“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

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

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

Aaacorp Exim India Private Limited, Mumbai vs. D.C.I.T.-Circle-14(1)(1), Mumbai

In the result the appeal of the assessee is allowed

ITA 966/MUM/2023[2015-16]Status: DisposedITAT Mumbai25 Aug 2023AY 2015-16

Bench: Shri Amit Shukla & Shri Gagan Goyal & Aaa Corp Exim India Pvt. Ltd. C-206, Ghatkopar Industrial Estate, Off Lbs Marg, Ghatkopar (W), Mumbai-400 086 Pan: Aacca8815C ...... Appellant Vs. Dcit-14(1)(1) Income Tax Offices, Aayakar Bhavan, M. K. Road, Mumbai-400 020 ..... Respondent

For Appellant: Shri M. Subramanian, Ld. ARFor Respondent: Shri Rajesh Yadav, Ld. DR

Section 10ASection 143(3)Section 234BSection 234CSection 250Section 40ASection 40A(2)(b)Section 80Section 80ASection 92B

such persons or such other relevant factors as the Board may prescribe, 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. (2) The most appropriate

Amadeus India Pvt. Ltd., New Delhi vs. DCIT, Circle-1(1), New Delhi

In the result, assessee’s appeal stands partly allowed as above

ITA 468/DEL/2022[2017-18]Status: DisposedITAT Delhi24 Aug 2023AY 2017-18

Bench: SHRI SHAMIM YAHYA (Accountant Member), SHRI CHALLA NAGENDRA PRASAD (Judicial Member)

For Appellant: Shri Tarandeep Singh, AdvocateFor Respondent: Shri Rajesh Kumar, CIT DR

Section 14ASection 92BSection 92C(3)Section 92F

That on facts and in law the AOITPO/DRP erred in making 1 upholding Substantive TP Adjustment on account of AMP expenses invoking "Cost Plus Method". 8. That without prejudice, while benchmarking alleged AMP as a separate "transaction" the TPO has erred in applying a mark-up of 23.90% while computing ... Delhi High Court in case of Sony Mobile reported in 374 ITR 18 (Del), the TPO has also made a Substantive Adjustment applying Cost Plus Method as under :- Particulars Amount (Rs.) Total Expenditure on AMP by the 9,56,91,630 taxpayer Markup (23.90%) 2,28,70,300 Adjustment

Ahlstrom Fiber Composites (I) P. Ltd., Mundra (Kutch) vs. The Asstt. Commr. of Income Tax, Gandhidham Circle, Gandhidham

In the result, the appeals of the assessee are allowed for statistical purposes

ITA 85/RJT/2017[2012-13]Status: DisposedITAT Rajkot04 Aug 2023AY 2012-13

Bench: Smt.Annapurna Gupta & Shri Siddhartha Nautiyalit(Tp)A No.85& 287/Rjt/2017 Assessment Year :2012-13 & 2013-14

For Appellant: Shri S.N. Soparkar, ld.ARFor Respondent: Shri Shramdeep Sinha, ld.CIT-DR

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

segment comparison. 1.3. On the facts and in the circumstances of the case and in law, the Ld. AO/TPO 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 ... international transactions except that relating to the sale of finished goods to AE. 8. The assessee had benchmarked the said international transaction using Cost Plus Method (CPM) and taking its own segmental data of exports to AE and non-AE segments, treating the non-AE segment as an internal comparable

Ahlstrom Fiber Composites (I) P. Ltd., Mundra (Kutch) vs. The Asstt. Commr. of Income Tax, Gandhidham Circle, Gandhidham

In the result, the appeals of the assessee are allowed for statistical purposes

ITA 287/RJT/2017[2013-14]Status: DisposedITAT Rajkot04 Aug 2023AY 2013-14

Bench: Smt.Annapurna Gupta & Shri Siddhartha Nautiyalit(Tp)A No.85& 287/Rjt/2017 Assessment Year :2012-13 & 2013-14

For Appellant: Shri S.N. Soparkar, ld.ARFor Respondent: Shri Shramdeep Sinha, ld.CIT-DR

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

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

In the result, the appeals of the assessee are allowed for statistical purposes

ITA 97/RJT/2016[2011-12]Status: DisposedITAT Rajkot04 Aug 2023AY 2011-12

Bench: Smt.Annapurna Gupta & Shri Siddhartha Nautiyalit(Tp)A No.85& 287/Rjt/2017 Assessment Year :2012-13 & 2013-14

For Appellant: Shri S.N. Soparkar, ld.ARFor Respondent: Shri Shramdeep Sinha, ld.CIT-DR

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

Franklin Wardcorpp India Pvt. Ltd., Mumbai vs. Addll./Jt/ACIT, NFAC, Delhi

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

ITA 2487/MUM/2021[2017-18]Status: DisposedITAT Mumbai26 Jul 2023AY 2017-18

Bench: Shri Prashant Maharishi, Am & Ms Kavitha Rajagopal, Jm

For Appellant: Shri Ashok Rao &For Respondent: Ms. Vranda U. Matkari, DR

Section 143(3)Section 144BSection 144C(13)

circumstances of the case, the Hon‟ble DRP was not justified in rejecting the contention of the Appellant that either the Cost Plus method or the Comparable Uncontrol Price („CUP‟) Method should have been applied in arriving at the ALP of the concerned transactions with its Associated Enterprise

Franklin Wardcorpp India P. Ltd., Mumbai vs. Addl/Jt/Dy/DIT/Asstt/ITO, National E-Assessment Centre, Delhi

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

ITA 1279/MUM/2021[2016-17]Status: DisposedITAT Mumbai26 Jul 2023AY 2016-17

Bench: Shri Prashant Maharishi, Am & Ms Kavitha Rajagopal, Jm

For Appellant: Shri Ashok Rao &For Respondent: Ms. Vranda U. Matkari, DR

Section 143(3)Section 144BSection 144C(13)

DCIT-CC 5(2), Mumbai vs. Jetair Private Limited, New Delhi

In the result, appeal of the Revenue is dismissed and Cross Objection of the assessee is dismissed as infructuous

ITA 3050/MUM/2022[2018-19]Status: DisposedITAT Mumbai24 Jul 2023AY 2018-19

Section 131Section 133ASection 143(3)

tickets. Further, in the case of All Nippon Airways Co. Ltd and Air Seychelles Ltd., the commission was charged on the basis of cost plus method and not on the basis of any fixed rate or percentage of ORC 4.3.5.3 The AO made addition of ORC commission after applying ... shared Accounts staff+60% Assistant GM Sales & Marketing Thus, in the cases of All Nippon Airways Co. Ltd and Air Seychelles Ltd., the cost plus method has been adopted to arrive at ORC rates whereas in the case of Jet Air (India) Ltd.. ORC rates have been decided

Relaxo Footwear Ltd., Delhi vs. Assessing Officer, National E- Assesment Centre, New Delhi

In the result, the appeal of the assessee is allowed

ITA 590/DEL/2021[2016-17]Status: FixedITAT Delhi20 Jul 2023AY 2016-17

Bench: Shri M. Balaganesh & Shri Anubhav Sharmaassessment Year: 2016-17 Relaxo Footwear Ltd., Vs Assessing Officer, Plot No.10, Aggarwal City Square, National E-Assessment Centre, Manglam Place Sec.3, New Delhi. New Delhi – 110 085. Pan: Aaacr0259D (Applicant) (Respondent) Assessee By : Shri Ved Jain, Ca Revenue By : Shri R.D. Burman, Cit-Dr Date Of Hearing : 26.06.2023 Date Of Pronouncement : 20.07.2023 Order Per M. Balaganesh, Am: This Appeal In Ita No.590/Del/2021 For Ay 2016-17 Arises Out Of The Order Of The National E-Assessment Centre, Delhi (Hereinafter Referred To As ‘Ld. Ao’) Passed U/S 143(3) R.W.S. 144C & 144C(13) R.W.Ss 143(3A) & 143(3B) Of The Income-Tax Act, 1961 (Hereinafter Referred To As ‘The Act’) Dated 30.03.2021. 2. Though The Assessee Has Raised Several Grounds Before Us, The Only Effective Issue To Be Decided In This Appeal Is As To Whether The Ld. Ao Was Justified In Making Transfer Pricing Adjustment Of Rs.91,04,673/- Pursuant To The Directions Of The Ld. Drp In Respect Of The Specified Domestic Transactions.

For Appellant: Shri Ved Jain, CAFor Respondent: Shri R.D. Burman, CIT-DR

Section 143(3)Section 144C(5)Section 3Section 80I

assessee and they are also enclosed in pages 81-192 of the paper book filed before us. 5. The ld. TPO rejected the Cost Plus method adopted by the assessee as the Most Appropriate Method (MAM) and substituted the same with Transactional Net Margin Method (TNMM). The ld. TPO identified

Gruner India Pvt. Ltd., New Delhi vs. ACIT, Circle- 10(2), New Delhi

In the result, the appeal of the assessee is allowed

ITA 4062/DEL/2019[2012-13]Status: DisposedITAT Delhi03 Jul 2023AY 2012-13

Bench: Dr. B. R. R. Kumarsh. Yogesh Kumar Usita No. 4062/Del/2019 : Asstt. Year : 2012-13 M/S Gruner India Pvt. Ltd., Vs Acit, 15 Dsidc, Okhla Industrial Area, Circle-10(2), Phase-Ii, Scheme-1, New Delhi New Delhi-110020 (Appellant) (Respondent) Pan No. Aadcg2938H Assessee By : Sh. Pancham Sethi, Ca Revenue By : Sh. Mrinal Kumar Das, Sr. Dr Date Of Hearing: 05.04.2023 Date Of Pronouncement: 03.07.2023 Order Per Dr. B. R. R. Kumar: The Present Appeal Has Been Filed By The Assessee Against The Order Dated Xx.02.2019 Passed By The Ao U/S 254/143(3) R.W.S. 144C Of The Income Tax Act, 1961. 2. Following Grounds Have Been Raised By The Assessee:

For Appellant: Sh. Pancham Sethi, CAFor Respondent: Sh. Mrinal Kumar Das, Sr. DR

Section 234BSection 254Section 271(1)(c)Section 92C

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

Verint Systems (India) Pvt. Ltd., Gurgaon vs. DCIT, Circle- 26(1), New Delhi

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

ITA 7779/DEL/2018[2012-13]Status: DisposedITAT Delhi19 Jun 2023AY 2012-13

For Appellant: Shri S.K. Aggarwal, CAFor Respondent: Ms. Indu Bala Saini, JCIT DR

Section 115J

also rendered on- call support services to the customers of AEs. The assessee is a captive concern providing services to its AEs at cost plus method (cost plus markup @ 12.89%). All the expenses in the profit and loss account are marked up with an arm's length profit margin

Tpg Growth II Makets Pte Ltd., Mumbai vs. DCIT 4(1)(2), Mumbai

Accordingly, Ground No. 4 raised by the Appellant is partly allowed

ITA 1387/MUM/2022[2017-18]Status: DisposedITAT Mumbai06 Jun 2023AY 2017-18

For Appellant: Shri Dinesh BafnaFor Respondent: Dr. Samuel Pitta

Section 143(3)Section 144C(13)Section 144C(5)Section 5Section 9Section 92C(3)

Appropriate Method out of the following six methods: (a) Comparable Uncontrolled Price Method (For short ‘CUP Method’) (b) Resale Price Method (RPM) (c) Cost Plus Method (CPM) (d) Profit Split Method (PSM) (e) Transactional Net Margin Method (TNMM) (f) Such other method as may be prescribed by the Board

Jiostar India Private Limited, Mumbai vs. Asst CIT 16 (1), Mumbai

ITA 7872/MUM/2019[2015-16]Status: FixedITAT Mumbai05 Jun 2023AY 2015-16

Bench: Shri R.S. Syal (V.P.), Shri Aby T. Varkey (J.M.) & Shri Prashant Maharishi (A.M.) आयकर अपील सं. / Ita. No.7872/Mum/2019 "नधा"रण वष" / Assessment Year : 2015-16

Section 255(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. Thereafter, another method is given in clause (f), namely, such other method as may be prescribed ... concession in this regard and settles with even lesser degree of match for choosing a benchmark property. 34.5. Though the Resale price method, Cost plus method and the TNMM also deploy the expression `same and similar’ properties, but because of these methods being profit-based unlike

Larsen & Toubro Infotech Ltd, Mumbai vs. Addl CIT RG 2(2), Mumbai

ITA 1924/MUM/2014[2009-10]Status: DisposedITAT Mumbai31 May 2023AY 2009-10

For Appellant: Shri Percy J PardiwallaFor Respondent: Dr. Yogesh Kamat, CIT DR

Section 10ASection 143(2)Section 143(3)Section 144C(13)Section 144C(5)Section 92C

credit rating of the AE. Thereafter, the TPO proceeded to examine the applicability of External CUP with AE as a tested party and cost plus method. In order to locate External CUP the TPO found the corporate bond 13. rates at which the AE could have borrowed funds ... Appellant LIBOR + Method used by the Appellant would not qualify as a CUP. 14. Having concluded as above, the TPO applied Cost Plus Method to arrive at Arm‟s Length interest rate of 8.32%. According to the TPO the cost of borrowing to the Appellant was 6.05%. Since, the Appellant

Deputy Commissioner of Income Tax 14(2)(1), Mumbai vs. India Debt Management Private Limited, Mumbai

ITA 5532/MUM/2017[2012-13]Status: DisposedITAT Mumbai30 May 2023AY 2012-13

For Appellant: Shri Vijay MehtaFor Respondent: Shri Purnesh Gururani

Section 143(3)Section 144C(3)

length interest rate (all-in-rate) for the credit facility based on the above searches. 4.5.2.2. Resale price method 10 xx xx 4.5.2.3. Cost plus method xx xx 4.5.2.4. Profit split method xx xx 4.5.2.5. Transactional net margin method xx xx 4.5.2.6. Other method xx xx 4.5.3. Application

ACIT, Circle- 16(1), New Delhi vs. Timex Group India Ltd., New Delhi

In the result, assessee’s appeals are partly allowed, whereas,

ITA 2015/DEL/2018[2010-11]Status: DisposedITAT Delhi27 Mar 2023AY 2010-11

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Dey

Section 92B

expenses is an international transaction and directed to exclude the routine selling and distribution expenses and directed the TPO to use the cost plus method and further directed to apply the markup on excess AMP expenses as per sub-clause (ii) of Rule 108(I)(c). 25. However

ACIT, Circle- 16(1), New Delhi vs. Timex Group India Ltd., New Delhi

In the result, assessee’s appeals are partly allowed, whereas,

ITA 2013/DEL/2018[2009-10]Status: DisposedITAT Delhi27 Mar 2023AY 2009-10

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Dey

Section 92B

Timex Group India Ltd., New Delhi vs. ACIT, Circle- 16(1), New Delhi

In the result, assessee’s appeals are partly allowed, whereas,

ITA 1505/DEL/2018[2010-11]Status: DisposedITAT Delhi27 Mar 2023AY 2010-11

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Dey

Section 92B

Timex Group India Ltd., New Delhi vs. ACIT, Circle- 16(1), New Delhi

In the result, assessee’s appeals are partly allowed, whereas,

ITA 1504/DEL/2018[2009-10]Status: DisposedITAT Delhi27 Mar 2023AY 2009-10

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Dey

Section 92B

Asst. Commissioner of Income Tax, Central Circle-3, Surat vs. Antrix Diamond Exports Pvt. Ltd., Mumbai

In the result, these three appeals filed by the Revenue are dismissed

ITA 178/SRT/2022[2014-15]Status: DisposedITAT Surat21 Mar 2023AY 2014-15

Bench: Shri Pawan Singh, Jm & Dr. A. L. Saini, Am आयकर अपील सं./Ita Nos.176 To 178/Srt/2022 Assessment Years: (2012-13 To 2014-15) (Physical Hearing) The Acit, Central Circle-3, Vs. Antrix Diamond Exports Pvt. Ltd., Surat. 1006, Free Press Mark, Raheja Centre Nariman Point, Mumbai – 400021. "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aaaca3403G (Revenue)/(Appellant) (Assessee)/(Respondent) Assessee By Ms Ekta Sanghvi, Ca Revenue By Shri Ashok B. Koli, Cit(Dr) Date Of Hearing 10/02/2023 21/03/2023 Date Of Pronouncement

Section 271GSection 92CSection 92D(3)

polished diamond were at arm's length. As the assessee has transactions both on purchase as well as sales, neither RPM nor Cost Plus Method can be applied in its case. The assessee was also requested to produce complete breakup of both the transactions in terms of quality as well