The Mumbai Bench of the Income-tax Appellate Tribunal in the case of: DCIT v. Tata Consultancy Services Ltd. (ITA no. 7513/2010), held that an Assessing Officer cannot “mechanically” refer a taxpayer’s international transaction to a Transfer Pricing Officer for a determination of the arm’s length price, but must first independently conclude that the taxpayer did not determine the arm’s length price or did not maintain appropriate documents based on statutory provisions.
The tribunal also held that, no transfer pricing adjustment can be made in cases when the taxpayer enjoys the benefit of a “tax holiday” or when the tax rate of the related party’s country of residence is greater than the tax rate in India.
