India: Taxpayer to cross-examine companies’ personnel | KPMG | GLOBAL

India: Taxpayer must have opportunity to cross-examine comparable companies’ personnel

India: Taxpayer to cross-examine companies’ personnel

The Delhi High Court held that a taxpayer must be afforded an opportunity to cross-examine personnel of comparable companies that were selected by the Transfer Pricing Officer to determine the arm’s length price and ultimately to arrive at a transfer pricing adjustment.


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The Transfer Pricing Officer used “segmental data” from several companies—data that did not form part of these companies' audited accounts—in determining the arms' length price. The taxpayer was not provided an opportunity to cross-examine the comparable companies’ authorised personnel who had provided the segmental data.

The High Court found that in light of the tax department’s reliance on the data, the taxpayer must be afforded an opportunity of rebutting such data, and this rebuttal would not be available unless the taxpayer were given an opportunity to cross-examine the individuals who had submitted the data. Accordingly, the transfer pricing order was set aside, and the case was returned with instructions to allow the taxpayer an opportunity to cross-examine the personnel who had submitted the segmental data.


Read a July 2016 report [PDF 298 KB] prepared by the KPMG member firm in India: Taxpayer to be given an opportunity to cross-examine authorised personnel of companies providing unaudited segmental data to the transfer pricing officer

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