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Showing contexts for: Profit Split Method in Dcit Cen Cir 2(1), Mumbai vs Dhanera Diamonds, Mumbai on 25 October, 2017Matching Fragments
(iii).Cost Plus Method;
(iv). Profit Split Method;
(v). Transactional Net Margin Method;
(vi). Such other method as may be prescribed by the Board.
That in the backdrop of the fact that the assessee himself had selected the TNMM as the most appropriate method, the TPO therefore deliberated on Rule 10B(1)(e) which prescribed the methodology for determining the ALP as per the said method. The TPO observed that in order to find out as to whether the transactions entered into by the assessee with its AEs were at arms length with that entered into by the third party in comparable situation with independent parties, the separate segmental results in assesses transactions with AEs and non AEs would be indispensably required. The TPO also not inspired by the benchmarking carried out by the assessee on the basis of entity level margins, therein observed that in such a case the loss in transactions with AE segment could easily be set off with the profits of ACIT Vs. D. Navinchandra Exports Pvt. Ltd-ITA. 6304/Mum/2016 8 ACIT vs. D. Navinchandra Gems Pvt. Ltd - ITA 6303/Mum/2016 Dy. CIT Vs. M/s Dhanera Diamonds- ITA 6310/Mum/2016 Dy. CIT Vs. M/s Akshar Impex Pvt. Ltd. -ITA 6292/Mum/2016 the non-AE segment. The TPO thus holding a conviction that a correct benchmarking could not be carried out unless the assessee submits correct margins in respect of transactions with AEs and non-AEs. Thus, in the absence of the segmental details in respect of AE and non-AE segments having been furnished by the assessee, it was observed by the TPO that the non-availability of the said data therein rendered the entire exercise of benchmarking the transactions futile. The TPO in order to drive home his aforesaid view that entity level benchmarking does not lead to correct results and the same will not stand the test of Rule 10B(1)(e) relied on the orders of the Tribunal in the case of (i). UCB India Vs. ACIT 121 ITD 131 (Mum); (ii). Aztec Software & Technology Services Ltd. (2007) 107 ITD 141 (Bang) (SB) and OECD TP guidelines. Thus, the TPO in the backdrop of his aforesaid observations called upon the assessee to furnish the requisite details in terms of Sec. 92D(3). However, the assessee once again expressed its inability to furnish the requisite information for certain reasons, viz. (i). that no separate books of accounts for AE and non-AE transactions were maintained; (ii). functions performed and assets deployed for transactions with AE and non-Ae were the same; and (iii). that even the comparable did not have segmental disclosures etc. The assessee failed to file the details till the date of passing of the order by the TPO on 20.01.2015, as a result whereof the latter failed to properly benchmark the transactions.
(iii).Cost Plus Method;
(iv). Profit Split Method;
(v). Transactional Net Margin Method;
(vi). Such other method as may be prescribed by the Board.
ACIT Vs. D. Navinchandra Exports Pvt. Ltd-ITA. 6304/Mum/2016 35 ACIT vs. D. Navinchandra Gems Pvt. Ltd - ITA 6303/Mum/2016 Dy. CIT Vs. M/s Dhanera Diamonds- ITA 6310/Mum/2016 Dy. CIT Vs. M/s Akshar Impex Pvt. Ltd. -ITA 6292/Mum/2016 That in the backdrop of the fact that the assessee himself had selected the TNMM as the most appropriate method, the TPO therefore deliberated on Rule 10B(1)(e) which prescribed the methodology for determining the ALP as per the said method. The TPO observed that in order to find out as to whether transactions entered into by the assessee with its AEs were at arms length with that entered into by the third party in comparable situation with independent parties, the separate segmental results of the assesses transactions with AEs and non AEs were indispensably required. The TPO also not inspired by the benchmarking carried out by the assessee on the basis of entity level margins, observed that in such a case the loss in transactions with AE segment could easily be set off with the profits of the non-AE segment. The TPO thus held a conviction that a correct benchmarking could not be carried out unless the assessee submits correct margins in respect of transactions with AEs and non-AEs. Thus, in the absence of the segmental details in respect of AE and non-AE segments having been furnished by the assessee, it was observed by the TPO that the non-availability of the said data therein rendered the entire exercise of benchmarking the transactions futile. The TPO in order to drive home his aforesaid view that entity level benchmarking does not lead to correct results and the same will not stand the test of Rule 10B(1)(e), relied on the orders of the Tribunal in the case of (i). UCB India Vs. ACIT 121 ITD 131 (Mum); (ii). Aztec Software & Technology Services Ltd. (2007) 107 ITD 141 (Bang) (SB) and OECD TP guidelines. Thus, the TPO in the backdrop of his aforesaid observations called upon the assessee to furnish the requisite details in terms of Sec. 92D(3). However, the assessee once again expressed its inability to furnish the requisite information for certain reasons, viz. (i). that no separate books of accounts for AE and non-AE transactions were maintained;
(iii). Cost Plus Method;
(iv). Profit Split Method;
(v). Transactional Net Margin Method;
(vi). Such other method as may be prescribed by the Board.
That in the backdrop of the fact that the assessee himself had selected the TNMM as the most appropriate method, the TPO therefore deliberated on Rule 10B(1)(e) which prescribed the methodology for determining the ALP as per the said method. The TPO observed that in order to find out as to whether transactions entered into by the assessee with its AEs were at arms length with that entered into by the third party in comparable situation with independent parties, the separate segmental results of the assesses transactions with AEs and ACIT Vs. D. Navinchandra Exports Pvt. Ltd-ITA. 6304/Mum/2016 42 ACIT vs. D. Navinchandra Gems Pvt. Ltd - ITA 6303/Mum/2016 Dy. CIT Vs. M/s Dhanera Diamonds- ITA 6310/Mum/2016 Dy. CIT Vs. M/s Akshar Impex Pvt. Ltd. -ITA 6292/Mum/2016 non AEs would be indispensably required. The TPO also not inspired by the benchmarking carried out by the assessee on the basis of entity level margins, therein observed that in such a case the loss in transactions with AE segment could easily be set off with the profits of the non-AE segment. The TPO thus held a conviction that a correct benchmarking could not be carried out unless the assessee submits correct margins in respect of transactions with AEs and non-AEs. Thus, in the absence of the segmental details in respect of AE and non-AE segments having been furnished by the assessee, it was observed by the TPO that the non-availability of the said data had therein rendered the entire exercise of benchmarking the transactions futile. The TPO in order to drive home his aforesaid view that entity level benchmarking does not lead to correct results and the same will not stand the test of Rule 10B(1)(e) relied on the orders of the Tribunal in the case of (i). UCB India Vs. ACIT 121 ITD 131 (Mum); (ii). Aztec Software & Technology Services Ltd. (2007) 107 ITD 141 (Bang) (SB) and OECD TP guidelines. Thus, the TPO in the backdrop of his aforesaid observations called upon the assessee to furnish the requisite details in terms of Sec. 92D(3). However, the assessee once again expressed its inability to furnish the requisite information for certain reasons, viz. (i). that no separate books of accounts for AE and non-AE transactions were maintained; (ii). functions performed and assets deployed for transactions with AE and non-Ae were the same; and (iii). that even the comparable did not have segmental disclosures etc.