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2018 (4) TMI 1826 - AT - Income TaxTP Adjustment - adjustment to the price of International transaction of provision of engineering and design services - cost incurred toward AE and non-AE transaction - amount received by the assessee corresponding to the man-hours utilised by the AE - cost allocated towards utilized man-hours of AE transactions according to the matching principle of revenue expenses - HELD THAT - We cannot take different yardsticks for measuring cost incurred toward AE and non-AE transaction by same set of manpower. Taking committed man-hours in the case of AE which also included unutilized man-hours would distort the allocation key. Thus the basis of allocation of the cost towards the AE transaction should be on man-hours utilized only and not on man-hours which have been committed by the AE for payment. TPO should have only computed the cost allocated towards utilized man-hours of AE transactions according to the matching principle of revenue expenses - total cost incurred by the assessee is for total man-hours utilized both for the AE as well as non-AE transactions and thus while allocating the cost to the AE transactions non-utilized manhours cannot be included. Since the man-hours utilized for the AE are 5695 and man-hours utilized for non-AE are 2, 77, 730 the total man-hours utilized would be (5695 2, 77, 730 ) 2, 83, 425 and the ratio of man-hours utilized by the AE to the total man-hours utilized would be (5695/283425)X 100 2%. Since the amount received by the assessee corresponding to the man-hours utilised by the AE has been worked out by the Ld. TPO which being less than the arm s length price computed no adjustment to the price of International transaction of provision of engineering and design services is required. - Decided in favour of assessee. Depreciation on intangibles - HELD THAT - As decided in assessee s own case 2015 (11) TMI 1218 - DELHI HIGH COURT the issue has been decided in favour of the assessee following the judgment of Smifs Securities Limited reported in 2012 (8) TMI 713 - SUPREME COURT
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