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However, as the computation of Gross Margin in case of services is currently not possible under the Indian GAAP. Cost Plus method therefore cannot be used in this analysis and has to be used in modification thus falling within the definition of Transactions! Net Margin Method. Therefore, this method has not been used to benchmark the services rendered by SEMCl.
Profit Split Method In general, the Profit Split Method ("PSM") evaluates whether the allocation of the combined profit or loss attributable to one or more controlled transactions is arm's length by reference to the relative value of each controlled taxpayer's contribution to that combined profit or loss. The profit split methods typically are applied where 6006 & 6751/Del./2014 13 each party to the transaction under evaluation has significant intangible assets and/or the operations of the parties to the transaction are highly integrated and cannot be evaluated on a separate basis.