UAPA Can serve as a Persuasive Benchmark

The Delhi Bench of the Income Tax Appellate Tribunal held that a subsequently concluded Unilateral Advance Pricing Agreement (UAPA) can serve as a persuasive benchmark for determining the arm’s length price of similar international transactions in earlier years. 

The Tribunal directed the Assessing Officer to restrict the transfer pricing adjustment relating to royalty and technical service fees by applying the rate of 1.9% of net sales accepted by the CBDT under the UAPA, thereby substantially reducing the adjustment made by the Transfer Pricing Officer.