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“cost plus method”

Transfer PricingSection 92CSection 92C204 judgments

The decision most relied on for cost plus method is CIT v. Cushman & Wakefield (India) (P.) Ltd. (367 ITR 730), cited in 120 judgments on BharatTax.

Leading authorities on cost plus method

CIT v. Cushman & Wakefield (India) (P.) Ltd.
367 ITR 730 · 2014 · High Court
120
citing judgments

This case determines the Arm's Length Price (ALP) for intra-group services and reimbursements, clarifying when charges constitute services warranting a mark-up versus mere pass-through costs. It provides guidance on the circumstances under which an ALP adjustment, including an ALP of 'nil', is appropriate for such transactions.

Asstt. CIT v. MSS India (P.) Ltd.
32 SOT 132 · 2009 · ITAT
26
citing judgments

The Comparable Uncontrolled Price (CUP) method is preferred when comparable transactions with third parties are available to determine if transfer prices are at arm's length. Transactional profit methods are considered methods of last resort.

Brigade Global Services Pvt. Ltd. v. ITO
33 Taxmann.com 618 · 2013 · ITAT
11
citing judgments

A company engaged in outsourced ITES activities can be excluded as a comparable if a significant portion of its activities were outsourced, resulting in an abnormally low employee cost.

Judgments citing cost plus method

Lg Electronics Inc., Korea vs. DCIT Int. Taxation, Circle 2(2)(1), New Delhi

In the result, the appeals filed by the assessee in ITA Nos

ITA 650/DEL/2021[2008-09]Status: DisposedITAT Delhi17 Nov 2021AY 2008-09

Bench: Shri N.K. Billaiya & Shri Sudhanshu Srivastava

For Appellant: Shri Deepak Chopra, AdvFor Respondent: Mrs. Anupama Anand, CIT-DR
Section 147Section 263

other household electronic appliances. Assessment in the case of the appellant for the captioned Assessment Years so completed was on the basis of cost plus method on the salary of expat employees, wherein 25% of salary is attributable to operation in India and cost of 20% of salary was applied ... company had submitted without prejudice that PE could be inferred in India but the attribution of profit of PE may be based on cost plus method of salary of expat employees. The ld. CIT further noted that the assessee company clearly mentioned that salary of 50% is attributable to operation

Lg Electronics Inc., Korea vs. DCIT Int. Taxation, Circle 2(2)(1), New Delhi

In the result, the appeals filed by the assessee in ITA Nos

ITA 649/DEL/2021[2010-11]Status: DisposedITAT Delhi17 Nov 2021AY 2010-11

Bench: Shri N.K. Billaiya & Shri Sudhanshu Srivastava

For Appellant: Shri Deepak Chopra, AdvFor Respondent: Mrs. Anupama Anand, CIT-DR
Section 147Section 263

other household electronic appliances. Assessment in the case of the appellant for the captioned Assessment Years so completed was on the basis of cost plus method on the salary of expat employees, wherein 25% of salary is attributable to operation in India and cost of 20% of salary was applied ... company had submitted without prejudice that PE could be inferred in India but the attribution of profit of PE may be based on cost plus method of salary of expat employees. The ld. CIT further noted that the assessee company clearly mentioned that salary of 50% is attributable to operation

Lg Electronics Inc., Korea vs. DCIT Int. Taxation, Circle 2(2)(1), New Delhi

In the result, the appeals filed by the assessee in ITA Nos

ITA 648/DEL/2021[2006-07]Status: DisposedITAT Delhi17 Nov 2021AY 2006-07

Bench: Shri N.K. Billaiya & Shri Sudhanshu Srivastava

For Appellant: Shri Deepak Chopra, AdvFor Respondent: Mrs. Anupama Anand, CIT-DR
Section 147Section 263

other household electronic appliances. Assessment in the case of the appellant for the captioned Assessment Years so completed was on the basis of cost plus method on the salary of expat employees, wherein 25% of salary is attributable to operation in India and cost of 20% of salary was applied ... company had submitted without prejudice that PE could be inferred in India but the attribution of profit of PE may be based on cost plus method of salary of expat employees. The ld. CIT further noted that the assessee company clearly mentioned that salary of 50% is attributable to operation

Lg Electronics Inc., Korea vs. DCIT Int. Taxation, Circle 2(2)(1), New Delhi

In the result, the appeals filed by the assessee in ITA Nos

ITA 647/DEL/2021[2005-06]Status: DisposedITAT Delhi17 Nov 2021AY 2005-06

Bench: Shri N.K. Billaiya & Shri Sudhanshu Srivastava

For Appellant: Shri Deepak Chopra, AdvFor Respondent: Mrs. Anupama Anand, CIT-DR
Section 147Section 263

other household electronic appliances. Assessment in the case of the appellant for the captioned Assessment Years so completed was on the basis of cost plus method on the salary of expat employees, wherein 25% of salary is attributable to operation in India and cost of 20% of salary was applied ... company had submitted without prejudice that PE could be inferred in India but the attribution of profit of PE may be based on cost plus method of salary of expat employees. The ld. CIT further noted that the assessee company clearly mentioned that salary of 50% is attributable to operation

Lg Electronics Inc., Korea vs. DCIT Int. Taxation, Circle 2(2)(1), New Delhi

In the result, the appeals filed by the assessee in ITA Nos

ITA 646/DEL/2021[2004-05]Status: DisposedITAT Delhi17 Nov 2021AY 2004-05

Bench: Shri N.K. Billaiya & Shri Sudhanshu Srivastava

For Appellant: Shri Deepak Chopra, AdvFor Respondent: Mrs. Anupama Anand, CIT-DR
Section 147Section 263

other household electronic appliances. Assessment in the case of the appellant for the captioned Assessment Years so completed was on the basis of cost plus method on the salary of expat employees, wherein 25% of salary is attributable to operation in India and cost of 20% of salary was applied ... company had submitted without prejudice that PE could be inferred in India but the attribution of profit of PE may be based on cost plus method of salary of expat employees. The ld. CIT further noted that the assessee company clearly mentioned that salary of 50% is attributable to operation

Trl Riceland Pvt. Ltd., (Formerly Known As M/S Tilda Riceland P.Ltd.), New Delhi vs. Addl.CIT, Special Range- 9, New Delhi

In the result, the appeal of the assessee is allowed partly for the statistical purposes

ITA 7366/DEL/2018[2014-15]Status: DisposedITAT Delhi17 Nov 2021AY 2014-15

Bench: Shri O.P. Kant & Shri. K. N. Chary[Through Video Conferencing] Assessment Year: 2014-15

Section 1Section 115JSection 271

provisions of section 92C of the Act. The Section 92C(1) has prescribed different method of benchmarking including CUP, resale price method, cost plus method, profit split method and transactional net margin method. The Section 92C(2) of the Act has provided manner of applying most approved method in terms

DCIT, Circle- 1(1)(1), International Taxation, New Delhi vs. At Kearney Ltd.- India Branch Office, Gurgaon

In the result, ITA.No.7888/Del

ITA 7888/DEL/2017[2010-11]Status: DisposedITAT Delhi14 Sept 2021AY 2010-11

Bench: Shri R.K. Panda & Shri Kul Bharat

For Appellant: And Shri Ashish Goel, C.AFor Respondent: Shri Vijay Choudhary, Sr. DR
Section 195

intermediary in the provision of 22 ITA.Nos.7887 & 7888/Del./2017 M/s. AT Kearney Limited, Gurgaon. services, it is important in applying the cost plus method that the return or mark-up is appropriate for the performance of an agency function rather than for the performance of the services themselves ... ./2017 M/s. AT Kearney Limited, Gurgaon. 1.8. In context of the present case, what the above guidance highlights is that in applying the cost plus method, it is important to ensure that the arm’s length profit mark up is charged on the value adding costs incurred by the sendee

DCIT, Circle- 1(1)(1), International Taxation, New Delhi vs. At Kearney Ltd.- India Branch Office, Gurgaon

In the result, ITA.No.7888/Del

ITA 7887/DEL/2017[2009-10]Status: DisposedITAT Delhi14 Sept 2021AY 2009-10

Bench: Shri R.K. Panda & Shri Kul Bharat

For Appellant: And Shri Ashish Goel, C.AFor Respondent: Shri Vijay Choudhary, Sr. DR
Section 195

intermediary in the provision of 22 ITA.Nos.7887 & 7888/Del./2017 M/s. AT Kearney Limited, Gurgaon. services, it is important in applying the cost plus method that the return or mark-up is appropriate for the performance of an agency function rather than for the performance of the services themselves ... ./2017 M/s. AT Kearney Limited, Gurgaon. 1.8. In context of the present case, what the above guidance highlights is that in applying the cost plus method, it is important to ensure that the arm’s length profit mark up is charged on the value adding costs incurred by the sendee

Nectar Lifesciences Ltd., Chandigarh vs. ACIT, Circle- 18(1), New Delhi

In the result, the additions, made by the Assessing

ITA 567/DEL/2019[2014-15]Status: PendingITAT Delhi13 Sept 2021AY 2014-15

Bench: Shri Amit Shukla & Dr. B.R.R. Kumar

For Appellant: Shri Yogesh Monga, CAFor Respondent: Ms. Meera Srivastava, CIT-DR
Section 143(3)Section 80

steam pricing, but it was for power generation and not for entire steam. Therefore, the MAM applied by the assesses is rejected and Cost Plus Method is applied to benchmark the transaction. The assessee has failed to submit cost of the steam produced. However, on functional analysis of activity regarding ... rate of Rs. 2,160/ MT can be treated as Arm’s Length Price. 14. It was further submitted that even if the cost plus method is taken into consideration then one hand is to be borne in mind that the steam is not a commercial commodity

Haier Appliances India Pvt. Ltd., New Delhi vs. ITO, New Delhi

In the result, the appeal of the revenue is dismissed and the appeal of the assessee is allowed

ITA 2968/DEL/2016[2011-12]Status: DisposedITAT Delhi16 Aug 2021AY 2011-12

Bench: Ms. Suchitra Kambledr. B. R. R. Kumarita No. 1594/Del/2016 : Asstt. Year: 2011-12 Income Tax Officer, Vs M/S Haier Appliances (India) Pvt. Ward-11(1), Ltd., Building No. 1, Okhla Phase- New Delhi Iii, Near Modi Mill, New Delhi (Appellantt (Respondent) Pan No. Aabch3162L

For Appellant: Sh. Ajay Vohra, Sr. AdvFor Respondent: Sh. Surenderpal, CIT DR
Section 143(3)Section 144CSection 271(1)(c)Section 92Section 92B

case of Sony Erickson Mobile Communication India Pvt. Ltd. 374 ITR 118 rejected the application of BLT and directed the computation by considering Cost Plus Method (CPM) as the most appropriate method leading to adjustment of Rs.11,19,14,589/-. ITA Nos. 1594 & 2968/Del/2016 5 Haier Appliances India

ITO, New Delhi vs. M/S. Haier Appliances (India) Pvt. Ltd., New Delhi

In the result, the appeal of the revenue is dismissed and the appeal of the assessee is allowed

ITA 1594/DEL/2016[2011-12]Status: DisposedITAT Delhi16 Aug 2021AY 2011-12

Bench: Ms. Suchitra Kambledr. B. R. R. Kumarita No. 1594/Del/2016 : Asstt. Year: 2011-12 Income Tax Officer, Vs M/S Haier Appliances (India) Pvt. Ward-11(1), Ltd., Building No. 1, Okhla Phase- New Delhi Iii, Near Modi Mill, New Delhi (Appellantt (Respondent) Pan No. Aabch3162L

For Appellant: Sh. Ajay Vohra, Sr. AdvFor Respondent: Sh. Surenderpal, CIT DR
Section 143(3)Section 144CSection 271(1)(c)Section 92Section 92B

case of Sony Erickson Mobile Communication India Pvt. Ltd. 374 ITR 118 rejected the application of BLT and directed the computation by considering Cost Plus Method (CPM) as the most appropriate method leading to adjustment of Rs.11,19,14,589/-. ITA Nos. 1594 & 2968/Del/2016 5 Haier Appliances India

DCIT, New Delhi vs. M/S Arham It Infrastructure Pvt. Ltd., New Delhi

In the result the appeal of the Revenue in ITA No

ITA 5300/DEL/2016[2012-13]Status: DisposedITAT Delhi27 Jul 2021AY 2012-13

Bench: Shri N.K. Billaiya & Shri K.N. Chary[A.Y 2013-14]

For Appellant: Shri Sudesh Garg, AdvFor Respondent: Shri Jagdish Singh, Sr. DR

that it is working as contractor for providing repair and maintenance only at the common area and in contracts, these are based on cost plus method, which may fluctuate. The assessee also referred to the relevant clause of the agreement which is as under: “The Lessee shall ... maintenance charges received. It is pertinent to point out that the maintenance charges are worked out and charges on the basis of cost plus method. The income derived under this head is offered as “income from business and profession. ’’ The offer of income under different heads i.e Rental Income under

Sankei Giken India Pvt. Ltd., Rewari vs. JCIT, Rewari

In the result the appeal of the assessee is allowed for statistical purposes

ITA 197/DEL/2016[2009-10]Status: DisposedITAT Delhi04 Jun 2021AY 2009-10

Bench: Shri Amit Shukla & Shri Prashant Maharishi(Through Video Conferencing) Sankei Giken India Pvt. Ltd, Vs. Jcit, Plot No. 84-93, Sector-, Industrial Rewari Estate, Bawal, Rewari Pan: Aaics3604B (Appellant) (Respondent)

For Appellant: Shri S. D. Kapila, AdvFor Respondent: M. Baranwal, Sr. DR
Section 143(3)Section 144CSection 271

following grounds of appeal:- “1. That the Ld CIT grossly erred in upholding the erroneous approach followed by Ld TPO in applying the Cost Plus Method (‘CPM’) in respect of international transactions involving Purchase of Raw Material and Machinery by comparing the transactional margin of its Associated Enterpnse (‘AE’) with ... Both these transactions were benchmarked by taking Japanese associated enterprises as a ‘tested party’, adopting most appropriate method as cost plus method. There are certain other international transactions but they are accepted by both the parties and therefore, those do not require any further narration. The ld AO accepted that

Amadeus India Pvt. Ltd., New Delhi vs. ACIT, Circle 2(2), New Delhi

In the result, the appeal of assessee are allowed

ITA 8700/DEL/2019[2015-16]Status: DisposedITAT Delhi31 May 2021AY 2015-16

Bench: Sh. Anil Chaturvedi & Sh. Amit Shukla(Through Video Conferencing) Amadeus India Pvt. Ltd., Vs. Acit E-9, Connaught Hose, Circle – 2(2), Connaught Place, New Delhi New Delhi - 110001 Pan No. Aaaca 0364 L (Appellant) (Respondent) Assessee By Shri Taran Deep Singh, Adv. Revenue By Shri Surender Pal, Cit-D.R. Date Of Hearing: 18/05/2021 Date Of Pronouncement: 31/05/2021 Order Per Anil Chaturvedi, Am: This Appeal Filed By The Assessee Is Directed Against The Order Dated 19.09.2019 Of The Asst. Commissioner Of Income Tax, Circle-2(2), Delhi Under Section 143(3) R.W.S 144C(13) Of The Act Pursuant To The Direction Of Dispute Resolution Panel (Drp) – 1, Delhi For Assessment Year 2015-16. 2. The Relevant Facts As Culled From The Material On Records Are As Under :

Section 143(2)Section 143(3)Section 144CSection 144C(2)Section 144C(5)Section 92BSection 92CSection 92C(3)Section 92F

Method”. 8. That on facts and in law the AO/TPO/DRP erred in making/ upholding Substantive TP Adjustment on account of AMP expenses invoking “cost plus method”. 9. That without prejudice, while benchmarking alleged AMP as a separate “transaction” the TPO has erred in applying a mark-up of 15.62% while

Dentsply India Pvt Ltd vs. DCIT, New Delhi

The appeals of the assessee are allowed

ITA 752/DEL/2009[2002-03]Status: DisposedITAT Delhi04 May 2021AY 2002-03

Bench: Sh. Amit Shukladr. B. R. R. Kumarita No. 752/Del/2009 : Asstt. Year: 2002-03 Ita No. 1682/Del/2009 : Asstt. Year: 2003-04 Ita No. 4195/Del/2009 : Asstt. Year: 2004-05 Dentsply India Pvt. Ltd., Vs Dcit, Plot No. 263, Fies, Patparganj Circle-10(1), Industrial Area, Delhi-110092 New Delhi (Appellantt (Respondent) Pan No. Aaacd3171E Assessee By : Sh. Himanshu Sinha, Adv. Revenue By : Ms. Meera Srivastava, Cit Dr Date Of Hearing: 25.03.2021 Date Of Pronouncement: 04.05.2021

For Appellant: Sh. Himanshu Sinha, AdvFor Respondent: Ms. Meera Srivastava, CIT DR
Section 254

determined by following any of the most appropriate method viz. (i) Comparable Uncontrolled Price method (CUP); (ii) Resale Price Method (RPM); (iii) Cost Plus Method (CPM); (iv) Profits Split Method (PSM) and (v) Transactional Net Margin Method (TNMM). In CUP method, the focus is directly on the price

Dentsply India Pvt. Ltd, New Delhi vs. DCIT, New Delhi

The appeals of the assessee are allowed

ITA 4195/DEL/2009[2004-05]Status: DisposedITAT Delhi04 May 2021AY 2004-05

Bench: Sh. Amit Shukladr. B. R. R. Kumarita No. 752/Del/2009 : Asstt. Year: 2002-03 Ita No. 1682/Del/2009 : Asstt. Year: 2003-04 Ita No. 4195/Del/2009 : Asstt. Year: 2004-05 Dentsply India Pvt. Ltd., Vs Dcit, Plot No. 263, Fies, Patparganj Circle-10(1), Industrial Area, Delhi-110092 New Delhi (Appellantt (Respondent) Pan No. Aaacd3171E Assessee By : Sh. Himanshu Sinha, Adv. Revenue By : Ms. Meera Srivastava, Cit Dr Date Of Hearing: 25.03.2021 Date Of Pronouncement: 04.05.2021

For Appellant: Sh. Himanshu Sinha, AdvFor Respondent: Ms. Meera Srivastava, CIT DR
Section 254

determined by following any of the most appropriate method viz. (i) Comparable Uncontrolled Price method (CUP); (ii) Resale Price Method (RPM); (iii) Cost Plus Method (CPM); (iv) Profits Split Method (PSM) and (v) Transactional Net Margin Method (TNMM). In CUP method, the focus is directly on the price

Dentsply India Pvt. Ltd, New Delhi vs. DCIT, New Delhi

The appeals of the assessee are allowed

ITA 1682/DEL/2009[2003-04]Status: DisposedITAT Delhi04 May 2021AY 2003-04

Bench: Sh. Amit Shukladr. B. R. R. Kumarita No. 752/Del/2009 : Asstt. Year: 2002-03 Ita No. 1682/Del/2009 : Asstt. Year: 2003-04 Ita No. 4195/Del/2009 : Asstt. Year: 2004-05 Dentsply India Pvt. Ltd., Vs Dcit, Plot No. 263, Fies, Patparganj Circle-10(1), Industrial Area, Delhi-110092 New Delhi (Appellantt (Respondent) Pan No. Aaacd3171E Assessee By : Sh. Himanshu Sinha, Adv. Revenue By : Ms. Meera Srivastava, Cit Dr Date Of Hearing: 25.03.2021 Date Of Pronouncement: 04.05.2021

For Appellant: Sh. Himanshu Sinha, AdvFor Respondent: Ms. Meera Srivastava, CIT DR
Section 254

determined by following any of the most appropriate method viz. (i) Comparable Uncontrolled Price method (CUP); (ii) Resale Price Method (RPM); (iii) Cost Plus Method (CPM); (iv) Profits Split Method (PSM) and (v) Transactional Net Margin Method (TNMM). In CUP method, the focus is directly on the price

Roxtec India Private Limited, New Delhi vs. ACIT, Circle- 21(2), New Delhi

In the result, the appeal of the assessee is allowed in part and for statistical purposes

ITA 3840/DEL/2017[2013-14]Status: DisposedITAT Delhi22 Feb 2021AY 2013-14

Bench: Shri Anil Chaturvedi & Shri K. Narasimha Charyassessment Year: 2013-14

For Appellant: Mr. Vijay Mehta, CAFor Respondent: Sh. Sunil Kumar, CIT/DR
Section 144CSection 154

support its case. We have carefully considered the facts in that case wherein the method adopted by the assessee was cost plus method and against which the learned transfer pricing officer adopted transactional net margin method. On careful perusal of the facts of that decision, they are distinct from ... before us. In that case the assessee determine the arm’s-length price of its transactions with foreign associates on the basis of cost plus method by offering the comparison of gross profit markup margin on its transactions with unrelated parties which was held to be correct. In that case

M/S. Dabur India Ltd., New Delhi vs. Addl.CIT, New Delhi

In the result, the appeals filed by the Revenue are partly allowed and the appeals filed by the assessee are partly allowed for statistical purposes

ITA 6525/DEL/2014[2008-09]Status: DisposedITAT Delhi18 Feb 2021AY 2008-09

Bench: Shri R.K. Panda & Ms Suchitra Kamble

For Appellant: Shri Ajay Vohra, Sr. AdvocateFor Respondent: Shri Anupam Kant Garg, CIT-DR
Section 115JSection 143(1)Section 143(2)Section 143(3)Section 80GSection 80ISection 92CSection 92E

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : I-2 : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND MS

DCIT, New Delhi vs. M/S. Dabur India Ltd., New Delhi

In the result, the appeals filed by the Revenue are partly allowed and the appeals filed by the assessee are partly allowed for statistical purposes

ITA 6256/DEL/2014[2008-09]Status: DisposedITAT Delhi18 Feb 2021AY 2008-09

Bench: Shri R.K. Panda & Ms Suchitra Kamble

For Appellant: Shri Ajay Vohra, Sr. AdvocateFor Respondent: Shri Anupam Kant Garg, CIT-DR
Section 115JSection 143(1)Section 143(2)Section 143(3)Section 80GSection 80ISection 92CSection 92E

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : I-2 : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND MS