Case Law Details
Brief of the case
In the case of HCL Technologies BPO Services Ltd vs. ACIT, ITAT has held that for transfer pricing only amount retained by associates from end user is to be taken into account for transfer pricing adjustment, and to adjust operating cost by excluding abnormal cost incurred on a/c of Startup Company like salary, rent, and depreciation.
Facts of the case
1. The brief facts of the case are that the appellant is a private limited company and is engaged in providing IT Enabled Services (ITES) e.g. voice/web based contact and front office services (hereinafter referred as business process outsourcing (BPO) services). For the relevant previous year, the return of income of the appellant was filed declaring loss of Rs.12,85,57,867/-. The appellant had during the relevant previous year entered into the international transaction of provision of information technology enabled services, amounting to Rs.13,06,79,399/- with the various associated enterprises. For application of TNMM, the appellant was considered to be the tested party and operating profit/total cost was taken as the profit level indicator (PLI).
2. The operating results of the appellant were computed as follows:
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Dear C.A Rahul Surekha
Beautiful article. Please keep writing such articles especially on I.T.P.
With regards
C.A.C.M.A M.Srinivas Kumar