TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether the transfer pricing adjustment made in respect of salary cross-charge paid to global sales personnel was sustainable when the associated enterprise segment was already benchmarked under TNMM. (ii) Whether the adjustments/disallowances made in the intimation under section 143(1) could be challenged in the present appeal arising from the final assessment order.
Issue (i): Whether the transfer pricing adjustment made in respect of salary cross-charge paid to global sales personnel was sustainable when the associated enterprise segment was already benchmarked under TNMM.
Analysis: The salary cost of global sales personnel formed part of the operating cost of the software development segment and was closely connected with the sale of software products and services to associated enterprises. That segment had already been benchmarked at arm's length under TNMM and accepted in assessment. The separate benchmarking of only the salary cross-charge was inconsistent with the acceptance of the composite transaction under TNMM, and the material placed on record supported the allocation and business nexus of the cost.
Conclusion: The separate transfer pricing adjustment was not justified and the addition was deleted in favour of the assessee.
Issue (ii): Whether the adjustments/disallowances made in the intimation under section 143(1) could be challenged in the present appeal arising from the final assessment order.
Analysis: The impugned adjustments had been made in the intimation under section 143(1) and were not independently examined in the final assessment order under section 143(3) read with section 144C. The proper cause of action arose from the intimation itself, which is separately appealable, and the pending rectification application also related to that intimation. The present proceedings were therefore not the proper forum for adjudicating those adjustments on merits.
Conclusion: The challenge to the section 143(1) adjustments was rejected, leaving the assessee to pursue the separate statutory remedies in respect of that intimation.
Final Conclusion: The appeal succeeded only on the transfer pricing issue, while the objections relating to the intimation under section 143(1) were not entertained in this appeal.
Ratio Decidendi: Once an international transaction or segment has been benchmarked under TNMM and accepted at arm's length, a closely connected component of that very transaction cannot ordinarily be carved out and benchmarked separately under a different approach; separately, adjustments arising from an intimation under section 143(1) must be pursued through the remedies provided against that intimation.
TaxTMI 
TaxTMI 
