Transactional Net Margin Method

Transfer Pricing Concept & The Law in India

Income Tax - No exhaustive and compact definition of the phrase ‘transfer pricing’ is possible nor has it been attempted in the legislations in the countries that have tried to find solutions to this menace. When transfers by way of sales exchange, etc. are made between two independent entities unconnected with each other as normal business deals,...

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Pass- through costs that are incurred for non value- added purposes should not form part of the cost base while determin

Cheil Communications India Private Limited Vs. Dy. Commissioner of Income Tax (ITAT Delhi), ITA No: 712/Del/2010 - The ruling upholds and reiterates the OECD position on pass -through costs that are not incurred for value-added purposes. It will provide clarity and guidance to taxpayers and tax administration alike on the issue of determination of cost base in si...

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Pass-through costs (paid to third party vendors) not to be included in cost base for determining net profit margin

DCIT Vs Cheil Communications India Private Limited (ITAT Delhi) - The ITAT Delhi held where a taxpayer engaged in rendering advertising and related services to its Associated Enterprises (AEs) is also acting as an intermediary between the AEs and the third party vendor to rent advertisement space from the vendor, costs recovered by the taxpayer from the AEs for s...

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No Penalty for bonafide difference of opinion in selection of transfer pricing method

ACIT Vs. Firmenich Aromatics (India) Pvt. Ltd. (ITAT Mumbai) - The Tribunal ruling has reiterated the principle of 'bona fide difference of opinion' arising in the context of application of most appropriate transfer pricing method. The Tribunal has ruled that any addition to income arising as a result of bona fide difference of opinion cannot be used as a basis...

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Delhi Tribunal rules on aggregation of closely-linked transactions and characterisation of reimbursement of advertisement expenses

M/s Panasonic India Pvt Ltd Vs. Income Tax Officer (ITAT Delhi) - Recently, the Delhi bench of the Income-tax Appellate Tribunal in the case of M/s Panasonic India Pvt Ltd Vs. Income Tax Office, has upheld the aggregation of transactions where the Functions, Assets &; Risks underlying those transactions are similar. The Tribunal also concluded that reimbursement ...

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ITAT Delhi rejects Assessing Officer’s approach of cherry picking the comparables and proposing an arbitrary Transfer Pricing adjustment

ACIT Vs M/s Toshiba India Private Limited (ITAT Delhi) - Recently, the Delhi bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of ACIT Vs M/s Toshiba India Private Limited (2010-TII-14-ITAT-DEL-TP) has rejected the Assessing Officer’s approach of cherry picking the comparables and proposing an arbitrary Transfer Pricing adjustment....

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Recent Posts in "Transactional Net Margin Method"

Transfer Pricing Concept & The Law in India

No exhaustive and compact definition of the phrase ‘transfer pricing’ is possible nor has it been attempted in the legislations in the countries that have tried to find solutions to this menace. When transfers by way of sales exchange, etc. are made between two independent entities unconnected with each other as normal business deals,...

Read More
Posted Under: Income Tax | ,

Pass- through costs that are incurred for non value- added purposes should not form part of the cost base while determin

Cheil Communications India Private Limited Vs. Dy. Commissioner of Income Tax (ITAT Delhi), ITA No: 712/Del/2010

The ruling upholds and reiterates the OECD position on pass -through costs that are not incurred for value-added purposes. It will provide clarity and guidance to taxpayers and tax administration alike on the issue of determination of cost base in si...

Read More

Pass-through costs (paid to third party vendors) not to be included in cost base for determining net profit margin

DCIT Vs Cheil Communications India Private Limited (ITAT Delhi)

The ITAT Delhi held where a taxpayer engaged in rendering advertising and related services to its Associated Enterprises (AEs) is also acting as an intermediary between the AEs and the third party vendor to rent advertisement space from the vendor, costs recovered by the taxpayer from the AEs for such renting and then passed on to the ve...

Read More
Posted Under: Income Tax |

No Penalty for bonafide difference of opinion in selection of transfer pricing method

ACIT Vs. Firmenich Aromatics (India) Pvt. Ltd. (ITAT Mumbai)

The Tribunal ruling has reiterated the principle of 'bona fide difference of opinion' arising in the context of application of most appropriate transfer pricing method. The Tribunal has ruled that any addition to income arising as a result of bona fide difference of opinion cannot be used as a basis for levy of penalty....

Read More

Delhi Tribunal rules on aggregation of closely-linked transactions and characterisation of reimbursement of advertisement expenses

M/s Panasonic India Pvt Ltd Vs. Income Tax Officer (ITAT Delhi)

Recently, the Delhi bench of the Income-tax Appellate Tribunal in the case of M/s Panasonic India Pvt Ltd Vs. Income Tax Office, has upheld the aggregation of transactions where the Functions, Assets &; Risks underlying those transactions are similar. The Tribunal also concluded that reimbursement of advertisement expenses received by a ...

Read More

ITAT Delhi rejects Assessing Officer’s approach of cherry picking the comparables and proposing an arbitrary Transfer Pricing adjustment

ACIT Vs M/s Toshiba India Private Limited (ITAT Delhi)

Recently, the Delhi bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of ACIT Vs M/s Toshiba India Private Limited (2010-TII-14-ITAT-DEL-TP) has rejected the Assessing Officer’s approach of cherry picking the comparables and proposing an arbitrary Transfer Pricing adjustment....

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Transfer Pricing TNMM must be applied to transaction margins and not to enterprise level margins. Adjustments must be confined to international transactions

DCIT Vs. M/s Starlite (ITAT Mumbai)

The assessee, engaged in the business of manufacture and export of diamonds and jewellery, claimed that having regard to the nature of the product, none of the transfer pricing methods were applicable for benchmarking the international transactions with associated enterprises. The TPO rejected the argument on the ground that the Transacti...

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Transfer Pricing: If foreign AE pays more tax, motive to shift profit unlikely: ITAT Mumbai

DCIT Vs. Indo American Jewellery (ITAT Mumbai)

DCIT vs. Indo American Jewellery (ITAT Mumbai) :- Assessee’s TP study cannot be rejected lightly, “comparables” have to be comparable on all parameters, no incentive to shift profits offshore if tax rates there are higher....

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ITAT Delhi ruling provides guidance for ascertaining arm’s length price of an international transaction under TNMM

IL Jin Electronics (I) Pvt. Ltd. Vs. Asst. Commissioner of Income Tax (ITAT Delhi)

Established in September, 2001, IL Jin Electronics (I) Pvt. Ltd. (IL Jin/ Taxpayer) is engaged in the business of manufacturing & selling printed circuit boards for consumer durables. It commenced commercial production in January, 2002. During FY 2002-03, for its operations, the Taxpayer entered into various international transactions (Se...

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