Case Law Details
Destination of the World (Subcontinent) Pvt. Ltd. Vs Asst. CIT (ITAT Delhi) The Tribunal held that in the first instance, the attempt should be made to determine arm’s length price of controlled transactions by comparing the same with internal uncontrolled transactions undertaken in same or similar economic scenario. The Tribunal relied on the following in arriving at this conclusion.
OECD Transfer Pricing Guidelines in paragraph 3.26 suggest preference for internal comparable, and suggest use of external independent enterprises only when such internal comparison is not possible.
The Tribunal ruling in the case of UCB India Pvt. Ltd. (above), indirectly concludes that internal comparable are preferable to external comparable. Also, in the case of Birla soft (India) Ltd. (above), the Tribunal ruled that the taxpayer was justified in undertaking internal comparison.
Internal comparison is valid under all methods.
In the current case, the Revenue had not made a case for economic scenarios of controlled and uncontrolled transactions to be different.
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