The ALP has to be computed as per section 92C and Rules thereunder. This is a statutory mandate. An interesting issue arises as to whether the taxpayer can argue that it is impossible to compute ALP as per any of the prescribed methods and therefore transfer pricing provisions are not applicable to it or in […]
COMPUTATION OF ALP – DEVIATIONS FROM PRESCRIBED METHODOLOGY PERMITTED
Section 92C(1) provides that ALP of international transaction and SDT shall be determined by adopting “MAM”. Sub-section (2) provides that most appropriate method shall be applied, for determination of ALP, in the manner prescribed. Rule 10B lays down the methodology for computation of ALP for each of the method. The selection of one method as […]
INTEL ASIA ELECTRONICS INC v ADIT [2011] 9 taxmann.com 197 (Bang.), [2011] 140 TTJ (Bang.) 513
In the context of sale of the taxpayer’s PE as a ‘going concern’ to the AE and where no similar transactions in an uncontrolled situation to compare are available, The ITAT observed that the valuation determined by the registered valuer could be the most appropriate means under the CUP method. However, the ITAT finally directed […]
KODAK INDIA PVT LTD v ACIT (2013) 155 TTJ 697 (Mum ITAT)
The Tribunal rejected the action of the TPO of computing ALP by allocating the consideration received on sale of business on the basis of revenue ratio on the ground that it is not prescribed method and no seventh method could be adopted by the TPO. Facts The taxpayer sold its medical – imaging business to […]
CIT v CA COMPUTER ASSOCIATES INDIA PVT LTD (2013) 351 ITR 69 (Bom)
It was held that the ALP should be determined as per the procedure prescribed. Any deviation from the prescribed procedure cannot be sustained. Facts The taxpayer was engaged in the business of licensing mainframe, midrange and system infrastructure software products of CA Management Inc. of the USA. The taxpayer had set-up a Technical Support Centre […]
COMPARABLES FOR ITES FOR AY 2008-09
LIONBRIDGE TECHNOLOGIES PVT LTD VS ITO [2014] 48 TAXMANN.COM 46 (MUMBAI – TRIB.) – The Tribunal held that comparables providing KPO services like engineering or data analysis/processing etc cannot be comparable with the assessee engaged in providing low end back-office operations. The assessee was engaged in providing low end back-office support services. During AY 2007-08, […]
BRIGAE CORPORATION INDIA (P.) LTD vs ACIT [2014] 48 taxmann.com 176 (Chennai- Trib.)
Facts: For AY 2007-08, the Assessee was engaged in the business of providing customer supporting services in the form of email support, voice support & chatting and financial information support for customers identified by the AEs. The TPO selected M/s.Eclerx Services Ltd as a comparable. The CIT(A) observed that Eclerx has an operating profit of […]
ACUMEN FUND ADVISORY SERVICES INDIA (P.) LTD VS DCIT [2014] 50 TAXMANN.COM 317 (MUMBAI- TRIB.)
The issue for consideration was whether Motilal Oswal Investment Advisor, engaged in merchant banking activity can be compared with Assessee engaged in investment advisory services. Facts: For AY 2009-10, the assessee rendered investment advisory services to its AE. The assessee applied TNMM as the MAM and arrived at mean margin of 18.60% (PLI=OP/OR) by selecting […]
CIT V. MIRZA INTERNATIONAL LTD [2014] 51 TAXMANN.COM 21 (ALLAHABAD HC)
The Issue for consideration was whether there can be difference in treatment of export incentives while computing margins of comparables and Assessee The assessee made export sales to its AE in UK for AY 2008-2009. The TPO passed an order making TP adjustments. The CIT(A) observed that the TPO has computed the operating margin of […]
COST OF TERMINATION OF PROPERTY PURCHASE AGREEMENT – WHETHER OPERATING OR NON-OPERATING FOR PLI COMPUTATION
Rule 10B of Income Tax Rules provides methodology for computation of ALP. Under TNMM, ‘net profit’ is used as benchmark for ALP computation. Rule 10B(1)(e)(i) provides for considering “net profit margin realised by the enterprise from an international transaction or SDT entered into with an associated enterprise”. Rule 10B(1)(e)(ii) provides for computation of ‘net profit […]