In Brief
SAP Labs India and related cases challenged the High Court's view that transfer pricing determinations by the Income Tax Tribunal are final and beyond judicial review. The Supreme Court held that while the Tribunal is the primary fact-finder, its determination of arm's length price must comply with statutory guidelines under the Income Tax Act, 1961 and Rules. Deviations from prescribed methods and guidelines constitute perversity and raise substantial questions of law reviewable by the High Court under Section 260A. The Court overruled the Karnataka High Court's precedent barring High Court scrutiny of transfer pricing determinations and remitted cases for fresh examination of guideline compliance.
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