« Top Headlines » Open DEMAT Account in 24 hrs  Mock Test Papers Series - I & II for Students appearing in CA Foundation January 2027 Examination.  Income Tax Rules 2026: CBDT Introduces Revised Form 161 for Penalty Waiver, Clarifies Misreporting Categories and Taxpayer Relief  ITR Filing and Income Tax Audit Deadline Extended: 5 Critical Things Taxpayers Must Know  Filing Belated ITR for AY 2026-27? Know Which Losses You Can Carry Forward and Which You May Lose  CBDT Extends Tax Audit Report Deadline to October 21, ITR Filing Last Date to November 21 for AY 2026-27  CBDT Extends AY 2026-27 ITR Filing Deadline for Tax-Audit Cases: New Dates and Key Compliance Details  Foreign Assets Missing From Your ITR? Income Tax Department Opens One-Time Disclosure Window  Tax Audit Deadline September 30: Why AIS, TDS and GST Figures May Not Match Your ITR and What Taxpayers Should Do  Tax audit deadline September 30: Common mistakes taxpayers should avoid  Your ITR says ‘verified’, but the refund hasn’t arrived? 5 reasons why your money could be stuck  Missed the ITR Deadline but TDS Refund Is Due? Here’s How You Can Still Claim Your Money «  Tax norms for foreign service providers still confusing... Tax-saving is a year-long business... » ITAT mathematics: Transfer pricing is no science November, 06th 2007 The Income-Tax Appellate Tribunal has held that transfer pricing is not an exact science in which mathematical certainty is possible and some approximations cannot be ruled out. The case relates to transfer pricing of captive software development services rendered by an Indian subsidiary Mentor Graphics to its US-based overseas parent. Mentor Graphics had carried out a detailed transfer pricing analysis and documentation choosing a set of comparables, which was rejected by the first level audit officer and the latters decision upheld by the commissioner (appeals). The tribunal, however, did not approve of the order of the transfer pricing officer and deleted the adjustment to the taxpayers income made by him, upholding the transfer price paid the taxpayer. The primary issue in the case was the choice of appropriate comparables for benchmarking or comparing the profits of the Indian entity, in order to evaluate the adequacy of the transfer prices between the Indian entity and its overseas parent. The tribunal contended that transfer pricing is not an exact science in which mathematical certainty is possible. It needs to be prima facie shown that the transaction was properly examined, comparable prices were objectively fixed, in a bona-fide, honest manner as required by law. Transfer pricing provisions primarily require any income arising from an international transaction between two or more associated enterprises to be at arms length price and comparable to similar transactions between unrelated enterprises. A proper study of all the specific characteristics of the transaction needs to be undertaken, including analysis of functions, assets and risks taking into account economically significant activities and responsibilities of the enterprises, it ruled, saying that a mere broad comparison was not sufficient enough. This landmark ruling is a step in the right direction, as it focuses on economic issues and recognises commercial realities of businesses, which are the key in any transfer pricing analysis. Further, the ruling gives a direction to transfer pricing officer that once taxpayers undertake appropriate due diligence, their analysis cannot be arbitrarily rejected during audits based on inferences and presumptions, said PwC executive director Shyamal Mukherjee.