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
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
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
international transactions with its associate enterprises. The
assessee has applied PSM (profit split method) for benchmarking international
transactions with the AE. The assessee has justified ... under the method, i.e. the profits earned by the AE and assessee
from each transaction so that profit could be split having reasonable basis
that both the lower authorities have
committed grave mistake by upholding profit split method and
submitted as under :
a) Hiring and Operation of Vessels/leasing ... profit split. Under the above-
mentioned facts and circumstances of the case, adoption of profit split
method by the TPO is found to be justified
made by the Assessing Officer/Transfer Pricing
Officer on account of profit split method, ignoring that the Transfer
Pricing Officer rejected the CUP method after ... made by the AO/TPO by applying profit split method,
ignoring the fact that TPO has rejected the CUP method after
30
Tolani Shipping
appreciating that
transaction of royalty cannot be benchmarked using the profit split method.
5. On the facts and in the circumstances of the case ... Income-tax Rules, 1962, relating to Profit Split
Method.
8. The lower authorities, erred in not noticing that the above methodology is
also in accordance
transaction was declared at ₹
25.34 crores. The assessee has adopted the profit split method to justify
the price transaction in accordance with global transfer pricing ... benchmarking international transactions by adopting
Revenue Split Method instead of Profit Split Method
or other specified methods as are acceptable in
Indian TP jurisprudence
tested party for comparability only in CUP method,
TNMM and 'Other method', in other methods such as RPM and CPM choice
of selecting ... available. In any case, it is not required in
Profit split method.
(b) The tested party normally should be the least complex party
