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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

Humboldt Wedag India Pvt. Ltd, New Delhi vs. Additional/Joint/ Deputy/ACIT, Circle-10(1), Delhi

The appeal of the assessee is allowed

ITA 3074/DEL/2024[2020-21]Status: DisposedITAT Delhi10 Dec 2024AY 2020-21

Bench: Shri Pradip Kumar Kedia & Shri Anubhav Sharmaassessment Year: 2020-21 Humboldt Wedag India Pvt. Ltd., Vs Addl. Cit, A-36, Mehtab House, Circle-10(1), Mohan Co-Op. Estate, Delhi. Mathura Road, Delhi – 110 044. Pan: Aaach7474G (Appellant) (Respondent) Assessee By : Shri Siddhesh Chaugule, Ca & Ms Hemlata Sharma, Ca Revenue By : Shri Dharm Veer Singh, Cit-Dr Date Of Hearing : 20.11.2024 Date Of Pronouncement : .12.2024 Order Per Anubhav Sharma, Jm:

For Appellant: Shri Siddhesh Chaugule, CA &For Respondent: Shri Dharm Veer Singh, CIT-DR
Section 143(3)

charged on cost to cost basis. The transaction value was Rs 155,728,455/-. Analysis carried out in the TP documentation was Method: Cost Plus Method (‘CPM’)Tested Party NCPM:5%; Arm’s length NCPM: 3.47% - 6.56% 3 (median: 4.64%). Service fee to the extent of cost is allowed

Schaeffler India Limited, Vadodara, Gujarat vs. Assistant Director of Income Tax, CPC, Bangalore (Jao-Deputy Commissioner of Income Tax Circle1(1)(1), Vadodara, Gujarat

ITA 692/AHD/2024[2019-20]Status: DisposedITAT Ahmedabad27 Nov 2024AY 2019-20

Bench: Smt. Annapurna Gupta & Shri Siddhartha Nautiyal

For Appellant: Shri Bhavin Marfatia, A.RFor Respondent: Shri Prathvi Raj Meena, CIT D.R. & Smt
Section 143(3)Section 144CSection 234Section 271(1)(c)Section 37

charged. The rates reflect the actual fully-loaded costs incurred in providing such services, plus a profit mark-up 5% (Cost plus method). However, it is seen that the Reimbursement agreement between the appellant and Schaeffler GmBH, copy of which was furnished is for reimbursement of expenses incurred in relation ... that Schaeffler China charged service fee at the rate of actual cost incurred plus a markup of 5% which is of the nature Cost plus Method prescribed under the Rules. It also argued that even if, it is assumed that the mark

The ACIT, Circle-1(1)(1), Vadodara vs. Schaeffler India Ltd.( Erstwhile Luk India Pvt. Ltd)), Vadodara

ITA 299/AHD/2023[2012-13]Status: DisposedITAT Ahmedabad27 Nov 2024AY 2012-13

Bench: Smt. Annapurna Gupta & Shri Siddhartha Nautiyal

For Appellant: Shri Bhavin Marfatia, A.RFor Respondent: Shri Prathvi Raj Meena, CIT D.R. & Smt
Section 143(3)Section 144CSection 234Section 271(1)(c)Section 37

charged. The rates reflect the actual fully-loaded costs incurred in providing such services, plus a profit mark-up 5% (Cost plus method). However, it is seen that the Reimbursement agreement between the appellant and Schaeffler GmBH, copy of which was furnished is for reimbursement of expenses incurred in relation ... that Schaeffler China charged service fee at the rate of actual cost incurred plus a markup of 5% which is of the nature Cost plus Method prescribed under the Rules. It also argued that even if, it is assumed that the mark

Schaeffler India Ltd.(A Successor of Luk India Pvt. Ltd)), Vadodara vs. The ACIT, Circle-1(1)(1) (Earlier ACIT, Circle-1, Hosur), Vadodara

ITA 275/AHD/2023[2012-13]Status: DisposedITAT Ahmedabad27 Nov 2024AY 2012-13

Bench: Smt. Annapurna Gupta & Shri Siddhartha Nautiyal

For Appellant: Shri Bhavin Marfatia, A.RFor Respondent: Shri Prathvi Raj Meena, CIT D.R. & Smt
Section 143(3)Section 144CSection 234Section 271(1)(c)Section 37

charged. The rates reflect the actual fully-loaded costs incurred in providing such services, plus a profit mark-up 5% (Cost plus method). However, it is seen that the Reimbursement agreement between the appellant and Schaeffler GmBH, copy of which was furnished is for reimbursement of expenses incurred in relation ... that Schaeffler China charged service fee at the rate of actual cost incurred plus a markup of 5% which is of the nature Cost plus Method prescribed under the Rules. It also argued that even if, it is assumed that the mark

Parexel International Services India Pvt.Ltd, Chandigarh vs. ACIT, Circle-5(1), (Neac), Chandigarh

In the result, the appeal of the Assessee is partly allowed

ITA 129/CHANDI/2021[2016-17]Status: DisposedITAT Chandigarh28 Oct 2024AY 2016-17

Bench: SHRI. AAKASH DEEP JAIN (Vice President), SHRI. SHRI. KRINWANT SAHAY (Accountant Member)

For Appellant: Shri Dhanesh Bafna, CAFor Respondent: Shri Reuben Mathew Jacob, Addl. CIT, Sr. DR
Section 143(3)Section 234BSection 271(1)(C)

have charged the mark up for valuation of the sale of intangibles. The TPO, accordingly, sought to bench mark the transaction under the Cost Plus method, or the CPM. For this, the TPO imputed the cost plus mark up of 16.68%(operating profit / operation cost) on the sale value ... determined by the CPM. The transaction under consideration being a transaction in the nature of just intangible assets, therefore, cannot attract the Cost Plus Method, even as per the relevant Rule 10B itself. The Other Method, on the contrary, we find, is the method applicable. One of the foremost requirements

Assistant Commissioner of Income Tax Circle 2(1) (1) Ahmedabad, Vejalpur Ahmedabad vs. Inductotherm (India) Private Limited, Ahmedabad

Appeal are dismissed

ITA 598/AHD/2024[2016-17]Status: DisposedITAT Ahmedabad21 Oct 2024AY 2016-17

Bench: Ms. Suchitra Kamble & Shri Makarand V. Mahadeokar

For Appellant: Ms. Chandni Shah, ARFor Respondent: Shri Prateek Sharma, Sr.DR
Section 115JSection 143(2)Section 143(3)Section 144C(3)Section 14ASection 195Section 40Section 92C

made an upward adjustment of Rs.2,67,13,481/-, primarily by rejecting the aggregation approach adopted by the assessee and applying the Internal Cost-Plus Method (CPM) for certain comparable transactions. The Assessing Officer (AO), vide assessment order dated 10.01.2020 under Section 143(3) read with Section 144C ... Assessing Officer (AO) in respect of the international transactions of the assessee with its Associated Enterprises (AEs). The TPO, applying the Cost Plus Method (CPM), observed that the gross profit margin on AE sales was 39.52%, while the gross profit margin on non-AE sales was 66.60%, thus leading

Bestseller Fashion India Private Limited, Mumbai vs. Assistant Commissioner of Income Tax, 9(2)(1), Mumbai

In the result, the appeal filed by the assessee is allowed for statistical purpose

ITA 5140/MUM/2017[2011-12]Status: DisposedITAT Mumbai25 Jul 2024AY 2011-12

Bench: Shri Om Prakash Kant, Am & Ms. Kavitha Rajagopal, Jm Bestseller Fashion India Private Limited Asst. Cit-9(2)(1) The Lalit Residency, 1St Floor, Mumbai Vs. Lalit Hotelsahar Airport Road, Andheri (E), Mumbai-400 059 Pan/Gir No. Aaecb 2906 M (Assessee) : (Respondent) : Shri Jabir Contractor Assessee By Respondent By : Shri Ashish Kumar Agrawal Date Of Hearing : 29.04.2024 Date Of Pronouncement : 25.07.2024

For Respondent: Shri Ashish Kumar Agrawal
Section 143(1)Section 143(2)Section 143(3)Section 144C(1)Section 92C

When an AE is acting only as an agent or intermediary in the provision of 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

Hospira Healthcare India Private Limited, Chennai vs. DCIT, Chennai

ITA 469/CHNY/2017[2012-13]Status: DisposedITAT Chennai22 Jul 2024AY 2012-13

Bench: Shri Aby T. Varkey & Shri Jagadishआयकर अपील सं./Ita No.469/Chny/2017 िनधा<रण वष< /Assessment Year: 2012-13 M/S. Hospira Healthcare India The Dy. Commissioner Of Pvt. Ltd., Vs. Income Tax, Sri-Nivas, New No.86 (Old No.89), Corporate Circle-2(2), Gn Chetty Road, T Nagar, Chennai. Chennai – 600 017. [Pan: Aaabco 2190F] (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" की ओर से/ Appellant By : Shri Sriram Seshadri, C.A Jkथ" की ओर से /Respondent By : Shri A. Sasikumar, Cit सुनवाई की तारीख/Date Of Hearing : 25.04.2024 घोषणा की तारीख /Date Of Pronouncement : 22.07.2024 आदेश / O R D E R Per Jagadish, A.M : Aforesaid Appeal Filed By The Assessee Against The Assessment Order Passed By The Dcit, Corporate Circle-2(2), Chennai U/S.143(3) R.W.S. 144C(13) Of The Income Tax Act, 1961 (Hereinafter “The Act”) For The Assessment Year 2012-13, In Pursuance Of The Directions Issued By The Dispute Resolution Panel, Bengalore (Hereinafter ‘Drp’) Vide Directions Dated 09.11.2016. :- 2 -:

For Appellant: Shri Sriram Seshadri, C.A JKFor Respondent: Shri A. Sasikumar, CIT
Section 143(3)

Board may prescribe. Five specific methods have been set out, namely, (a) comparable uncontrolled price method; (b) resale price method; (c) cost plus method; (d) profit split method; (e) transactional net margin method. Sub-section (2) of section 92C mandates that: `The most appropriate method referred to in sub-section

Advance Power Display Systems Ltd, Andheri - East vs. Dy Commissioner of Income Tax -9(1)(1), Aaykar Bhavan, Church Gate, Mumbai

In the result, the appeals of the assessee are allowed

ITA 1535/MUM/2024[AY 2014-15]Status: DisposedITAT Mumbai11 Jul 2024

Bench: Shri Narendra Kumar Billaiya, Hon’Ble & Shri Rahul Chaudhary, Hon’Ble

For Appellant: Shri Y.P. Trivedi/ Shri Nishit Gandhi & Smt. UshaFor Respondent: Shri Uodal Raj Singh, Sr. D/R
Section 40ASection 92CSection 92C(2)

Display Systems Ltd., Andheri-east 4 Sr. No. International Transactions Amount (INR) Method Used 1 Import of Raw materials 1,248,909,787 Cost Plus method 2 Export of Finished goods 2,140,087,822 Cost Plus Method 3 Purchase of Fixed Assets 15,151,903 Cost Plus Method ... During the course of transfer pricing proceedings, the Transfer Pricing Officer (TPO) observed that in Form 3CEB report, the assessee used cost plus method whereas in transfer pricing study report (TPSR), TNMM was applied, which was accepted by the TPO. The TPO further noted that that the assessee has benchmarked

Advance Power Display Systems Ltd, Seepz, Andheri- East vs. Asst. Commission of Income Tax-9(1)(1), Aaykar Bhavan, Churchgate, Mumbai

In the result, the appeals of the assessee are allowed

ITA 1534/MUM/2024[AY 2015-16]Status: DisposedITAT Mumbai11 Jul 2024

Bench: Shri Narendra Kumar Billaiya, Hon’Ble & Shri Rahul Chaudhary, Hon’Ble

For Appellant: Shri Y.P. Trivedi/ Shri Nishit Gandhi & Smt. UshaFor Respondent: Shri Uodal Raj Singh, Sr. D/R
Section 40ASection 92CSection 92C(2)

Display Systems Ltd., Andheri-east 4 Sr. No. International Transactions Amount (INR) Method Used 1 Import of Raw materials 1,248,909,787 Cost Plus method 2 Export of Finished goods 2,140,087,822 Cost Plus Method 3 Purchase of Fixed Assets 15,151,903 Cost Plus Method ... During the course of transfer pricing proceedings, the Transfer Pricing Officer (TPO) observed that in Form 3CEB report, the assessee used cost plus method whereas in transfer pricing study report (TPSR), TNMM was applied, which was accepted by the TPO. The TPO further noted that that the assessee has benchmarked

Advance Power Display Systems Ltd, Seepz Sez, Andheri East vs. Asst Commisioner of Income Tax 9(1)(1), Aaykar Bhavan Church Gate, Mumbai

In the result, the appeals of the assessee are allowed

ITA 1533/MUM/2024[AY 2016-17]Status: DisposedITAT Mumbai11 Jul 2024

Bench: Shri Narendra Kumar Billaiya, Hon’Ble & Shri Rahul Chaudhary, Hon’Ble

For Appellant: Shri Y.P. Trivedi/ Shri Nishit Gandhi & Smt. UshaFor Respondent: Shri Uodal Raj Singh, Sr. D/R
Section 40ASection 92CSection 92C(2)

Display Systems Ltd., Andheri-east 4 Sr. No. International Transactions Amount (INR) Method Used 1 Import of Raw materials 1,248,909,787 Cost Plus method 2 Export of Finished goods 2,140,087,822 Cost Plus Method 3 Purchase of Fixed Assets 15,151,903 Cost Plus Method ... During the course of transfer pricing proceedings, the Transfer Pricing Officer (TPO) observed that in Form 3CEB report, the assessee used cost plus method whereas in transfer pricing study report (TPSR), TNMM was applied, which was accepted by the TPO. The TPO further noted that that the assessee has benchmarked

Advance Power Display Systems Ltd, Seepz, Andheri - East vs. Dy Commissioner of Income Tax 9(1)(1), Aaykar Bhavan, Church Gate, Mumbai

In the result, the appeals of the assessee are allowed

ITA 1532/MUM/2024[AY 2013-14]Status: DisposedITAT Mumbai11 Jul 2024

Bench: Shri Narendra Kumar Billaiya, Hon’Ble & Shri Rahul Chaudhary, Hon’Ble

For Appellant: Shri Y.P. Trivedi/ Shri Nishit Gandhi & Smt. UshaFor Respondent: Shri Uodal Raj Singh, Sr. D/R
Section 40ASection 92CSection 92C(2)

Display Systems Ltd., Andheri-east 4 Sr. No. International Transactions Amount (INR) Method Used 1 Import of Raw materials 1,248,909,787 Cost Plus method 2 Export of Finished goods 2,140,087,822 Cost Plus Method 3 Purchase of Fixed Assets 15,151,903 Cost Plus Method ... During the course of transfer pricing proceedings, the Transfer Pricing Officer (TPO) observed that in Form 3CEB report, the assessee used cost plus method whereas in transfer pricing study report (TPSR), TNMM was applied, which was accepted by the TPO. The TPO further noted that that the assessee has benchmarked

DCIT Circle-10(1), New Delhi vs. Htc India Pvt Ltd, Gurgaon

In the result, the appeal of the Revenue is dismissed

ITA 1785/DEL/2020[2011-12]Status: DisposedITAT Delhi30 May 2024AY 2011-12

Bench: Sh. Kul Bharatdr. B. R. R. Kumar

For Appellant: NoneFor Respondent: Sh. Vivek Kr. Upadhyay, Sr. DR
Section 271(1)Section 271(1)(c)Section 92BSection 92C

having regard to the nature of transaction or class of transaction etc., namely (a) comparable uncontrolled price method; (b) resale price method; (c) cost plus method; (d) profit split method; (e) transactional net margin method; (f) such other method as may be prescribed by the Board. Sub-section (2) provides

Skaps Industries India Pvt. Ltd., Ahmedabad vs. The Deputy Commissioner of Income Tax, Circle-8, Ahmedabad

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

ITA 595/AHD/2017[2010-11]Status: DisposedITAT Ahmedabad08 May 2024AY 2010-11

Bench: Ms. Suchitra Kamble & Shri Waseem Ahmedassessment Year: 2010-11

Section 10BSection 142(1)Section 143(2)Section 14ASection 35DSection 35D(2)Section 43BSection 92Section 92C

transaction carried with AE in preceding years. 5. Ld. CIT (A) erred in law in holding that TPO has rightly rejected the CPM (Cost Plus Method) for benchmarking sale transaction by considering it as incorrect method ignoring fact that appellant being manufacturer has entered into specific long-term selling contracts ... additions in ALP of International Transaction. 10. The Ld. DR submitted that the Assessing Officer/Transfer Pricing Officer has rightly held that the cost-plus method is sensitive to differences in accounting practices and, therefore, any difference in accounting practice such as treatment of commission and discounts as reduction in sale

Idemia Syscom India Private Limited, Noida vs. CIT(Tp), Delhi-2, New Delhi

In the result, the appeal of the assessee in ITA No

ITA 647/DEL/2024[2020-21]Status: DisposedITAT Delhi28 Mar 2024AY 2020-21

Bench: Shri Saktijit Dey & Shri N.K. Billaiya

For Appellant: Shri M.S. Syali, Sr. AdvFor Respondent: Shri Rajesh Kumar, CIT- DR
Section 263Section 92C

such a case the production company could be considered as performing a low-risk service to the counterparty, and the cost plus method could be the most appropriate transfer pricing method, subject to the principles in Chapter II.” 20. The assessee is a Contract Manufacturer of SIM Card and Smart

Ab Sciex Pte Ltd, Singapore vs. ACIT, Circle Int Taxation 1(1)(1), New Delhi

In the result, the second issue which was remanded by the

ITA 1969/DEL/2022[2019-20]Status: DisposedITAT Delhi21 Mar 2024AY 2019-20

Bench: Sh. Shamim Yahya & Sh. Yogesh Kumar U.S.Ita No. 514/Del/2021, (A.Y. 2017-18) Ab Sciex Pte Ltd. Vs. Acit Block 33, 46 Marsiling Circle International Taxation Industrial Estate, 1(1)(1) Singapore. 739256 New Delhi Pan: Aanca1192P Appellant Respondent

profits attributable to the activities carried out by Adobe India area to be ascertained by PSM as, according to him the Cost Plus method used by Adobe India for determining the ALP doe s not fairly capture the profits which could legitimately be taxed under the Act. In our view

Ab Sciex Pte Ltd, Singapore vs. ACIT, Circle Int Taxation 1(1)(1), Delhi

In the result, the second issue which was remanded by the

ITA 1968/DEL/2022[2018-19]Status: DisposedITAT Delhi21 Mar 2024AY 2018-19

Bench: Sh. Shamim Yahya & Sh. Yogesh Kumar U.S.Ita No. 514/Del/2021, (A.Y. 2017-18) Ab Sciex Pte Ltd. Vs. Acit Block 33, 46 Marsiling Circle International Taxation Industrial Estate, 1(1)(1) Singapore. 739256 New Delhi Pan: Aanca1192P Appellant Respondent

profits attributable to the activities carried out by Adobe India area to be ascertained by PSM as, according to him the Cost Plus method used by Adobe India for determining the ALP doe s not fairly capture the profits which could legitimately be taxed under the Act. In our view

Ab Sciex Pte Ltd., Singapore vs. ACIT, Circle Int. Tax. 1(1)(1), New Delhi

In the result, the second issue which was remanded by the

ITA 514/DEL/2021[2017-18]Status: DisposedITAT Delhi21 Mar 2024AY 2017-18

Bench: Sh. Shamim Yahya & Sh. Yogesh Kumar U.S.Ita No. 514/Del/2021, (A.Y. 2017-18) Ab Sciex Pte Ltd. Vs. Acit Block 33, 46 Marsiling Circle International Taxation Industrial Estate, 1(1)(1) Singapore. 739256 New Delhi Pan: Aanca1192P Appellant Respondent

profits attributable to the activities carried out by Adobe India area to be ascertained by PSM as, according to him the Cost Plus method used by Adobe India for determining the ALP doe s not fairly capture the profits which could legitimately be taxed under the Act. In our view

Shree Cement Limited, Beawar vs. National Faceless Assessment Centre, Delhi

In the result, the appeal of the Revenue in ITA No

ITA 500/JPR/2023[215-16]Status: DisposedITAT Jaipur21 Feb 2024

Bench: or at the time of hearing of this appeal.

For Appellant: Sh. Dilip B Desai(C.A.)For Respondent: Sh. Alka Gautam (CIT) (V.H) &
Section 115JSection 143Section 143(3)Section 144BSection 144B(1)(xvi)Section 80Section 80I

stand taken by the department in earlier year. TPO rejected the bench marking analysis conducted by the assessee and substituted the same with Cost Plus Method and applied gross margin earned by other companies. On this issue ACIT vs. Shree Cement Ltd. the ld. CIT(A) after considering the arguments

Shree Cement Limited, Beawar vs. National Faceless Assessment Centre, Deputy Commissioner of Income Tax, Circle -2, Ajmer

ITA 498/JPR/2023[2018-19]Status: DisposedITAT Jaipur21 Feb 2024AY 2018-19
For Appellant: Sh. Dilip B Desai(C.A.)For Respondent: Sh. Alka Gautam (CIT) (V.H) &
Section 115JSection 143Section 143(3)Section 144B(1)(xvi)Section 80Section 80I

stand taken by the department in earlier year. TPO rejected the bench marking analysis conducted by the assessee and substituted the same with Cost Plus Method and applied gross margin earned by other companies. On this issue ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement