Transfer Pricing | Delhi High Court Faults DRP For Merely Endorsing TPO's Conclusions Without Independent Findings

While dealing with the Income Tax Department's appeal in a transfer pricing case, the Delhi High Court has flagged that the Dispute Resolution Panel (DRP) failed to discharge its statutory duty by merely approving the conclusions of the Transfer Pricing Officer (TPO) without recording independent findings.

A Division Bench of Justices V Kameswar Rao and Justice Vinod Kumar made the observation in an order dated December 16, 205,  made available only today. It said,

“...in the facts of this case, the DRP, except approving the conclusion of the TPO had not given its findings on the same which was incumbent upon it.”

The Court was dealing with an appeal filed by the Principal Commissioner of Income Tax against an order of the Income Tax Appellate Tribunal (ITAT) in a transfer pricing dispute involving intra-group services and royalty payments for the assessment year 2013–14.

The Revenue had challenged the ITAT's decision setting aside transfer pricing adjustments relating to payments for Technical Support Services (TSS), Business Support Services (BSS) and royalty, where the TPO had determined the arm's length price (ALP) of certain intra-group services as “nil”.

During the hearing, the Court noted that while the DRP had approved the conclusions of the TPO, it had not given its own findings or dealt with the objections raised by the assessee, despite being statutorily required to do so.

The Court also examined the reasoning of the ITAT and found that the Tribunal had set aside the assessment after recording detailed findings on the absence of proper inquiry by the TPO, the DRP's failure to consider additional evidence, and the erroneous determination of ALP at nil.

The ITAT had also relied on the principle of consistency, noting that similar transactions had been accepted in earlier assessment years without adverse findings.

While acknowledging the Revenue's submissions, the High Court held that the ITAT's conclusions were supported by cogent reasoning and factual analysis.

Finding that the appeal raised no substantial question of law, the Court dismissed the Revenue's appeal.

Case Title: Principal Commissioner Of Income Tax, Delhi-1 v. Borgwarner Emissions Systems India Private Ltd

Citation: 2026 LLBiz HC (DEL) 23

Case Number: ITA 750/2025

For Appellant: Mr. Indruj Singh Rai, SSC, Mr. Sanjeev Menon, Mr. Rahul Singh, JSCs and Mr. Gaurav Kumar and Mr. Siddharth Burman, Advs.

Click Here To Read Order