Transfer Pricing Substance Over Form

In a nuanced and balanced ruling, the Tribunal deals with multiple transfer pricing adjustments involving reimbursements (personnel, IT, advertising) and royalty payments.

The Tribunal decisively rejects the TPO’s tendency to assign NIL ALP to legitimate intra-group transactions, especially where services are demonstrably rendered and costs are reimbursed on a cost-to-cost basis without markup.

At the same time, it upholds adjustments where the taxpayer fails to substantiate commercial necessity and evidentiary backing, thereby reinforcing that TP jurisprudence is evidence-driven, not assumption-driven.

The ruling is a classic example of “substance prevails but must be proven.”