Global

Details

  • Service: Tax, Global Transfer Pricing Services, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 2/11/2013

India - Comparable accepted despite having two-of-three years of losses 

February 11:  The Mumbai Bench of the Income-tax Appellate Tribunal accepted a company as a comparable, even though the company was rejected by the Transfer Pricing Officer on the basis that it had incurred losses in two out of three years (including the tax year at issue).

The tribunal accepted the company as a comparable on the basis that the nature of services it provided was similar to that of the business support services rendered by the taxpayer. Goldman Sachs (India) Securities Pvt. Ltd. v. ACIT (ITA NO. 7724/Mum/2011)


  • Concerning the taxpayer’s broker services segment, the tribunal accepted as comparable broker services those rendered by third-party Indian brokers based on findings that the business profile of the Indian and foreign-owned brokers matched that of the taxpayer. The tribunal further accepted the CUP method applies by the taxpayer as appropriate.
  • Concerning investment advisory services, the tribunal rejected comparables selected by the Transfer Pricing Officer because the main business segment of those companies was merchant banking. The tribunal noted that the taxpayer did not have a license to engage in the merchant banking business.

Read a February 2013 report [PDF 212 KB] prepared by the KPMG member firm in India: Mumbai tribunal accepts a company incurring losses in two out of three years based on similarity in nature of services; in applying CUP method, emphasizes similarity in business profiles vis-à-vis ownership profile



Contact a tax professional with KPMG's Global Transfer Pricing Services.



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