In Brief
Honda Motor Co. Ltd sought to challenge income tax reassessment notices that treated the company as having a permanent establishment in India and attempted to attribute additional profits beyond those determined under transfer pricing (arm's length) rules. The Supreme Court held that once the arm's length pricing principle is satisfied, no additional profit can be attributed solely on the basis of permanent establishment. The Court relied on its earlier precedent establishing this principle and set aside the reassessment notices. The appeals were accordingly allowed, with liberty granted to the Revenue to challenge the factual position if disputed.
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