Court Rules Against Unjustified Shift in Tax Assessment Method, Stresses Consistent Use of Transfer Pricing for Businesses.

The High Court held that a change in the approach of assessing tax, without any statutory change, leads to uncertainty in cash flow and fund flow, which are crucial for commercial enterprises. Unless there are cogent reasons to discard the Transfer Pricing (TP) method adopted in earlier assessment years, the Transfer Pricing Officer (TPO) should consistently follow the method used for determining the Arm's Length Price (ALP) in prior years. The TPO erred in rejecting the Transactional Net Margin Method (TNMM) without sufficient justification, despite it being consistently used in the past six assessment years. The court concurred with the Tribunal's view that the Dispute Resolution Panel (DRP) erred in finding that the TPO provided justific..... .....

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