Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (5) TMI 932 - AT - Income TaxTP Adjustments - Disregarding Profit Split Method ('PSM') as the most appropriate method for benchmarking Appellant's international transactions - held that:- The claim of the assessee that the issue is covered by the order of the Co-ordinate Bench in GOIPL [2014 (4) TMI 787 - ITAT DELHI] wherein held that when a transaction is integrated and interrelated and when costs are incurred by multiple entities and the revenues are to be apportioned to multiple entities, then the factual conclusions of the T.P.O have to be vacated - the "Profit Split Method" (PSM) is the "M.A.M" for the reason that the assessee generates revenue out of operations that are highly integrated - When one transaction, (example transmitting data from a destination in one country, to a destination in a different country in a secured manner) requires deployment of assets and functions of different entities, located in different Geographical locations, to ultimately deliver services and when such combined efforts generate revenues, the MAM for determining arm's length price is "Profit Split Method (PSM)", thus being the predecessor to the assessee is found to be correct. Relative contribution has to be determined, based on key value drivers - there is a general consensus on the principles of allocation of residual surplus - as per rule 10B(l)(d) of the IT Rules, a contribution or residual PSM would need to be supplemented by a comparable PSM - the TPO, should determine the ALP by adopting residual PSM as the MAM and by allocating residual profits based on the relative value of each enterprise's contribution In the absence of any submission whatsoever on the part of the Revenue despite more than adequate opportunities having been provided, we find on our independent study of the reasoning available on record brought out in the TPO’s order which has been upheld by the DRP that in the face of similarity of reasoning which already stands considered in the case of GOIPL, the issue needs to be restored back to the TPO with identical directions. Decided in favour of assesse for statistical purposes
|