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
Sony Ericsson Mobile Communications ... vs Commissioner Of Income Tax ??? Iii on 16 March, 2015
Author
Regarding the applicability of the Profit
Split Method by the TPO.
(f). Ground No's. 36 to 39 - Regarding the protective adjustment
made ... maintained a healthy profitability over the
comparables.
38. As regard the substantive AMP adjustment by applying the
Residual Profit Split method, he submitted that this
erred in law and on facts, in applying Profit Split Method ("PSM") to
benchmark the alleged international transaction of incurring excessive AMP
expenditure ... assessee are removed and not of the AE,
the PSM (Profit Split Method) calculation will go wrong.
3. The appellant craves to amend, modify, alter
profit to be split for
the associated enterprise from the controlled transactions in which the
associated enterprises are engaged. It then splits those profits between ... length. In general, the determination of the relevant
profits to be split and of the profit splitting factors should:
Be consistent with the functional analysis
share of residual profits belong to Tupperware
India;
4.2 not appreciating the fresh analysis by application of residual profit split
method ("RPSM") submitted ... Contribution profits split
method is concerned, the Panel agrees with the TPO that the method is too subjective to be
accepted as method of benchmarking
altogether to purported Residual Profit Split Method, both of
which are not notified methods and recognised methods under
the Transfer Pricing Regulations, without providing ... same, failed to appreciate that the Profit split
method can be used only for splitting the profit and not an
expense
