|CORAM:||Amit Shukla (JM), N. K. Billaiya (AM)|
|CATCH WORDS:||Allocation Key, Transfer Pricing|
|COUNSEL:||Dhanesh Bafna, Kanchun Kaushal|
|DATE:||September 26, 2014 (Date of pronouncement)|
|DATE:||October 4, 2014 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|The expenses like rent, depreciation, electricity, insurance charges, office maintenance and other miscellaneous expenses have no co-relation with the number of employees.|
The assessee has used allocation key of employee head account. The expenses like rent, depreciation, electricity, insurance charges, office maintenance and other miscellaneous expenses have no co-relation with the number of employees. On the contrary, these expenses have a direct bearing to the revenue generation. As per Rule 10-B(1) of the Act, determination of ALP u/s 92CA(2) of the Act, the ALP in relation to an international transaction has to be determined by the most appropriate method. In our considered opinion, the method adopted by the TPO is slightly better than the method adopted by the assessee. More so when the allocation by the assessee is not supported by any certificate from the management. Considering the nature of expenses in totality, we do not find any merit in the case of the assessee.