entire profitability is wipped off, there is nil profit to be attributed to the
entities on account of profit split method. In view of this ... which is resulting in nil profit to it. Therefore
there cannot be any reason to apply the profit split method to share the
profit
using TNMM method as
most appropriate method. He thus, proposed to benchmark international
transactions of assessee by using Profit Split Method as most
appropriate method ... proceedings, the profit of assessee and AEs was proposed
to be combined and split according to their functions, using Profit Split Method.
The TPO then
method for determining the arm's length price.
84. OFCD guidelines for profits spilt method (PSM) states as under:-
C. Transactional profit split method ... split the combined profits.
C.2 Strengths and weaknesses
2.109 The main strength of the transactional profit split method is that it can
offer
Part III: Transactional profit methods)
on TP Methods of OECD Guidelines
b) the relevant extracts of Chapter VI (Section 6.3.13: Profit Split Method ... profits to be split. It then
splits those combined profits between the associated enterprises
on an economically valid basis that approximates the division of
profits
Whether the Method applied by the TPO ie Profit Split Method (PSM) in
determination of Arm Length Price (ALP) of the Advertisement Marketing and
Promotion ... Appeal
No. 4 to 10.
30. II. Whether the Method of Profit Split Method (PSM) adopted by
the AO in determination Arm Length Price
performed,
perhaps as part of a residual profit split or as a
method of splitting profits in its own right, by taking
into account ... intangible property. The profit is to be divided
such as is expected in a joint venture relationship.
6.3.13.2. The Profit Split Method seeks to eliminate
profits to be split. It then splits those combined profits between the
associated enterprises on an economically valid basis that
approximates the division of profits ... split method will
generally be the most appropriate method, see paragraph 2.109.
However, a one-sided method (traditional transaction method or
transactional net margin method
2017
3.2 The ld TPO rejected internal CUP method and adopted Profit
Split Method (PSM) as the MAM for determination ... comparable
uncontrolled price method (CUP) as most appropriate method
depending upon facts and circumstances of the case.
5. Application of Profit Split Method requires information
conclusion that profit split method is the
most appropriate method. Under Rule 10 B(1)(d) profit split method is as
follows ... them, and there after the residual profits
are split among the AEs.
9.5. The profits need to be split among the AEs on the basis
erred in applying transfer pricing provisions to profit arrived
after the application of Profit Split Method ('PSM') ignoring
that such profit effectively represents ... Split Method
to be the most appropriate method(MAM) and consolidated global
Page | 8
I.T.A. No.1519 & 1637/Mum/2016
profitability
