Delhi High Court Clarifies Limits of MAP in Transfer Pricing Disputes

Date: 6 February 2025

The Delhi High Court recently ruled in AON Consulting Pvt. Ltd. v. Principal Commissioner of Income Tax on a key transfer pricing dispute involving the improper extension of MAP-based outcomes to unrelated transactions. The case involved whether the framework negotiated under the India–US MAP could be applied to Non-U.S. transactions lacking a similar bilateral agreement.

The ITAT had instructed the Transfer Pricing Officer to apply the same MAP principles to Non-U.S. transactions, even though no treaty mechanism existed for those jurisdictions. AON Consulting challenged this position, arguing that MAP is a bilateral dispute resolution process and cannot be generalized.

The High Court agreed, emphasizing that MAP outcomes are jurisdiction-specific and cannot serve as precedent in unrelated cross-border dealings. It affirmed that Non-U.S. transactions must be evaluated independently under Indian law, specifically Section 92C and Rule 10B.

The judgment reinforces the limits of MAP applicability and prevents tax authorities from unilaterally extending negotiated outcomes. The ITAT’s ruling was set aside, and the matter was remanded for reassessment under domestic TP provisions.

Full English Translation: India vs AON Consulting Pvt. Ltd., February 2025, High Court of Delhi, Case ITA 244/2024 - TPcases