Projected profits of subsequent years cannot be considered for working out the PLI under TNMM (ITAT Delhi)

Headstrong Services India (P) Ltd v, DCIT [2016]

The Tribnal held that essence of the entire transfer pricing provisions is to compare the actual profit earned by the assessee from an international transaction with the profits earned from comparable uncontrollable transactions.

It is totally impermissible to substitute actual profit earned by the assessee from an international transaction with any other profit base , either by considering the actual profits for the earlier years or by taking into account the projected profits of the subsequent years, for determining the ALP of an international transaction.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s