INDIA Law and Practice Contributed by: Deepak Chopra, Harpreet Singh Ajmani, Rohan Khare, Pulkit Pandey and Priyam Bhatnagar, AZB & Partners
Writ Petition, which is an extra-ordinary jurisdic - tion in cases where the order passed by the stat - utory authority is in gross violation of principles of natural justice or has been passed without the authority of law or overreaching the mandate of the statutory provision or on account of violation of fundamental rights. 14. Judicial Precedent 14.1 Judicial Precedent on Transfer Pricing Since 2001, India has developed a very rich repository of judicial precedents on transfer pric - ing issues. It would be prudent to mention that transfer pricing is one of the most highly litigated areas under the Income Tax regime on both fac - tual and legal issues. Some of the burning issues decided by the Indian tax tribunals and courts, providing guidance and precedence, are: • existence of an international transaction; • existence of relationship as an AE; • selection of the tested party; • selection of the most appropriate method; The following are some important transfer pric - ing decisions which were rendered in the last year. • In a case where a taxpayer filed an applica - tion under MAP with the competent authority of the US under Article 27 of India US-DTAA and settled the transfer pricing adjustments – thereafter, with respect to transfer pric - ing adjustments made on account of simi - lar transactions with other group AEs in a • selection of the comparables; • allowability of adjustments; and • scope and levy of penalty. 14.2 Significant Court Rulings
different jurisdiction, the Tribunal proceeded to apply the rate agreed between the com - petent authority of India and the USA. In this context when the matter travelled to the High Court, it was opined that MAP proceedings, being based on mutual agreement between the competent authorities, would only be binding on such transactions and cannot be automatically applied across the board on transactions with third/other parties. [Refer: Aon Consulting (P.) Ltd. v PCIT, [Order dated 06.02.2025 in ITA 244 of 2024 (Delhi HC)] • In a case where, in the absence of any addi - tions proposed by the TPO, the Assessing Officer passed the Draft Order by making a transfer pricing addition of INR2,541 crores on account of demerger of the mobile secu - rity division of the taxpayer – aggrieved, a Writ petition challenging the assumption of jurisdiction by the Assessing Officer was filed before the Hon’ble High Court of Delhi. After considering the submission made on behalf of the taxpayer, the Hon’ble High Court, whilst specifically carving out the distinct jurisdictions of the Assessing Officer as well as the TPO, categorically noted that when no transfer pricing adjustment on account of demerger of the company was proposed by the TPO to begin with, the Assessing Officer was barred from making such adjust - ment in the draft order. With this background, the Hon’ble High Court was pleased to set aside the order whilst directing the Assessing Officer to proceed in accordance with the law. [Refer: Giesecke and Devrient India (P.) Ltd. v DCIT, Order dated 01.04.2024 in W.P.(C) 5429 of 2021 (Delhi HC)] • The Hon’ble High Court of Delhi concluded that in a case where the taxpayer was provid - ing call centre services to its AE, whilst under - taking comparability analysis, the compara - bles engaged in providing knowledge process
185 CHAMBERS.COM
Powered by FlippingBook