Use of Berry ratio as PLI upheld

In a recent ruling, the Delhi Bench of the Income-tax Appellate Tribunal, placing extensive reliance on the ruling made by the same bench in the case of Mitsubishi Corporation India Private Limited, has:

• Upheld the use of the ‘Berry ratio’ as profit level indicator (PLI).
• Rejected the transfer pricing officer’s (TPO’s) re-characterisation of the taxpayer’s service activity to a trading activity.
• Rejected the TPO’s contentions pertaining to attribution of additional returns on account of location savings and certain supply chain and human intangibles owned/ developed by the taxpayer.