LI and Fung India Pvt. Ltd. v. CIT

361 ITR 85High Court2014#3694 most cited

What is LI and Fung India Pvt. Ltd. v. CIT authority for?

The cost base for applying the operating profit over total cost margin in transfer pricing cannot be broadened to include costs not incurred by the assessee. Tax authorities cannot impute costs incurred by third parties or associated enterprises for computing the assessee's net profit margin.

32

judgments rely on this decision, according to BharatTax’s citation analysis of 366,339 Indian tax judgments — from 2015 to 2023.

Also referred to as

LI and Fung India Pvt. Ltd. v. CIT · section 92C · section 143(3) · arm's length price · ALP · cost base · operating profit · total cost · transfer pricing adjustment · associated enterprise · TNMM · Rule 10B(e)(i)

Sections most often in play

Section 115JBSection 143(3)Section 144C(13)Section 271(1)(c)Section 92C(1)Section 92C(2)Section 92C(3)Section 92CA(1)
Read the full judgment

Issues it is cited on

section 92(1)section 92c(1)section 32(1)(ii)commercial rightssection 14a(2)written down valueintangible assetssection 32(1)arm's length pricemost appropriate methodtransfer pricing adjustmentassociated enterprise

Judgments citing LI and Fung India Pvt. Ltd. v. CIT

Marubeni Itochu Steel India Pvt. Ltd., New Delhi vs. DCIT, Circle- 16(1), New Delhi

In the result, the appeal of the assessee is allowed

ITA 4581/DEL/2017[2013-14]Status: DisposedITAT Delhi27 Sept 2017AY 2013-14

Bench: Shri Lalit Kumar & Shri L.P. Sahu[A.Y. 2013-14] M/S Marubeni Itochu Steel India P. Ltd Vs. The Dcit F-17, 17A, 1St Floor, Salcon Rasvillas Circle 16(1) D-1, District Center, Saket New Delhi New Delhi Pan : Aaecm 6453 G [Appellant] [Respondent] Date Of Hearing : 27.09.2017 Date Of Pronouncement : .09.2017 Assessee By : Shri Himanshu Sinha, Adv Revenue By : Shri H.K. Choudhary, Cit- Dr

For Appellant: Shri Himanshu Sinha, AdvFor Respondent: Shri H.K. Choudhary, CIT- DR
Section 92CSection 92D

…t as income from trading activity. The same issue cropped in Mitsubishi Corporation India Pvt. Ltd. (supra) wherein the Coordinate Bench following the order of the Hon'ble jurisdictional High Court decision in the case of M/s Li & Fung India Pvt. Ltd vs. CIT (361 ITR 85) has upheld the contention of the assessee that it is no longer open to the revenue authorities to reconstruct the financial statements of the assessee by including the cost of products incurred by its AEs, in respect of which services are rendered, in its reconstructed financial statements and then putting the hypothetical trading profits, so arr…

Mckinsey Knowledge Centre India Pvt. Ltd., Gurgaon vs. DCIT, New Delhi

In the result ground No. 14 of the appeal of the assessee is dismissed

ITA 6648/DEL/2016[2012-13]Status: DisposedITAT Delhi11 May 2017AY 2012-13

Bench: Shri Bhavnesh Saini & Shri Prashant Maharishimckinsey Knowledge Centre India Pvt. Vs. Dcit, Ltd, Circle-16(2) 3Rd Floor, Block-Iii, Vatika Business Park, New Delhi Sector-49, Sohna Road, Gurgaon Pan:Aaccm2356G (Appellant) (Respondent)

For Appellant: Shri Porus KakaFor Respondent: Shri Amrendra Kumar, CIT DR
Section 143(3)Section 143(3)(ii)Section 144CSection 92C

…rdinate bench has already decided this issue based on order of Hon‟ble high court in assessee‟s own case for earlier year wherein claim of eligibility of deduction under section 10 A of income tax act was decided. He submitted that Hon‟ble Delhi High Court in 361 ITR 85 (Delhi) in Li & Fung India private limited versus CIT has held that even in case of TNMM strict criteria is of independent enterprise, carrying out a comparable transaction, with caveat that this will only be a guide. Indeed, emphasis is very clear on finding a comparable transaction. Therefore he submitted that functional analysis of both the ass…

Syngenta India Ltd, Pune vs. Asst CIT RG 1(3)(1), Mumbai

In the result, appeal of the revenue stands dismissed

ITA 147/MUM/2016[2011-12]Status: DisposedITAT Mumbai30 Nov 2016AY 2011-12

Bench: Shri R. C. Sharma & Shri Amit Shuklait(Tp)A No.: 1373/Mum/2014 (Assessment Year 2009-10) ससिंगएनता इिंडिमा प्राइवेट सरसभटेि Vs Dy. Cit- 1(3), Room No.564, Syngenta India Ltd., Aayakar Bhavan, S No. 110/11/3, Amar Paradigm M K Road, Mumbai – 400 020 Baner Road, Pune -411 045 स्थमी रेखा सिं. Pan: Aaecs 9424 P अऩीराथी (Appellant) प्रत्मथी (Respondent)

For Respondent: Shri N K Chand
Section 143(3)Section 144C(5)Section 253(1)Section 92C(2)

…Act. 28 ससिंगएनता इिंडिमा प्राइवेट सरसभटेि Syngenta India Ltd IT(TP)A 1373/Mum/2014 ITA 1926/Mum/2014 ITA 560/Mum/2015 ITA 147/Mum/2016 Mr. Bhutani, also relied upon Delhi High Court decision in the case of Li Fung India (P) Ltd. vs. CIT reported in [2014] 361 ITR 85, wherein Hon‟ble court has held that AO/TPO cannot resort to adjustments on vague generalities. He further submitted that, here in this case one has to see from this angle also, whether Assessing Officer has recorded his „satisfaction‟ before making reference to the TPO for computing the ALP of an international transaction specifically with regard…

Syngenta India Ltd, Pune vs. Addl CIT RG 1(3), Mumbai

In the result, appeal of the revenue stands dismissed

ITA 560/MUM/2015[2010-11]Status: DisposedITAT Mumbai30 Nov 2016AY 2010-11

Bench: Shri R. C. Sharma & Shri Amit Shuklait(Tp)A No.: 1373/Mum/2014 (Assessment Year 2009-10) ससिंगएनता इिंडिमा प्राइवेट सरसभटेि Vs Dy. Cit- 1(3), Room No.564, Syngenta India Ltd., Aayakar Bhavan, S No. 110/11/3, Amar Paradigm M K Road, Mumbai – 400 020 Baner Road, Pune -411 045 स्थमी रेखा सिं. Pan: Aaecs 9424 P अऩीराथी (Appellant) प्रत्मथी (Respondent)

For Respondent: Shri N K Chand
Section 143(3)Section 144C(5)Section 253(1)Section 92C(2)

…Act. 28 ससिंगएनता इिंडिमा प्राइवेट सरसभटेि Syngenta India Ltd IT(TP)A 1373/Mum/2014 ITA 1926/Mum/2014 ITA 560/Mum/2015 ITA 147/Mum/2016 Mr. Bhutani, also relied upon Delhi High Court decision in the case of Li Fung India (P) Ltd. vs. CIT reported in [2014] 361 ITR 85, wherein Hon‟ble court has held that AO/TPO cannot resort to adjustments on vague generalities. He further submitted that, here in this case one has to see from this angle also, whether Assessing Officer has recorded his „satisfaction‟ before making reference to the TPO for computing the ALP of an international transaction specifically with regard…

DCIT 1(3), Mumbai vs. Syngenta India Ltd, Pune

In the result, appeal of the revenue stands dismissed

ITA 1926/MUM/2014[2009-10]Status: DisposedITAT Mumbai30 Nov 2016AY 2009-10

Bench: Shri R. C. Sharma & Shri Amit Shuklait(Tp)A No.: 1373/Mum/2014 (Assessment Year 2009-10) ससिंगएनता इिंडिमा प्राइवेट सरसभटेि Vs Dy. Cit- 1(3), Room No.564, Syngenta India Ltd., Aayakar Bhavan, S No. 110/11/3, Amar Paradigm M K Road, Mumbai – 400 020 Baner Road, Pune -411 045 स्थमी रेखा सिं. Pan: Aaecs 9424 P अऩीराथी (Appellant) प्रत्मथी (Respondent)

For Respondent: Shri N K Chand
Section 143(3)Section 144C(5)Section 253(1)Section 92C(2)

…Act. 28 ससिंगएनता इिंडिमा प्राइवेट सरसभटेि Syngenta India Ltd IT(TP)A 1373/Mum/2014 ITA 1926/Mum/2014 ITA 560/Mum/2015 ITA 147/Mum/2016 Mr. Bhutani, also relied upon Delhi High Court decision in the case of Li Fung India (P) Ltd. vs. CIT reported in [2014] 361 ITR 85, wherein Hon‟ble court has held that AO/TPO cannot resort to adjustments on vague generalities. He further submitted that, here in this case one has to see from this angle also, whether Assessing Officer has recorded his „satisfaction‟ before making reference to the TPO for computing the ALP of an international transaction specifically with regard…

Pr. Commissioner of Income Tax, Delhi- 5 vs. Li & Fung (India) Private Limited

ITA/674/2016HC Delhi05 Sept 2016

Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MS. JUSTICE DEEPA SHARMA

…at the Income Tax Act does not authorise the broadening of the cost base in the circumstances. The Court had observed as follows: “3. On this the ITAT noticed that this Court’s decision in Li and Fung India Pvt. Ltd. vs. Commissioner of Income Tax (2014) 361 ITR 85 (Del) held that there is no legal authority under the Income Tax Act, 1961 or the Rules to broaden the cost base in that manner. Consequently, the ITAT directed a remission of the matter to the AO for redetermination of the cost base in tune with this Court’s judgment in Li and Fung India Pvt. Ltd. (supra). In the abovesaid judgment, this…

New Delhi Television Ltd., New Delhi vs. ACIT, New Delhi

In the result this ground is allowed for statistical purposes

ITA 2851/DEL/2013[2007-08]Status: DisposedITAT Delhi17 Aug 2016AY 2007-08

Bench: Shri J. Sudhakar Reddy & Ms. Suchitra Kamblea.Y. 2007-08

For Appellant: Sh. C.S.Aggarwal, Sr.Adv. &For Respondent: Sh. Amit Mohan Govil, CIT, D.R
Section 143(3)Section 92C

…action “having a bearing on profits, income, loss or assets” and submitted that, share holder activity does not have a bearing on these items. (l) He relied on the decision of Hon’ble Delhi High Court in the case of M/s Li & Fung India Pvt.Ltd. vs. CIT (2014) 361 ITR 85 and submitted that, no intangible asset has been created. When the assessee’s employees worked for the formation of the assessee’s UK Subsidiary and the expenditure reimbursed was nothing but the cost of assessee’s employees for the time worked in formation of the UK company. 7.2. On the issue of ESOPs, the second ground in the assessee’s appeal,…

DCIT, New Delhi vs. M/S New Delhi Television Ltd., New Delhi

In the result this ground is allowed for statistical purposes

ITA 2752/DEL/2013[2007-08]Status: DisposedITAT Delhi17 Aug 2016AY 2007-08

Bench: Shri J. Sudhakar Reddy & Ms. Suchitra Kamblea.Y. 2007-08

For Appellant: Sh. C.S.Aggarwal, Sr.Adv. &For Respondent: Sh. Amit Mohan Govil, CIT, D.R
Section 143(3)Section 92C

…action “having a bearing on profits, income, loss or assets” and submitted that, share holder activity does not have a bearing on these items. (l) He relied on the decision of Hon’ble Delhi High Court in the case of M/s Li & Fung India Pvt.Ltd. vs. CIT (2014) 361 ITR 85 and submitted that, no intangible asset has been created. When the assessee’s employees worked for the formation of the assessee’s UK Subsidiary and the expenditure reimbursed was nothing but the cost of assessee’s employees for the time worked in formation of the UK company. 7.2. On the issue of ESOPs, the second ground in the assessee’s appeal,…

Mitsui & Co India Pvt. Ltd, New Delhi vs. Deputy Commissioner of Income-Tax, New Delhi

Appeals are partly allowed and

ITA 1795/DEL/2015[2010-11]Status: DisposedITAT Delhi25 Apr 2016AY 2010-11

Bench: Shri S.V.Mehrotrashri Kuldip Singhmitsui & Co. India Pvt. Ltd., Vs. Dcit, Plot No. D-1, 4Th Floor, Salcon Ras Vilas, Circle 6 (1), District Centre Saket, New Delhi. New Delhi (Pan :Aadcm4488J) Mitsui & Co. India Pvt. Ltd., Vs. Dcit, Plot No. D-1, 4Th Floor, Salcon Ras Vilas, Circle 16(2), District Centre Saket, New Delhi New Delhi. (Pan :Aadcm4488J) (Appellant) (Respondent) Assessee By : Shri Ved Jain, Advocate, Sh. Ashu Goel, Ca & Shri Ashish, Ca Revenue By : Shri Amrendra Kumar, Cit, Dr Date Of Hearing : 27.01.2016 Date Of Pronouncement : 25.04.2016

For Appellant: Shri Ved Jain, Advocate, Sh. Ashu Goel, CA and Shri Ashish, CAFor Respondent: Shri Amrendra Kumar, CIT, DR
Section 14ASection 234BSection 438Section 92CSection 92C(2)

…issue has been decided by the Tribunal in case of Mitsubishi Corporation India (P_ Ltd. vs. DCIT – ITA No.5042/Del/2011 dated 21.10.2014 by following the judgment rendered by Hon’ble jurisdictional High Court in case of Li and Fung India Pvt. Ltd. vs. CIT – 361 ITR 85 (Del.) and held that the TPO was not justified in re-characterizing the transaction as trading transaction and it has also been held that cost of sales incurred by the AE cannot be included to work out the profit for determination of the ALP; (iii) that the nature of services rendered by the assessee company to its AE since 2003 are the same an…

M/S. Mitsui & Co. India Pvt Ltd., New Delhi vs. DCIT, New Delhi

Appeals are partly allowed and

ITA 813/DEL/2014[2009-10]Status: DisposedITAT Delhi25 Apr 2016AY 2009-10

Bench: Shri S.V.Mehrotrashri Kuldip Singhmitsui & Co. India Pvt. Ltd., Vs. Dcit, Plot No. D-1, 4Th Floor, Salcon Ras Vilas, Circle 6 (1), District Centre Saket, New Delhi. New Delhi (Pan :Aadcm4488J) Mitsui & Co. India Pvt. Ltd., Vs. Dcit, Plot No. D-1, 4Th Floor, Salcon Ras Vilas, Circle 16(2), District Centre Saket, New Delhi New Delhi. (Pan :Aadcm4488J) (Appellant) (Respondent) Assessee By : Shri Ved Jain, Advocate, Sh. Ashu Goel, Ca & Shri Ashish, Ca Revenue By : Shri Amrendra Kumar, Cit, Dr Date Of Hearing : 27.01.2016 Date Of Pronouncement : 25.04.2016

For Appellant: Shri Ved Jain, Advocate, Sh. Ashu Goel, CA and Shri Ashish, CAFor Respondent: Shri Amrendra Kumar, CIT, DR
Section 14ASection 234BSection 438Section 92CSection 92C(2)

…issue has been decided by the Tribunal in case of Mitsubishi Corporation India (P_ Ltd. vs. DCIT – ITA No.5042/Del/2011 dated 21.10.2014 by following the judgment rendered by Hon’ble jurisdictional High Court in case of Li and Fung India Pvt. Ltd. vs. CIT – 361 ITR 85 (Del.) and held that the TPO was not justified in re-characterizing the transaction as trading transaction and it has also been held that cost of sales incurred by the AE cannot be included to work out the profit for determination of the ALP; (iii) that the nature of services rendered by the assessee company to its AE since 2003 are the same an…

Commissioner of Income Tax-6 vs. Marubeni India P. Ltd

ITA/94/2015HC Delhi23 Apr 2015

Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE R.K.GAUBA

Section 260

…d Indian parties by using valuable intangibles which has benefited the group as a whole, but never substantiated those conclusions. On the basis of its appreciation of the facts and the decision of this Court in M/s Li & Fung India Pvt. Ltd. v. CIT (2014) 361 ITR 85 (Del) (which reversed the decision in Li & Fung, by the ITAT, relied on by the TPO) the ITAT held that: “8. Considering the entirety of the facts and circumstances prevailing in the present case, we find that the findings returned by the TPO - the assessee assuming substantial risks; doing critical functions for its AEs; and allowing the user…

The Commissioner of Income Tax-II vs. Li &Fung ( India) Pvt. Ltd

ITA/505/2014HC Delhi11 Mar 2015

…lising the assessment was by the increased cost base of the total cost incurred for determining ALP in both the years in question. 3. On this the ITAT noticed that this Court’s decision in Li and Fung India Pvt. Ltd. vs. Commissioner of Income Tax (2014) 361 ITR 85 (Del) held that there is no legal authority under the Income Tax Act, 1961 or the Rules to broaden the cost base in that manner. Consequently, the ITAT directed a remission of the matter to the AO for redetermination of the cost base in tune with this Court’s judgment in Li and Fung India Pvt. Ltd. (supra). In the abovesaid judgment, this C…