← All Phrases

“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

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

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

ITA 3597/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

DCIT (Ltu) 1, Mumbai vs. Ipca Laboratories Ltd, Mumbai

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

ITA 2815/MUM/2015[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. Asst CIT (Ltu), Mumbai

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

ITA 2493/MUM/2015[2008-09]Status: DisposedITAT Mumbai29 Aug 2022AY 2008-09

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 3267/MUM/2012[2007-08]Status: DisposedITAT Mumbai29 Aug 2022AY 2007-08

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. ACIT (Ltu), Mumbai

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

ITA 8120/MUM/2010[2005-06]Status: DisposedITAT Mumbai29 Aug 2022AY 2005-06

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 8084/MUM/2010[2006-07]Status: DisposedITAT Mumbai29 Aug 2022AY 2006-07

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

ACIT Cen Cir 13, Mumbai vs. Ipca Laboratories Ltd, Mumbai

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

ITA 7511/MUM/2010[2005-06]Status: DisposedITAT Mumbai29 Aug 2022AY 2005-06

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

Damco International Bv, Mumbai vs. Deputy Commissioner of Income Tax (It)-2(1)(2), Mumbai

In the result, appeal by the assessee is partly allowed

ITA 7447/MUM/2017[2013-14]Status: DisposedITAT Mumbai22 Aug 2022AY 2013-14
For Appellant: Shri Poras Kaka, Sr.Advocate with Shri Manish KanthFor Respondent: S/ Shri B.K.Bagchi & Milind Chavan
Section 143(3)Section 234ASection 244ASection 271(1)(c)Section 92C

year under appeal, Damco India had remitted network fee of Rs.8,46,91,990/- to the assessee calculated 4 on the basis of profit split method. The Transfer Pricing Officer (TPO) on reference u/s 92CA of the Act, made no adjustment in respect of the aforesaid transaction. The Assessing Officer

Toyota Boshoku Automotive India Private Limited, Ramanagaram vs. The Assistant Commissioner of Income Tax, Ltu, Circle-2, Bangalore

In the result, the appeal of the assessee is allowed

ITA 362/BANG/2021[2016-17]Status: DisposedITAT Bangalore18 Jul 2022AY 2016-17

Bench: Shri N.V Vasudevan, Hon’Ble & Shri Laxmi Prasad Sahu

For Appellant: Ms. Hirali Desai, ARFor Respondent: Shri Pradeep Kumar, CIT (DR)
Section 92D

rejecting the Transactional Net Margin Method ('TNMM') used by the Appellant and IT(TP)A No.362/Bang/2021 Page 3 of 40 applying the Profit Split method ('PSM') as the most appropriate method ('MAM') to benchmark the international transaction of payment of royalty. Without prejudice, while applying PSM, the Learned ... assessee to the AE is at 2.28% over net sales. We note that, the Ld.TPO computed the royalty rate by using profit split method at 3.19%. The Ld.TPO considered the profit split ratio of 2:3 wherein 40% split was considered to be the share of the AE. There

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

ITA 259/BANG/2022[2017-18]Status: DisposedITAT Bangalore14 Jun 2022AY 2017-18

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)

For Appellant: Sri.Padamchand Kincha, CAFor Respondent: Sri.Sumer Singh Meena, CIT -DR
Section 143(1)Section 143(2)Section 143(3)Section 144C(5)Section 2(11)Section 92C

appellant is a manufacturer as well as full-fledged distributor of its own products using its own technology and comprehensive distribution network, the profit split method is not applicable as per internationally accepted guidelines and Indian Transfer Pricing Laws. 10.8 Without prejudice to the above grounds ... justified in upholding the action of the Learned TPO in identifying ₹ 267,87,95,129/- as alleged AMP expenditure and applying the purported profit split method(PSM) though the said sum essentially represents all the expenses debited to profit and loss account below the gross profit level. 10.12 Without prejudice

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

ITA 188/BANG/2022[2017-18]Status: DisposedITAT Bangalore02 Jun 2022AY 2017-18

Bench: Shri Beena Pillai & Shri Laxmi Prasad Sahu

For Appellant: Shri. K. R. Vasudevan, AdvocateFor Respondent: Dr. Manjunath Karkihalli , CIT (DR)
Section 92C

selected as an appropriate method for benchmarking. The relevant extract from the OECD Guidelines (para 2.109) is as below: "A transactional profit split method may also be found to be the most appropriate method in cases where both parties to a transaction make unique and valuable contributions (e.g. contribute unique ... presence of unique and valuable contributions, reliable comparables information might be insufficient to apply another method. On the other hand, a transactional profit split method would ordinarily not be used in cases where one party to the transaction performs only simple functions and IT(TP)A No.188/Bang/2022 Page

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

In the result, the appeal is treated as partly allowed

ITA 301/BANG/2021[2016-17]Status: DisposedITAT Bangalore23 May 2022AY 2016-17

Bench: Shri N. V. Vasudevan & Shri Laxmi Prasad Sahuit(Tp)A No.301/Bang/2021 Assessment Year : 2016-17 M/S. Toyota Kirloskar Auto Parts Pvt. Ltd., Acit, Vs. Plot No.21 Bidadi Industrial Area, Circle –2, Ltu, Bidadi, Ramanagara, Bengaluru. Bengaluru-562 109. Pan : Aabct 5590 Q Appellant Respondent

For Appellant: Shri. K. R. Vasudevan, AdvocateFor Respondent: Shri. Pradeep Kumar, CIT(DR)(ITAT), Bengaluru
Section 143(3)Section 92

study adopting TNMM as the most appropriate method for determining ALP. This was rejected by the TPO and he proceeded to apply Profit Split Method (PSM) as the MAM to determine ALP. The action of the TPO was upheld by the DRP. Hence this appeal by the assessee before ... selected as an appropriate method for benchmarking. The relevant extract from the OECD Guidelines (para 2.109) is as below: "A transactional profit split method may also be found to be the most appropriate method in cases where both parties to a transaction make unique and valuable contributions (e.g. contribute unique

M/S. Steer Engineering Pvt. Ltd., Bengaluru vs. Deputy Commissioner of Income-Tax, Circle-6(1)(2), Bengaluru

In the result, appeal of the Assessee is partly allowed

ITA 2071/BANG/2018[2012-13]Status: DisposedITAT Bangalore27 Apr 2022AY 2012-13

Bench: Shri N. V. Vasudevan & Ms. S. Padmavathyassessment Year : 2012-13 M/S. Steer Engineering Private Limited, Vs. Dcit, No.290, 4Th Main, 4Th Phase, Circle – 6(1)(2), Peenya Industrial Area, Nagawara, Bengaluru. Bengaluru – 560 058. Pan : Aabcs 8840 E Appellant Respondent Assessee By : Shri. Narendra Jain, Advocate Revenue By : Mrs. Susan D. George, Cit(Dr)(Itat), Bengaluru. Date Of Hearing : 18.04.2022 Date Of Pronouncement : 27.04.2022

For Appellant: Shri. Narendra Jain, AdvocateFor Respondent: Mrs. Susan D. George, CIT(DR)(ITAT), Bengaluru
Section 144CSection 92(1)Section 92ASection 92A(1)Section 92CSection 92C(2)Section 92F

Board may prescribed, namely :— (a) comparable uncontrolled price method (CUP);(b) resale price method;(RSPM)(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. By virtue of the provisions of section 92CA

Accc 30, Mumbai vs. United Shippers Ltd, Mumbai

In the result, appeal filed by the assessee is partly allowed and appeal filed by the AO is dismissed

ITA 3036/MUM/2012[2007-08]Status: DisposedITAT Mumbai26 Apr 2022AY 2007-08

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm The Asst. Commissioner Of United Shippers Ltd. United India Bldg, 2N D Floor, Sir Income-Tax, Circle-30 R.No. 403, 4Th Floor, P.M. Road , Vs. Aayakar Bhavan, M.K. Marg, Fort, Mumbai-400 020 Mumbai-400 001 (Appellant) (Respondent) Pan No. Aaacu0764C The Asst. Commissioner Of United Shippers Ltd. Income-Tax, Circle-30 United India Bldg, 2N D Floor, Sir R.No. 403, 4Th Floor, P.M. Road , Vs. Ayakar Bhavan, Fort, M.K. Marg, Mumbai-400 001 Mumbai-400 020 (Appellant) (Respondent)

For Appellant: Shri Madhur Agarwal, AdvocateFor Respondent: Shri Ms. Vatsalaa Jha, CIT DR
Section 14ASection 92Section 92CSection 92C(3)

find any force in the argument of the learned authorised representative as we are dealing with a transactional net margin method and not profit split method. 032. In the result ground number 2 – 5 of the appeal are allowed partly. 033. Coming to ground number 6, The learned authorised representative

Asst CIT Cir 5(3)(2), Mumbai vs. Tolani Shipping Co. Ltd, Mumbai

In the result, the appeal filed by the revenue is hereby dismissed

ITA 7035/MUM/2016[2008-09]Status: DisposedITAT Mumbai22 Feb 2022AY 2008-09

Bench: Shri Shamim Yahya, Am & Shri Amarjit Singh, Jm (Hearing Through Video Conferencing Mode) आयकर अपील सं/ I.T.A. No.7035/Mum/2016 (निर्धारण वर्ा / Assessment Year: 2008-09) बिधम/ Acit-5(3)(2) M/S. Tolani Shipping Co. Room No.573, Aayakar Ltd. Vs. Bhavan, 5Th Floor, M. K. 10-A, Bakhtawar, Nariman Road, Mumbai-400020. Point, Mumbai-400021. स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaact4127C (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) Revenue By: Shri Rajesh Mishra (Dr) Assessee By: Shri Satya Prakash सुनवाई की तारीख / Date Of Hearing: 18/02/2022 घोषणा की तारीख /Date Of Pronouncement: 22/02/2022 आदेश / O R D E R Per Amarjit Singh, Jm: The Revenue Has Filed The Present Appeal Against The Order Dated 22.08.2016 Passed By The Commissioner Of Income Tax (Appeals) -58 Mumbai [Hereinafter Referred To As The “Cit(A)”] Relevant To The A.Y.2008- 09. 2. The Revenue Has Raised The Following Grounds: - "1. Whether On The Facts & Circumstances Of The Case & In Law, The Ld. Cit(A) Was Justified In Restricting The Addition Of Rs.30,96,52,860/- Made By The Ao/Tpo To Rs.12,00,43,750/- On Account Of Profit Split Method, Ignoring That The Tpo Rejected A.Y.2008-09 The Cup Method After Giving Detailed Reasons In The Order Passed U/S 92Ca(3).

For Appellant: Shri Satya PrakashFor Respondent: Shri Rajesh Mishra (DR)
Section 115JSection 142(1)Section 143(1)Section 143(2)Section 143(3)Section 14ASection 50Section 92C

justified in restricting the addition of Rs.30,96,52,860/- made by the AO/TPO to Rs.12,00,43,750/- on account of profit split method, ignoring that the TPO rejected A.Y.2008-09 the CUP method after giving detailed reasons in the order passed u/s 92CA(3). 2. Whether on the facts ... challenged the restriction of the addition of Rs.30,96,52,860/- made by AO/TPO to Rs.12,00,43,750/- on account of profit split method, ignoring the fact that TPO has rejected the cup method after giving detailed reasons in the order passed u/s 92CA

Olympus Medical Systems India Pvt. Ltd., Gurugram vs. ACIT, Circle- 3(1), Gurugram

In the result, appeal of the assessee in ITA No

ITA 873/DEL/2021[2016-17]Status: HeardITAT Delhi13 Jan 2022AY 2016-17

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

For Appellant: Shri Nageshwar Rao, AdvFor Respondent: Shri Mahesh Shah, CIT-DR
Section 143(3)Section 144B

ambit of alleged AMP^ 16. Ld. AO/TPO/DRP erred on facts and circumstances of the case by considering Residual Profit Split Method (“PSM”) as the Most Appropriate Method (“MAM”) given multiple fallacies in application of the method. 17. while applying PSM, Ld. TPO again resorted to Bright Line Test in order

Gbt India Private Limited, Delhi vs. National E-Assesment Centre, New Delhi

In the result, the appeal of the assessee is allowed and Stay application is accordingly held to be infructuous

ITA 462/DEL/2021[2016-17]Status: DisposedITAT Delhi06 Jan 2022AY 2016-17

Bench: Shri G.S. Pannu & Shri Amit Shukla(Through Video Conferencing)

For Appellant: Shri Himanshu Sinha, Adv. &For Respondent: Shri Surendra Pal
Section 143(3)Section 144C(13)

five methods recognized by the rule are (i) comparable uncontrolled price method (CUP), (ii) re-sale price method, {in) cost plus method, (iv) profit split method and (v) transactional net marginal method (TNMM). The manner by which the ALP in relation to an international transaction is determined under

Trl Riceland Pvt. Ltd., (Formerly Known As M/S Tilda Riceland P.Ltd.), New Delhi vs. Addl.CIT, Special Range- 9, New Delhi

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

ITA 7366/DEL/2018[2014-15]Status: DisposedITAT Delhi17 Nov 2021AY 2014-15

Bench: Shri O.P. Kant & Shri. K. N. Chary[Through Video Conferencing] Assessment Year: 2014-15

Section 1Section 115JSection 271

section 92C of the Act. The Section 92C(1) has prescribed different method of benchmarking including CUP, resale price method, cost plus method, profit split method and transactional net margin method. The Section 92C(2) of the Act has provided manner of applying most approved method in terms of Rule

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

In the result, the additional ground raised by the assessee is allowed

ITA 463/DEL/2021[2016-17]Status: DisposedITAT Delhi22 Sept 2021AY 2016-17

Bench: The Income Tax Appellate Tribunal, Delhi Bench “I-2”, New Delhi

For Appellant: Mr. Deepak Chopra, AdvFor Respondent: Ms. Meera Shrivastava, CIT (DR)
Section 142(1)Section 143(2)Section 143(3)Section 271(1)(c)Section 80Section 80ISection 92C

Dispute Resolution Panel (DRP) on the issue of AMP adjustment. (e). Ground No’s. 27 to 35 – Regarding the applicability of the Profit Split Method by the TPO. (f). Ground No’s. 36 to 39 – Regarding the protective adjustment made by applying the Bright Line Method (BLT). (g). Ground ... transfer pricing adjustment has made protective adjustment using BLT and simultaneously made a substantive adjustment by applying a concoctive version of the profit split method (“PSM”). It is further noticed that, even while applying the so called PSM, the genesis was still the BLT. From perusal of the impugned order

Jas Forwarding Worldwide Pvt. Ltd., Gurgaon vs. DCIT, New Delhi

In the result appeal of the assessee for assessment year 2011 – 12 is allowed for statistical purposes

ITA 1687/DEL/2016[2011-12]Status: DisposedITAT Delhi26 Jul 2021AY 2011-12

Bench: Shri Amit Shukla & Shri Prashant Maharishi(Through Video Conferencing)

For Appellant: Shri Salil Kapoor advocateFor Respondent: Shri M. Barnwal, Sr. DR
Section 143Section 143(3)Section 144CSection 144C(1)Section 144C(5)Section 40Section 92CSection 92C(2)

associated enterprises and a shared in the ratio of 50:50. Therefore it means that assessee has entered into some kind of profit split method. However he accepted the transactional net margin method as the most appropriate method as well as also accepted the profit level indicator of OP/OC. However ... Assessee has placed reliance on recent ruling in case of Balmer Lawrie & co. Ltd. [2016] 68 taxmann.com 384 (Kolkata- Trib.), wherein 50:50 profit split method has been upheld. In the said case this issue had come up for, wherein Tribunal vide para 32 has categorically stated that merely