public domain after the specified date is not acceptable

  ACIT vs. Agility Logistics Pvt. Ltd (ITAT Mumbai)
» 207.6 KiB - 288 hits - January 25, 2012

The assessee considers the rate of 50:50 at which GeoUKmgt and the network members split their net revenues as a CUP and therefore considered CUP method as the most appropriate method for the purpose of bench marking the international transactions. The 50:50 split is a practice widely followed/accepted by the players in the logistic industry. The assessee does not split gross profit in a 50:50 ratio with its AE. It splits only the net revenue i.e. the difference between the total freight charges collected from customers less payments due to third party service providers such as airlines, ocean lines etc. The ‘net revenue split’ is a mechanism (pricing agreement) used to derive the remuneration due to each freight provider entity i.e. the assessee or its AE for the respective functions carried out by them in the origin and destination country. The assessee applied 50:50 profits not only to the AEs but also to non-AEs. The CUP method has been adopted for bench marking international transactions pertaining to payment of interest/royalty.

  Hosley India vs. DCIT (ITAT Delhi)
» 50.4 KiB - 299 hits - January 25, 2012

So far as the external comparables, turn over details of export and domestic segments and other relevant facts are concerned, we find similarity of the facts between both the years. The argument of the assessee is that the external comparable prices for the impugned assessment year 2006-07 supplied by the assessee, when accepted by the Assessing Officer for the assessment year 2007-08, must be accepted for that year in view of the absence of material facts and also in view of the rule of consistency. We have considered this argument and in our opinion, it is a settled law that the principle of res judicata is inapplicable to Income-tax matters. However, the same is true as long as the facts of different in different assessment years. Otherwise, the rule of consistency is relevant to Income-tax matters and AO cannot ignore the same

  Knoah Solutions Pvt. Ltd vs. ITO (ITAT Hyderabad)
» 153.5 KiB - 412 hits - January 25, 2012

ALP is determined by taking results of a comparable transaction in comparable circumstances and make suitable adjustments for the differences. The fundamental requirement in any of the methods selected, if the selection of “comparables”, for bench-marking international transactions. This selection of comparables should be based on functional, asset and risk analysis of both the parties and the transactions. The provisions of section 92C also provide scope for carrying out adjustments in cases where there are some differences or variations to make the transactions, commercially comparables, for the purpose of bench marking. In other words, an uncontrolled transaction selected for bench-marking should be adjusted by employing certain techniques like “FAR” analysis, to be selected on its peculiar factual matrix, for the purpose of enabling comparison of the same with the controlled international transaction so that the differences or variations are ironed out or minimised.

  Glaxo Smithkline Consumer vs. ACIT (ITAT Chandigarh)
» 235.2 KiB - 294 hits - January 25, 2012

The AO made a reference u/s 92CA(1) in respect of the transactions reported in Audit Report in form No.3CEB. The TPO accepted the said transactions and held that no adjustment on account of arm ’s length price was to be made in respect of the aforesaid transactions. However, while perusing the details furnished, the TPO raised the issue of expenditure incurred on payment of royalty and AMP expenses, to be international transactions. Though the payment of royalty was held to be deemed international transactions by the TPO, but no adjustment was proposed on account of the said payment. However, in respect of the AMP expenditure incurred by the assessee aggregating to Rs.14029.07 lacs, the TPO had held that such expenditure had resulted in creation of advertising intangibles in favour of the AE and consequently the said expenditure is to be computed on arm ’s length price. The ambit of s. 92CA flows where the AO, with the previous approval of the Commissioner, refers, the computation of arm ’s length price, in relation to the international transactions, to the TPO. The reference by the AO u/s 92CA(1) is transaction based and not entity based. There may be several international transactions with the same entity, but the reference made by the AO is each transaction specific. In the absence of the reference being made by the AO to the TPO, the suo moto action taken by the TPO in working out the arm ’s length price of a particular international transaction, not referred to him by the AO, is not warranted under s. 92CA (Instruction No. 3 of 2003, dated 20.05.2003, Amadeus India, 3i Infotech 129 ITD 422 (Mum) & Diageo India followed)