Transfer pricing- Tribunal provides guidance on recovery of pre-commencement costs

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 produc...