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“profit split method”

Transfer PricingSection 92CSection 92C110 judgments

The decision most relied on for profit split method is DIT v. Morgan Stanley Co. Inc. (399 ITR 34), cited in 162 judgments on BharatTax.

Leading authorities on profit split method

DIT v. Morgan Stanley Co. Inc.
399 ITR 34 · 2017 · Supreme Court
162
citing judgments

Once a transfer pricing analysis has been undertaken for an Indian associated enterprise, no further profits are attributable to it as a Permanent Establishment, thereby extinguishing the need for additional profit attribution.

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.

Global One India (P). Ltd. v. Assisstant Commissioner
44 Taxmann.com 100 · 2014 · ITAT
14
citing judgments

When entities are highly integrated and their combined efforts generate revenue, the Profit Split Method (PSM) is the appropriate method for determining arm's length price for transactions.

Judgments citing profit split method

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)

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 (For short ‘Other Method’) 17 Rule

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)

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 by the Board

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)

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 of the most appropriate method After reviewing

Perfetti Van Melle India Pvt. Ltd., Gurgaon vs. ACIT, Circle-3(1), Gurgaon

In the result, the appeals filed by the assessee stand partly allowed

ITA 454/DEL/2022[2017-18]Status: DisposedITAT Delhi30 May 2023AY 2017-18
For Appellant: Shri Deepak Chopra, AdvocateFor Respondent: Shri Rajesh Kumar, CIT DR
Section 92B

made protective assessment using BLT, but at the same time has proceeded to make substantive adjustment in his own version of profit split method (PSM). While applying his version of PSM, he still was circumscribed by the BLT method while making the adjustment. The core reason ... comparables and accordingly no adjustment on such transaction can be made. 58. Lastly, as regards the substantive AMP adjustment of applying residual profits split methods, it is incumbent upon the TPO firstly to combine profit from the so called international transaction of incurring of AMP expenses and then split

Perfetti Van Melle India Pvt. Ltd., Gurgaon vs. ACIT, Circle-3(1), Gurgaon

In the result, the appeals filed by the assessee stand partly allowed

ITA 890/DEL/2021[2012-13]Status: DisposedITAT Delhi30 May 2023AY 2012-13
For Appellant: Shri Deepak Chopra, AdvocateFor Respondent: Shri Rajesh Kumar, CIT DR
Section 92B

made protective assessment using BLT, but at the same time has proceeded to make substantive adjustment in his own version of profit split method (PSM). While applying his version of PSM, he still was circumscribed by the BLT method while making the adjustment. The core reason ... comparables and accordingly no adjustment on such transaction can be made. 58. Lastly, as regards the substantive AMP adjustment of applying residual profits split methods, it is incumbent upon the TPO firstly to combine profit from the so called international transaction of incurring of AMP expenses and then split

Perfetti Van Melle India Pvt. Ltd., Gurgaon vs. ACIT, Circle-3(1), Gurgaon

In the result, the appeals filed by the assessee stand partly allowed

ITA 889/DEL/2021[2011-12]Status: DisposedITAT Delhi30 May 2023AY 2011-12
For Appellant: Shri Deepak Chopra, AdvocateFor Respondent: Shri Rajesh Kumar, CIT DR
Section 92B

made protective assessment using BLT, but at the same time has proceeded to make substantive adjustment in his own version of profit split method (PSM). While applying his version of PSM, he still was circumscribed by the BLT method while making the adjustment. The core reason ... comparables and accordingly no adjustment on such transaction can be made. 58. Lastly, as regards the substantive AMP adjustment of applying residual profits split methods, it is incumbent upon the TPO firstly to combine profit from the so called international transaction of incurring of AMP expenses and then split

Perfetti Van Melle India Pvt. Ltd., Gurgaon vs. ACIT, Circle-3(1), Gurgaon

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

ITA 888/DEL/2021[2009-10]Status: DisposedITAT Delhi01 Feb 2023AY 2009-10

Bench: Shri Anil Chaturvedi & Shri Yogesh Kumar U.S.

For Appellant: ShriFor Respondent: Shri Rajesh Kumar
Section 143(3)Section 144CSection 254Section 92C

made protective assessment using BLT, but at the same time has proceeded to make substantive adjustment in his own version of profit split method (PSM). While applying his version of PSM, he still was circumscribed by the BLT method while making the 7 Perfetti Van Melle India, Manesar adjustment ... comparables and accordingly no adjustment on such transaction can be made. 58. Lastly, as regards the substantive AMP adjustment of applying residual profits split methods, it is incumbent upon the TPO firstly to combine profit from the so called international transaction of incurring of AMP expenses and then split

DCIT, Circle- 1(2)(1), International Taxation, New Delhi vs. Convergys Customer Management Group Inc., New Delhi

In the result, assessee’s appeal is partly allowed, whereas,

ITA 7782/DEL/2018[2014-15]Status: DisposedITAT Delhi11 Jan 2023AY 2014-15

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Deyassessment Year: 2014-15

Section 9(1)(vi)

disclosed in the transfer pricing study for assets and software cannot be accepted. Further, in the facts and circumstances of the case Profit Split method is not the correct method for attribution of profits to the PE of the assessee in India. F. In our considered opinion, the correct approach

Asst CIT Cir 4(3)(2), Mumbai vs. Morgan Stanley India Co.P.Ltd, Mumbai

ITA 1794/MUM/2016[2011-12]Status: DisposedITAT Mumbai15 Dec 2022AY 2011-12

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm Co No. 145/Mum/2016 (Arising In Ita No. 1794/Mum/2016 For A.Y. 11-12)

For Appellant: Shri Sunil M. Lala, ARFor Respondent: Shri Samuel Pitta, DR
Section 143(3)Section 144CSection 14ASection 253Section 80G

income and support services were benchmarked using Transactional Net Margin Method as the most appropriate method and investment banking services was benchmarked using profit split method and also Transactional Net Margin Method. The learned Transfer Pricing Officer noted that there is an adjustment history in the earlier assessment years wherein

Morgan Stanley India Company P. Ltd, Mumbai vs. Asst CIT RG 4(3)(2), Mumbai

ITA 1715/MUM/2016[2011-12]Status: DisposedITAT Mumbai15 Dec 2022AY 2011-12

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm Co No. 145/Mum/2016 (Arising In Ita No. 1794/Mum/2016 For A.Y. 11-12)

For Appellant: Shri Sunil M. Lala, ARFor Respondent: Shri Samuel Pitta, DR
Section 143(3)Section 144CSection 14ASection 253Section 80G

income and support services were benchmarked using Transactional Net Margin Method as the most appropriate method and investment banking services was benchmarked using profit split method and also Transactional Net Margin Method. The learned Transfer Pricing Officer noted that there is an adjustment history in the earlier assessment years wherein

Ubs Ag, Mumbai vs. DCIT (It) 4(3)(1)

In the result, the appeal by the Revenue is dismissed

ITA 842/MUM/2016[2011-12]Status: DisposedITAT Mumbai09 Dec 2022AY 2011-12

Bench: Shri M. Balaganesh & Shri Sandeep Singh Karhail

For Appellant: Shri Dinesh Bafna a/wFor Respondent: Ms. Vatsalaa Jha
Section 143(2)Section 143(3)Section 144C(13)Section 234Section 92C

relied upon the orders passed by the lower authorities and submitted that the benchmarking analysis undertaken by the assessee is not based on Profit Split Method as provided under the Rules. 8. We have considered the rival submissions and perused the material available on record. The assessee is a leading

DCIT (It) 4(3)(1), Mumbai vs. Ubs Ag, Mumbai

In the result, the appeal by the Revenue is dismissed

ITA 1347/MUM/2016[2011-12]Status: DisposedITAT Mumbai09 Dec 2022AY 2011-12

Bench: Shri M. Balaganesh & Shri Sandeep Singh Karhail

For Appellant: Shri Dinesh Bafna a/wFor Respondent: Ms. Vatsalaa Jha
Section 143(2)Section 143(3)Section 144C(13)Section 234Section 92C

relied upon the orders passed by the lower authorities and submitted that the benchmarking analysis undertaken by the assessee is not based on Profit Split Method as provided under the Rules. 8. We have considered the rival submissions and perused the material available on record. The assessee is a leading

Abbott India Ltd (As Successor to Solvay Pharma India Ltd), Mumbai vs. Addl CIT RG 7(2), Mumbai

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

ITA 1705/MUM/2012[2007-08]Status: DisposedITAT Mumbai30 Nov 2022AY 2007-08

Bench: Shri Om Prakash Kant () & Ms Kavitha Rajagopal () Assessment Year: 2007-08 Abott India Limited Addl. Cit-Range 7(2) Unit 3-4, Corporate Park, Aayakar Bhavan, M.K. Sion-Trombay Road, Chembur, Vs. Marg, Mumbai-400 071. Mumbai-400 020 Pan No. Aaacu 9269 Q Appellant Respondent Assessee By : Shri. Madhur Agrawal, Adv. Revenue By : Shri Yogesh Kamat, Cit Dr Date Of Hearing : 22/09/2022 Date Of Pronouncement : 30/11/2022

For Appellant: Shri. Madhur Agrawal, AdvFor Respondent: Shri Yogesh Kamat, CIT DR
Section 143(3)Section 145ASection 14A

21st amendment) Rules, 2001 has provided five methods consisting of, comparable uncontrolled Price method (CUP), Resale Price Method (RPM), Cost Plus Method (CPM), profit split method (PSM) Transactional Net Margin Method (TNMM). With effect from 01-04-2012 one more method i.e. any other method has been prescribed. However under

Brinks India P.Ltd (Formerly Known As Brinks Arya (India ) Private Limited, Mumbai vs. DCIT Central Cir 6(4), Mumbai

In the result, the present appeal preferred by the Assessee is allowed

ITA 7071/MUM/2017[2013-14]Status: DisposedITAT Mumbai15 Nov 2022AY 2013-14
For Appellant: Shri Farrokh V IraniFor Respondent: Ms. Samruddhi Dhananjay Hande
Section 143(3)Section 144C(1)Section 144C(13)Section 144C(5)Section 92C

arms length price in relation to an international transaction shall be determined by comparable uncontrolled price method; resale price method; cost plus method; profit split method; transactional net margin method or such other method as may be prescribed by the Board. Hence, the TPO is bound to determine

Spencer Stuart International B.V. Tax, Mumbai vs. The ACIT (It) -4(2)(2), Mumbai

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

ITA 514/MUM/2022[2019-20]Status: DisposedITAT Mumbai04 Nov 2022AY 2019-20

Bench: Shri Pramod Kumar & Shri Sandeep Singh Karhail

For Appellant: Shri Mukesh Butani a/wFor Respondent: Shri Lovish Kumar
Section 143(3)Section 144C(13)Section 144C(5)Section 195Section 9(1)(vii)

payment of licence fee and Executive search transactions. So far as the Executive search transactions are concerned, the APA states that the 'Profit Split Method' is the most appropriate method for benchmarking the transactions. We are only highlighting the aforesaid features of the APA to point out that there

Spencer Stuart International B.V., Mumbai vs. ACIT (It) 4(2)(2), Mumbai

In the result, appeal by the assessee is allowed

ITA 318/MUM/2022[2018-19]Status: DisposedITAT Mumbai04 Nov 2022AY 2018-19

Bench: Shri Pramod Kumar & Shri Sandeep Singh Karhail

For Appellant: Shri Mukesh Butani a/wFor Respondent: Shri Lovish Kumar
Section 143(3)Section 144C(13)Section 144C(5)Section 195Section 9(1)(vii)

payment of licence fee and Executive search transactions. So far as the Executive search transactions are concerned, the APA states that the 'Profit Split Method' is the most appropriate method for benchmarking the transactions. We are only highlighting the aforesaid features of the APA to point out that there

Spencer Stuart International B.V., Mumbai vs. The Asstt. CIT (International Taxation)-4(2)(2), Mumbai

In the result, appeals filed by the assessee are allowed

ITA 1148/MUM/2021[2016-17]Status: DisposedITAT Mumbai06 Sept 2022AY 2016-17

Bench: Shri Amit Shukla, Hon'Ble & Shri S. Rifaur Rahman, Hon'Ble

Section 143(3)Section 144CSection 144C(5)Section 195Section 9(1)(vii)

payment of licence fee and Executive search transactions. So far as the Executive search transactions are concerned, the APA states that the 'Profit Split Method' is the most appropriate method for benchmarking the transactions. We are only highlighting the aforesaid features of the APA to point out that there

DCIT Cent. Cir. 5(2), Mumbai vs. Ipca Laboratories Ltd., Mumbai

In the result, appeal filed by the learned assessing officer is dismissed

ITA 5227/MUM/2016[2010-11]Status: DisposedITAT Mumbai29 Aug 2022AY 2010-11

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Shri F.V. Irani, ARFor Respondent: Shri Sumit Kumar, DR
Section 801BSection 801CSection 80ISection 92C

later years, i.e. assessment year 2009 – 10 and 2010 – 11 assessee himself stated that CUP method may not be appropriate and adopted profit split method for the reason that the basket of product approach is not acceptable to the revenue. Even in those cases, the learned transfer-pricing officer ... erred in not considering the alternate claim of the appellant determining ALP with respect to transactions with Ipca Pharma Nigeria Ltd. (AE) by profit split method although the appellant had filed certificate by the Auditors in respect thereof during the course of assessment proceedings. 1.3 The CIT (A) erred

Ipca Laboratories Ltd, Mumbai vs. DCIT Ltu, Mumbai

In the result, appeal filed by the learned assessing officer is dismissed

ITA 3811/MUM/2016[2010-11]Status: DisposedITAT Mumbai29 Aug 2022AY 2010-11

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Shri F.V. Irani, ARFor Respondent: Shri Sumit Kumar, DR
Section 801BSection 801CSection 80ISection 92C

later years, i.e. assessment year 2009 – 10 and 2010 – 11 assessee himself stated that CUP method may not be appropriate and adopted profit split method for the reason that the basket of product approach is not acceptable to the revenue. Even in those cases, the learned transfer-pricing officer ... erred in not considering the alternate claim of the appellant determining ALP with respect to transactions with Ipca Pharma Nigeria Ltd. (AE) by profit split method although the appellant had filed certificate by the Auditors in respect thereof during the course of assessment proceedings. 1.3 The CIT (A) erred

Asst CIT (Ltu) 1, Mumbai vs. Ipca Laboratories Ltd, Mumbai

In the result, appeal filed by the learned assessing officer is dismissed

ITA 3691/MUM/2016[2009-10]Status: DisposedITAT Mumbai29 Aug 2022AY 2009-10

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Shri F.V. Irani, ARFor Respondent: Shri Sumit Kumar, DR
Section 801BSection 801CSection 80ISection 92C

later years, i.e. assessment year 2009 – 10 and 2010 – 11 assessee himself stated that CUP method may not be appropriate and adopted profit split method for the reason that the basket of product approach is not acceptable to the revenue. Even in those cases, the learned transfer-pricing officer ... erred in not considering the alternate claim of the appellant determining ALP with respect to transactions with Ipca Pharma Nigeria Ltd. (AE) by profit split method although the appellant had filed certificate by the Auditors in respect thereof during the course of assessment proceedings. 1.3 The CIT (A) erred