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DATE: October 31, 2014 (Date of pronouncement)
DATE: November 4, 2014 (Date of publication)
AY: 2002-03
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If assessee has followed CUP method, it cannot argue at the appellate stage that TNMM should be followed even if TPO has for later years accepted TNMM as the Most Appropriate Method

(i) It is observed that the assessee applied CUP as the most appropriate method for benchmarking the international transactions undertaken by it. The assessee did not dispute before the TPO that the CUP was the most appropriate method. However, it …

DCIT vs. Insilco Ltd (ITAT Delhi) Read More »

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DATE: October 31, 2014 (Date of pronouncement)
DATE: November 3, 2014 (Date of publication)
AY: 2002-03
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(i) Method of applying Resale Price Method (RPM) method, (ii) high advertisement expenses has no bearing on the RPM, (iii) comparables with more than 25% of related party transactions (RPTs) have to be excluded, (iv) transactions which do not impact the profitability should be excluded from the formula, (v) potentially comparable companies cannot be expelled only on the ground of high or low turnover

(i) The assessee simply purchased mobile phones and accessories from Nokia group companies situated outside India and resold the same as such without any further value addition, mainly, to HCL Infosystems in India. Since the goods imported from the foreign …

Nokia India (P) Ltd vs. DCIT (ITAT Delhi) Read More »

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DATE: October 29, 2014 (Date of pronouncement)
DATE: October 31, 2014 (Date of publication)
AY: 2007-08
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Rule 10B(1)(b): Resale Price Method applies even where the goods are bought from an AE and sold to another AE

The argument of the department that under Rule 10B(1)(b) the Resale Price Method can be applied only when the assessee buys from an associated enterprise and sells to a non-associated enterprise and not when the sale is to an AE …

Yamaha Motor India Pvt. Ltd vs. ACIT (ITAT Delhi) Read More »

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DATE: October 21, 2014 (Date of pronouncement)
DATE: October 29, 2014 (Date of publication)
AY: 2009-10
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“Umbrage” taken in Casio that BMW did not follow L. G. Electronics is based on “wrong head note”. L. G. does not deal with a case of distributor and so there is no conflict with the law laid down therein

In L. G. Electronics 140 ITD 41 (Del)(SB), the Special Bench laid down guidelines on how to determine whether a transfer pricing adjustment for “Advertisement & market Promotion” (“AMP”) expenses had to be made or not. Subsequently, in BMW (AY …

BMW India Pvt. Ltd vs. ACIT (ITAT Delhi) Read More »

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DATE: October 24, 2014 (Date of pronouncement)
DATE: October 26, 2014 (Date of publication)
AY: 2007-08
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Transfer pricing principles on right of TPO to collect info u/s 133(6), exclusion of high profit comparables, adjustment for limited risk environment, exclusion of reimbursement costs for computing operation margins explained

(i) The TPO conducted search in the data bases for finding additional comparable by applying 25% employee cost filter. After examining the information obtained from the company u/s 133(6) of the Act the TPO treated it as comparable by observing …

HSBC Electronic Data Processing India vs. ACIT (ITAT Hyderabad) Read More »

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DATE: October 21, 2014 (Date of pronouncement)
DATE: October 22, 2014 (Date of publication)
AY: 2007-08
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In a case of "sogo shosha" business model (high volume, low risk, trading of goods), the "berry ratio" (benchmarking gross profit and/ or net revenues (after subtraction of cost of sales) against operating expenses is an appropriate PLI. To avoid discrimination under Article 24(3) of the India-Japan DTAA, the benefit of no disallowance u/s 40(a)(ia) (in the cast of residents) for want of TDS if the recipient has paid the tax has to be extended to non-residents u/s 40(a)(i)

As regards the transfer pricing adjustment: (i) Even the TPO does not dispute that (a) MCI is a low risk activity in the field of trading, (b) MCJ group is primarily involved in high volume sales, or ‘colossal sales’ of …

Mitsubishi Corporation India Pvt. Ltd vs. DCIT (ITAT Delhi) Read More »

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DATE: October 15, 2014 (Date of pronouncement)
DATE: October 20, 2014 (Date of publication)
AY: 2008-09
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Fraud in determination of LIBOR/ EURIBOR no reason to discard it as ALP

The department claimed that in determining the ALP of an international transaction of loan by the assessee to its AE, LIBOR could not be treated as the ALP as there was a “fraud” regarding fixation of ‘LIBOR’ as evidenced by …

Vijay Electricals Limited vs. ACIT (ITAT Hyderabad) Read More »

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DATE: October 17, 2014 (Date of pronouncement)
DATE: October 20, 2014 (Date of publication)
AY: 2009-10
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Foreign exchange fluctuation gain arising on realization of trade debtor’s, payment to creditors etc is operational income. Tests for distinguishing secondment contract with technical services agreement

(i) The TPO had considered foreign exchange fluctuation gains to be non-operational in nature. This view was confirmed by the DRP stating that the foreign exchange fluctuations had nothing to do with the business operations of a tax payer. The …

Cisco Systems Services B.E vs. ADIT (IT) (ITAT Bangalore) Read More »

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DATE: November 23, 2012 (Date of pronouncement)
DATE: October 20, 2014 (Date of publication)
AY: 2007-08
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Transfer Pricing: Turnover filter is an important criteria in choosing comparables

(i) The ICAI TP Guidelines note on this aspect lay down in para 15.4 that a transaction entered into by a Rs. 1,000 crore company cannot be compared with the transaction entered into by a Rs. 10 crore company. The …

Trilogy E-Business Software India vs. DCIT (ITAT Bangalore) Read More »

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DATE: October 13, 2014 (Date of pronouncement)
DATE: October 18, 2014 (Date of publication)
AY: 2005-06
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Adjustment for capacity underutilization has to be in the results of the comparables and not the tested party. A 100% captive unit has to show that underutilization was for reasons beyond its control

The CIT(A) granted impugned relief by making adjustments, on account of capacity underutilization, in the results shown by the tested party and thus computing hypothetical financial results which the tested party would have achieved in perfect conditions. Such an exercise …

DCIT vs. EDAG Engineers & Design India Pvt Ltd (ITAT Delhi) Read More »