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TMI BlogCircular on application of profit split methodX X X X Extracts X X X X X X X X Extracts X X X X ..... method It has been brought to the notice of CBDT that clarification is needed for selection of profit split method (PSM) as most appropriate method. The issue has been examined in CBDT. It is hereby clarified that while selecting PSM as the most appropriate method, the following points may be kept in mind : 1. Since there is no correlation between cost incurred on R D activities and return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of PSM will depend upon following factors as prescribed under rule 10C(2) of the Rules : the nature and class of the international transaction; the class or classes of associated enterprises entering into the transaction and the functions performed by them taking into account assets employed or to be employed and risks assumed by such enterprise; the availability, coverage an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st appropriate method. Accordingly, in a case, where the Transfer Pricing Officer (TPO) is of view that PSM cannot be applied to determine the arm's length price of international transactions involving intangibles due to non-availability of information and reliable data required for application of the method, he must record reasons for non-applicability of PSM before considering TNMM or comparable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al remuneration, location savings and location specific advantages. The above may be brought to the notice of all concerned. (Batsala Jha Yadav) Director APA Central Board of Direct Taxes Copy to: 1. The Chairperson, Members and all other officers of the CBDT of the rank of Under Secretary and above. 2. All Chief Commissioners/Directors General of Income -tax. 3. The Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X
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