Case Law Details
The Hyderabad Bench of the Income-Tax Appellate Tribunal [the Tribunal] has in the case of M/S Convergys Information Management (India) (F) Ltd. Vs. DCIT [ITA No. 299/Hl/2009] , held that in a cost plus arrangement expenses incurred post the date of entering into agreement has to be marked up, as no customer would pay mark up before entering into agreement.
Facts of the Case
• Convergys Information Management (India) (P) Ltd. (Convergys/ Taxpayer), a 100 percent subsidiary of Convergys Information Management Inc. USA (Convergys USA/AE), is engaged in providing software development and product support service to its AE.
• The Taxpayer entered into a R&D agreement with its AE on 1 January 2004 which provided remuneration for services at a mark¬up of 10 percent on the costs incurred.
• The Taxpayer raised invoices on the AE for the period 15 March 2004 to 31 March 2004 being the period of commercial operation for the FY 2003-04.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
