“TNMM”

M/S Axa Group Solutions Private Limited, Bangalore vs. Assistant Commissioner of Income Tax Circle-1(1)(2), Bangalore

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

Bench: Shri George George K. & Ms. Padmavathy S

documentation, for the provision of Software Development Services and Admin Support Services, the assessee has applied Transaction Net Margin Method (TNMM) as the most appropriate method for determining the arm’s length price for the services rendered and considered the mark-up on total cost i.e. Operating profit / Total cost ... that international transaction for payment of management fees is a class of its own and the ALP of the transaction cannot be determined using TNMM and proceeded to calculate the ALP in respect of this transaction separately using CUP method. The TPO concluded that the assessee’s submissions are nothing

M/S. Citrix R & D India Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle- 2(1)(1), Bangalore

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

Bench: Shri Chandra Poojari & Shri George George K.

between high end software activity and low-end activity, so long as it falls within the purview of software development services. Besides, under the TNMM, such differences are tolerable and there is no requirement that the services / activities performed are identical. It is enough that the services are similar

M/S. Himalaya Wellness Company (Formerly Known As the Himalaya Drug Company), Bengaluru vs. The Deputy Commissioner of Income Tax, Circle- 6(1)(1), Bengaluru

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

Bench: Shri George George K, Jm & Ms.Padmavathy S, Am It(Tp)A No.259/Bang/2022 : Asst.Year 2017-2018 M/S.Himalaya Wellness Company The Deputy Commissioner Of (Formerly Known As The Himalaya Income-Tax, Circle 6(1)(1) V. Bengaluru. Drug Company), Makali, Tumkur Road Bengaluru – 562 162. Pan : Aadft3025B. (Appellant) (Respondent)

from the international transactions entered into with an AE. TNMM requires establishing comparability at a broad functional level, requiring comparison between net margins derived from the operation of the uncontrolled transactions and net margin derived in similar international transactions. Thus, TNMM removes the limitations of other methods and since ... taxmann.com 240/231 Taxman 113/374 ITR 118 held that the TNMM is a preferred TP Method, for determination of ALP of international transactions for its proficiency, convenience and reliability and in TNMM preference should be given to internal or in-house comparables; as held in paras 89 and 90 thereof

Enstage Software Private Limited, Bengaluru vs. Deputy Commissioner of Income Tax, Circle-2(1)(1), Bangalore

The appeal of the assessee is partly allowed

Bench: Smt. Beena Pillai & Ms. Padmavathy Sit(Tp)A No.260/Bang/2021 Assessment Year : 2016-17 M/S. Enstage Software Private Limited, Dcit (Exemptions), Vs. 16/1, Wings, 2Nd Floor, Circle – 2(1)(1), Cambridge Road, Halsuru, Bengaluru. Bengaluru – 560 008. Pan : Aaace 9963 B Appellant Respondent

development services Trade advances received Rs. 5,50,19,732/- 6. The assessee has adopted transactional net margin method (TNMM) as the most appropriate (MAM) for computing arms length IT(TP)A No.260/Bang/2021 Page 6 of 30 price (ALP). Operating profit/operating cost is taken as the profit level indicator ... when the determination of ‘ALP’ is done under the MAM being resale price method (‘RPM’), cost plus method (‘CPM’) or transactional net margin method (‘TNMM’). The relevant provisions of Rule 10CA of the Rules, in so far as it relates to choice of comparable companies, read as follows: “Computation

M/S Lenovo (India) Private Limited, Bangalore vs. Income Tax Officer Ward-4(1)(1), Bangalore

Bench: Shri. George George K & Ms. Padmavathy S

Profit (65,70,77,791) Net operating profit margin based on sales (%) -7.59% 6. The TPO rejected the CUP method and proceeded to apply TNMM as MAM. The TPO made fresh search of comparables and arrived at OP/OR of 4.83%. The TPO did not consider the submission of the assessee

M/S. Johnson & Johnson Surgical Vision India Private Limited ( Earlier Known As Abbott Medical Optics Private Limited), Gurgaon vs. Income Tax Officer, Ward- 11(1), Bangalore

In the result, the appeal filed by assessee stands partly allowed

Bench: Shri. Chandra Poojari & Smt. Beena Pillaiit(Tp)A No. 84/Bang/2020 Assessment Year : 2009-10 M/. Johnson & Johnson Surgical Vision India Pvt. Ltd. (Earlier Known As Abbott Medical Optics Pvt. Ltd.), The Income-Tax The Masterpiece, Officer, Level 5, Golf Course Road, Ward – 11(1), Sector – 54, Bangalore. Vs. Gurgaon – 122 002. Haryana. Pan: Aaeca8659C Appellant Respondent Assessee By : Shri Ajit Tolani, Ca Revenue By : Shri Pradeep Kumar, Cit Dr Date Of Hearing : 18-04-2022 Date Of Pronouncement : 10-06-2022 Order Per Beena Pillaipresent Appeal Arises Out Of Order Dated 05.11.2011 Passed By Ld.Cit(A)-4, Bangalore For A.Y. 2009-10 On Following Grounds Of Appeal: “The Grounds Mentioned Herein By The Appellant Are Without Prejudice To One Another. 1. That The Order Of The Learned Commissioner Of Income- Tax (Appeals)-4, Bangalore [‘Ld. Cit(A)'] & The Learned Income-Tax Officer, Ward 11(1), Bangalore (`Ld. Ao') To The Extent Prejudicial To The Appellant, Are Bad In Law, Contrary To Facts & Circumstances Of The Case & Liable To Be Quashed.

distribution segment, as there was no value addition to the products sold. The Ld.TPO rejected the method of assessee and applied TNMM as the most appropriate method. In reply to a show cause notice by Ld.TPO, the assessee agreed for TNMM to be a supplementary method regarding the transaction relating ... purchases of traded goods. 2.4 The Ld.TPO however applied TNMM as the most appropriate method and by applying one comparable with an average margin of 4.54% computed the adjustment, in the hands of the assessee at Rs. 4,19,98,575/-. On receipt of the transfer pricing order, the Ld.AO

M/S. Brillio Technologies Private Limited (Formerly Known As Collabera Solutions Private Limited), Bangalore vs. Deputy Commissioner of Income Tax, Circle-1(1)(1), Bangalore

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

Bench: Smt. Beena Pillai & Ms. Padmavathy S

international transactions:- SP No.5/Bang/2022 & IT(TP)A No.128/Bang/2022 Page 3 of 10 Particulars Amt (Paid) Amt (Recd) Method Software development & 160,07,64,665 TNMM support services Trade Receivable 83,62,94,157 TNMM Recovery of expenses 1,28,32,158 TNMM Availing professional services 35,33,400 Other - erroneous ... services to its AE. The ALP of the transaction in SWD segment provided to AE has been determined by applying Transactional Net Margin Method [TNMM] to be the Most Appropriate Method [MAM]. The Operating Profit to Operating Cost [OP/OC] has been determined as the Profit Level Indicator

M/S Applied Materials India Private Limited, Bangalore vs. Income Tax Officer Ward-1(1)(1), Bangalore

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

Bench: Shri George George K. & Ms. Padmavathy S

Transfer Pricing [TP] Study to justify the price paid in the international Transaction as at ALP by adopting the Transaction Net Margin Method [TNMM] as the Most Appropriate Method [MAM] of determining ALP. The Assessee selected Operating Profit/Operating Cost [OP/OC] as the Profit Level Indicator [PLI] for the purpose ... considered opinion, these are factually distinguishable and thus, we reject argument advanced by Ld.AR. 23.8. Alternatively, it has been argued that in TNMM, working capital adjustment subsumes sundry creditors. In such situation computing interest on outstanding receivables and loans and advances to associated enterprise would amount to double taxation

Hewlett-Packard Globalsoft Private Limtied, Bangalore vs. DCIT, Bangalore

In the result, the appeal filed by the assessee stands partly allowed for statistical purposes and the appeal of the revenue stands dismissed

lower profit margins. iv) Whether the Hon'ble DRP was right in seeking exact comparability while searching for comparable companies of the assessee under TNMM method whereas requirement of law and international jurisprudence require seeking similar comparable companies. v) Whether the Hon'ble DRP has erred on fact in deleting ... correct in fact and law in disregarding the position of law that there could be differences between the enterprises compared under the TNMM method that are not likely to materially affect the price or cost charged or the profits accruing to such enterprises? viii) In the facts and circumstances

DCIT, Bangalore vs. M/S Hewlett Packard Globalsoft Pvt. Ltd., Bangalore

In the result, the appeal filed by the assessee stands partly allowed for statistical purposes and the appeal of the revenue stands dismissed

lower profit margins. iv) Whether the Hon'ble DRP was right in seeking exact comparability while searching for comparable companies of the assessee under TNMM method whereas requirement of law and international jurisprudence require seeking similar comparable companies. v) Whether the Hon'ble DRP has erred on fact in deleting ... correct in fact and law in disregarding the position of law that there could be differences between the enterprises compared under the TNMM method that are not likely to materially affect the price or cost charged or the profits accruing to such enterprises? viii) In the facts and circumstances

Toyota Kirloskar Auto Parts Private Limited, Ramanagara vs. Deputy Commissioner of Income Tax, Ltu, Circle-2, Bangalore

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

Bench: Shri Beena Pillai & Shri Laxmi Prasad Sahu

section (3) of 92C of the Act. 3. The learned AO/ learned TPO/ Hon'ble DRP erred in disregarding the Transactional Net Margin Method (TNMM') search performed by the Appellant to justify the arm's length nature of the royalty transaction. 4. The learned AO/ learned ... erred in not understanding that the Appellant had adopted TNMM for benchmarking the royalty transaction in its TP Documentation of FY 2016-17 as the royalty paid is closely interlinked with the manufacturing operations carried out by the Appellant. 5. The learned AO/ learned TPO/ Hon'ble DRP erred

Essilor India Private Limited, Bengaluru vs. Deputy Commissioner of Income Tax, Circle-2(1)(1), Bangalore

In the result, the appeal filed by the assessee stands allowed

Bench: Shri. Chandra Poojari & Smt. Beena Pillaiit(Tp)A No. 219/Bang/2021 Assessment Year : 2016-17 M/S. Essilor India Pvt. Ltd., 10Th Floor, Prestige Trade The Deputy Tower, Commissioner Of 46, Palace Road, High Income Tax, Grounds Sampangi Rama Circle-2 (1)(1), Nagar, Vs. Bangalore. Bangalore – 560 001. Pan: Aaace4623J Appellant Respondent Assessee By : Shri Chavali Narayan, Ca : Dr. Manjunath Karkihalli, Revenue By Cit Dr Date Of Hearing : 30-03-2022 Date Of Pronouncement : 31-05-2022 Order Per Beena Pillaipresent Appeal Is Filed By The Assessee Against The Final Assessment Order Dated 30.03.2021 For Assessment Year 2016-17 Passed By The Ld.Acit, National E-Assessment Centre, Delhi On Following Grounds Of Appeal: “Based On The Facts & Circumstances Of The Case & In Law, Essilor India Private Limited (Hereinafter Referred To As "Eipl" Or The "Company" Or The "Appellant"), Respectfully Craves Leave To Prefer An Appeal Against The Order Passed By The Additional / Joint / Deputy / Assistant Commissioner Of Income Tax / Income Tax Officer

excess AMP expenditure is considered as cost, the net margin of the Appellant at 5.86% on operating revenue computed by the TPO based on TNMM is higher than the weighted average operating margin earned by comparable companies at 0.98% and thereby indicating that the Appellant has already been adequately remunerated ... learned AO/ TPO/ DRP erred in law and fact, by considering 'Other method' as the Most Appropriate Method ("MAW) and in not appreciating that TNMM has been considered as the MAM and the operating margin of the Appellant is higher that the operating margins of the comparable companies, thus

M/S. L G Soft India Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle- 4(1)(1), Bengaluru

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

Bench: Shri Chandra Poojari & Smt. Beena Pillai

software activity and low-end activity so long as it falls within the purview of software development services. It was observed that under TNMM, such differences are tolerable and there is no requirement that services for activities performed are identical. It is informed that the services are similar and fall ... took the following view:- “64. The next objection of the Assessee is that when the most appropriate method selected for determining ALP is the TNMM there is no reason as to why one should look at price difference in offshore software development and onsite software development. It is no doubt