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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

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

ITA 497/JPR/2023[2017-18]Status: DisposedITAT Jaipur21 Feb 2024AY 2017-18
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 the ld. CIT(A) after considering the arguments of the assessee

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

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

ITA 496/JPR/2023[2016-17]Status: DisposedITAT Jaipur21 Feb 2024AY 2016-17

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

Assisstant Commissioner of Income Tax, Ajmer vs. Shree Cement Ltd, Beawar

ITA 490/JPR/2023[2016-17]Status: DisposedITAT Jaipur21 Feb 2024AY 2016-17
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 the ld. CIT(A) after considering the arguments of the assessee

Assisstant Commissioner of Income Tax, Ajmer vs. Shree Cement Ltd, Beawar

ITA 489/JPR/2023[2015-16]Status: DisposedITAT Jaipur21 Feb 2024AY 2015-16
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

Fulford (India) Ltd, Mumbai vs. DCIT Cir 2(1), Mumbai

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

ITA 338/MUM/2014[2009-10]Status: DisposedITAT Mumbai06 Feb 2024AY 2009-10

Bench: Shri Vikas Awasthy & Shri Gagan Goyalआ.अ.सं.338/मुं/2014(िन.व.2009-10) Fulford (India) Limited, Platina Building, 8Th Floor, C-59, G-Block, Bandra Kurla Complex, Bandra (East), Mumbai – 400 098 Pan: Aaacf-1795-L ...... अपीलाथ"/Appellant बनाम Vs. Dy.Commissioner Of Income Tax, Circle 2(1), Room No.561, 5Th Floor, Aaykar Bhavan, M.K.Road, Mumbai – 400 020. ..... "ितवादी/Respondent Assessee By : Shri P.J. Pardiwala, Sr. Advocate With Shri Madhur Agrawal, Advocate Revenue By : Dr. Yogesh Kamat, Cit-Dr & Shri Ujjwal Kumar Chavan, Sr.Ar सुनवाई क" ितिथ/ Date Of Hearing : 10/11/2023 घोषणा क" ितिथ/ Date Of Pronouncement : 06/02/2024 आदेश/Order Per Vikas Awasthy, Jm: This Appeal By The Assessee Is Directed Against The Assessment Order Dated 13/12/2013 Passed U/S. 143(3) R.W.S. 144C(13) Of The Income Tax Act, 1961 [In Short ‘The Act’], For The Assessment Year 2009-10. 2. The Facts Of The Case In Brief Are: The Assessee/Appellant Is Engaged In The Business Of Manufacturing & Distribution Of Pharmaceutical Products In 2 India. The Assessee Is A Subsidiary Of Schering-Plough Corporation, Usa. During The Period Relevant To The Assessment Year Under Appeal, The Assessee Entered Into Various International Transactions With Its Associated Enterprise(Ae). During The Course Of Assessment Proceedings The Transfer Pricing Officer (Tpo) Made Adjustment In Respect Of Following International Transactions: Sl.No. Description Of International Transaction Adjustment Made By Tpo (Amount In Rs.) 1. Import Of Active Pharmaceutical 4,81,96,325 Ingredients (Apis) 2 Import Of Finished Drug Formulations (Fdf) 15,75,53,000 Total 20,57,49,325

For Appellant: Shri P.J. Pardiwala, Sr. Advocate with Shri Madhur Agrawal, AdvocateFor Respondent: Dr. Yogesh Kamat, CIT-DR &
Section 143(3)

applicable to the facts of the present case as in the said assessment year, the Tribunal was concerned with the issue of whether cost plus method or CUP, which is the most appropriate method. In the given facts, the Tribunal held that for determining ALP of APIs, cost + method cannot ... tried to distinguish the aforesaid decision on the ground that in Assessment Year 2003-04 assessee had benchmarked the transaction by applying cost plus method. The Tribunal was considering CUP vis-à-vis cost plus method as the most appropriate method. TNMM was not under consideration before the Tribunal

The ACIT, Circle-1(1)(1), Vadodara vs. Schaeffler India Limited (Earlier Known As Fag Bearings India Ltd.), Vadodara

Appeals are partly allowed for statistical purposes and Department’s appeals are dismissed

ITA 150/AHD/2023[2013-14]Status: DisposedITAT Ahmedabad12 Jan 2024AY 2013-14

Bench: Shri Waseem Ahmed & Shri Siddhartha Nautiyal

For Appellant: Shri Bhavin Marfatia, A.RFor Respondent: Dr. Darsi Suman Ratnam, CIT D.R. & Shri
Section 234Section 234ASection 271(1)(c)Section 37Section 90(2)

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 Limited (Earlier Known As Fag Bearings India Ltd.), Vadodara

Appeals are partly allowed for statistical purposes and Department’s appeals are dismissed

ITA 149/AHD/2023[2012-13]Status: DisposedITAT Ahmedabad12 Jan 2024AY 2012-13

Bench: Shri Waseem Ahmed & Shri Siddhartha Nautiyal

For Appellant: Shri Bhavin Marfatia, A.RFor Respondent: Dr. Darsi Suman Ratnam, CIT D.R. & Shri
Section 234Section 234ASection 271(1)(c)Section 37Section 90(2)

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 Limited (Earlier Known As Fag Bearings India Ltd.), Vadodara

Appeals are partly allowed for statistical purposes and Department’s appeals are dismissed

ITA 148/AHD/2023[2011-12]Status: DisposedITAT Ahmedabad12 Jan 2024AY 2011-12

Bench: Shri Waseem Ahmed & Shri Siddhartha Nautiyal

For Appellant: Shri Bhavin Marfatia, A.RFor Respondent: Dr. Darsi Suman Ratnam, CIT D.R. & Shri
Section 234Section 234ASection 271(1)(c)Section 37Section 90(2)

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 Limited (Earlier Known As Fag Bearings India Ltd.), Vadodara

Appeals are partly allowed for statistical purposes and Department’s appeals are dismissed

ITA 147/AHD/2023[2010-11]Status: DisposedITAT Ahmedabad12 Jan 2024AY 2010-11

Bench: Shri Waseem Ahmed & Shri Siddhartha Nautiyal

For Appellant: Shri Bhavin Marfatia, A.RFor Respondent: Dr. Darsi Suman Ratnam, CIT D.R. & Shri
Section 234Section 234ASection 271(1)(c)Section 37Section 90(2)

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 Limited (Earlier Known As Fag Bearings India Ltd.), Vadodara vs. The Assistant Commissioner of Income Tax, Circle-1(1)(2) Now Circle-1(1)(1), Vadodara

Appeals are partly allowed for statistical purposes and Department’s appeals are dismissed

ITA 137/AHD/2023[2014-15]Status: DisposedITAT Ahmedabad12 Jan 2024AY 2014-15

Bench: Shri Waseem Ahmed & Shri Siddhartha Nautiyal

For Appellant: Shri Bhavin Marfatia, A.RFor Respondent: Dr. Darsi Suman Ratnam, CIT D.R. & Shri
Section 234Section 234ASection 271(1)(c)Section 37Section 90(2)

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 Limited (Earlier Known As Fag Bearings India Ltd.), Vadodara vs. The Assistant Commissioner of Income Tax, Circle-1(1)(2) Now Circle-1(1)(1), Vadodara

Appeals are partly allowed for statistical purposes and Department’s appeals are dismissed

ITA 136/AHD/2023[2013-14]Status: DisposedITAT Ahmedabad12 Jan 2024AY 2013-14

Bench: Shri Waseem Ahmed & Shri Siddhartha Nautiyal

For Appellant: Shri Bhavin Marfatia, A.RFor Respondent: Dr. Darsi Suman Ratnam, CIT D.R. & Shri
Section 234Section 234ASection 271(1)(c)Section 37Section 90(2)

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 Limited (Earlier Known As Fag Bearings India Ltd.), Vadodara vs. The Assistant Commissioner of Income Tax, Circle-1(1)(2) Now Circle-1(1)(1), Vadodara

Appeals are partly allowed for statistical purposes and Department’s appeals are dismissed

ITA 135/AHD/2023[2012-13]Status: DisposedITAT Ahmedabad12 Jan 2024AY 2012-13

Bench: Shri Waseem Ahmed & Shri Siddhartha Nautiyal

For Appellant: Shri Bhavin Marfatia, A.RFor Respondent: Dr. Darsi Suman Ratnam, CIT D.R. & Shri
Section 234Section 234ASection 271(1)(c)Section 37Section 90(2)

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 Limited (Earlier Known As Fag Bearings India Ltd.), Vadodara vs. The Assistant Commissioner of Income Tax, Circle-1(1)(2) Now Circle-1(1)(1), Vadodara

Appeals are partly allowed for statistical purposes and Department’s appeals are dismissed

ITA 134/AHD/2023[2011-12]Status: DisposedITAT Ahmedabad12 Jan 2024AY 2011-12

Bench: Shri Waseem Ahmed & Shri Siddhartha Nautiyal

For Appellant: Shri Bhavin Marfatia, A.RFor Respondent: Dr. Darsi Suman Ratnam, CIT D.R. & Shri
Section 234Section 234ASection 271(1)(c)Section 37Section 90(2)

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 Limited (Earlier Known As Fag Bearings India Ltd.), Vadodara vs. The Assistant Commissioner of Income Tax, Circle-1(2) Now Circle-1(1)(1), Vadodara

Appeals are partly allowed for statistical purposes and Department’s appeals are dismissed

ITA 133/AHD/2023[2010-11]Status: DisposedITAT Ahmedabad12 Jan 2024AY 2010-11

Bench: Shri Waseem Ahmed & Shri Siddhartha Nautiyal

For Appellant: Shri Bhavin Marfatia, A.RFor Respondent: Dr. Darsi Suman Ratnam, CIT D.R. & Shri
Section 234Section 234ASection 271(1)(c)Section 37Section 90(2)

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

Lubrizol Advanced Materials India Pvt Ltd., Mumbai vs. Assessment Unit (Income Tax Department), Delhi

In the result, appeal of the assessee is allowed

ITA 2543/MUM/2022[2018-19]Status: DisposedITAT Mumbai09 Jan 2024AY 2018-19

Bench: Shri Prashant Maharishi, Am & Ms. Kavitha Rajagopal, Jm M/S Lubrizol Advanced Materials India Private Limited Assessment Unit (Income Tax App. & Bus. Centre, 6 Th Floor, Department) Mehra Industrial Estate, Vs. Mumbai Jaswanti Landmark, Lbs Marg, Vikhroli (West), Mumbai-400 079 (Respondent) (Appellant) Pan No. Aaac1436B Assessee By : Shri Madhur Agrawal, Ar Revenue By : Shri Pankaj Kumar, Dr Date Of Hearing: 21.12.2023 Date Of Pronouncement : 09.01.2024

For Appellant: Shri Madhur Agrawal, ARFor Respondent: Shri Pankaj Kumar, DR
Section 143Section 143(3)Section 144BSection 144CSection 144C(13)Section 144C(3)Section 92C

facts and in the circumstances of the case and in law, learned TPO/DRP erred in mentioning that the method adopted by Appellant is Cost Plus Method (CPM') instead of TNMM without considering the submissions and transfer pricing study conducted by Appellant wherein margins are computed using operating profit/operating cost

Ahlstrom Fibercomposites India Pvt. Ltd., Mundra (Kutch) vs. The Dy. Commr. of Income Tax, Gandhidham Circle, Gandhidham

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

ITA 437/RJT/2018[2014-15]Status: DisposedITAT Rajkot20 Dec 2023AY 2014-15

Bench: Ms Suchitra Kamble & Shri Waseem Ahmedआयकरअपीलसं./Ita No. 437/Rjt/2018 धििाधरणणवध/Asstt. Year:2014-2015 Ahlstrom Munksjo Vs. D.C.I.T, Fibercomposites(India) Pvt. Ltd., Gandhidham Circle, Mundra Sez Integrated Textile & Gandhidham. Apparel Park (Mitap), Plot No.07, Survey No.141, Mundra, Kutch-370421. Pan: Aagca9137M (Applicant) (Respondent) Assessee By : Shri Tushar Hemani, A.R Revenue By : Shri Shramdeep Sinha, C.I.T Dr सुिणाईकीतारीख/Date Of Hearing : 06/12/2023 घोवणाकीतारीख/Date Of Pronouncement: 20/12/2023 आदेश/O R D E R Per Waseem Ahmed:

For Appellant: Shri Tushar Hemani, A.RFor Respondent: Shri Shramdeep Sinha, C.I.T DR
Section 143(3)Section 144C(13)Section 37(1)Section 40Section 92

circumstances of the case and in law, the Learned AO/TPO has erred in and learned DRP has further erred in rejecting cost plus method ('CPM') adopted by the Appellant and selecting Transactional Net Margin Method ('TNMM') as the most appropriate method to determine the Arm's Length Price of sale ... including transaction of sale of finished goods for Rs. 16,95,59,316/- only. The assessee benchmarked the impugned transaction by adopting the Cost-Plus Method (CPM) as most appropriate method where the assessee has taken its own segmental data being export to AE and non-AE as internal comparable

Larsen & Toubro Ltd, Mumbai vs. DCIT RG 2(2), Mumbai

ITA 6589/MUM/2013[2004-05]Status: DisposedITAT Mumbai11 Dec 2023AY 2004-05
For Appellant: Shri J. D. Mistry, Sr. AdvocateFor Respondent: Dr. Yogesh Kamat
Section 115JSection 143(3)Section 14ASection 40A(9)Section 80HSection 92C

IN THE INCOME TAX APPELLATE TRIBUNAL "K" BENCH, MUMBAI SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER Larsen

Ups Express Private Limited (Formerly Known As Ups Jetair Express Private Limited), Mumbai vs. Dy.CIT 3(1) (1) Addl/Jt/Dy/CIT/ITO/NFAC-Delhi, Mumbai

In the result, appeal of the assessee is partly allowed

ITA 2439/MUM/2022[2018-19]Status: DisposedITAT Mumbai16 Oct 2023AY 2018-19

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm Ups Express Pvt. Ltd. (Formerly Known As Ups Jetair Dcit-3(1)(1) Express Pvt. Ltd. Aaykar Bhavan, M.K. Road, 6-A, Shyam Off Jvlr, Majas Vs. Mumbai-400020 Village, Jogeshwari(E) Mumbai-400060 (Appellant) (Respondent) Pan No. Aaacu4322N Assessee By : Shri Nitesh Joshi Revenue By : Shri Dhiraj Kumar Date Of Hearing: 18.07.2023 Date Of Pronouncement : 16.10.2023

For Appellant: Shri Nitesh JoshiFor Respondent: Shri Dhiraj Kumar
Section 131

cost-to- cost basis. The Ld. TPO noted that why transaction net margin method has been used for bench marking instead of cost plus method. He further noted that as similar adjustment made in the earlier year, why A.Y.2018-19 UPS Express Pvt. Ltd. (Formerly Known as UPS Jetair Express

Computer Sciences Corporation India Private Limited, Chennai vs. ACIT, Chennai

ITA 1654/CHNY/2011[2007-08]Status: DisposedITAT Indore06 Oct 2023AY 2007-08

Bench: Shri Vijay Pal Rao & Shri B.M. Biyaniassessment Year: 2007-08 Computer Sciences Acit, Corporation India Private Company Circle 1(3), Limited, Chennai [Formerly Covansys (India) Private Limited], बनाम/ Unit 13, Block 2, Sdf Buildings, Vs. Madras Export Processing Zone, Tambaram, Chennai (Assessee / Appellant) (Revenue / Respondent) Pan: Aaacc1351M Assessee By Shri Neeraj Jain, Adv. Shri Abhishek Agrawal, Ca Revenue By Shri P.K. Mishra, Cit Dr Date Of Hearing 12.07.2023 Date Of Pronouncement

Section 10ASection 143(2)Section 143(3)Section 144C(5)Section 14ASection 92C

considerable tax literature and text that CUP Method, i.e. Comparable Uncontrolled Price Method, RP Method, i.e. Resale Price Method and CP Method, i.e. Cost Plus Method can be applied to a transaction or closely linked, or continuous transactions. Profits Split Method and TNM Method grouped as ‘transactional profit methods

M/S Andritz Hydro Private Limited, Bhopal vs. The DCIT Circle 1(1), Bhopal

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

ITA 75/IND/2022[2017-18]Status: DisposedITAT Indore28 Aug 2023AY 2017-18

Bench: Shri Vijay Pal Rao & Shri B.M. Biyanim/S. Andritz Hydro Private Dcit Circe 1(1) Ltd. Bhopal Vs. D-17, Mpakvn Industrial Area, Mandideep Raisen (Appellant / Assessee) (Respondent/ Revenue) Pan: Aabcv 2466 R Assessee By Shri Rahul, Kaul Ar Revenue By Shri P.K. Mishra, Cit-Dr Date Of Hearing 13.06.2023 Date Of Pronouncement 28.08.2023

Section 143(3)Section 144C(13)Section 144C(5)Section 92C(3)

length price in respect of the purchase of the property or obtaining of the services by the enterprise from the associated enterprise; (c) cost plus method, by which,— (i) the direct and indirect costs of production incurred by the enterprise in respect of property transferred or services provided