STOTLAND | GLOBAL TP MONITOR A weekly Review of Global Transfer Pricing Developments

Issue No. 02 | September 25, 2026

India dominates this week’s Global TP Monitor, accounting for all four of the material developments reviewed. The cases span a surprisingly broad section of the transfer pricing landscape—from procedural validity and TPO references to transaction aggregation, comparability, financial transactions and intercompany receivables.

For one week at least, the “Global” TP Monitor has a distinctly Indian accent. The decisions are different in subject matter, but collectively reinforce a familiar theme: reliable transfer pricing outcomes depend on both sound economic analysis and getting the underlying legal and procedural mechanics right.

I. Case Law

1. India — KEC International Limited v. DCIT

Jurisdiction: India

Court: Income Tax Appellate Tribunal (ITAT), Mumbai

Case: ITA No. 2157/Mum/2026, AY 2022–23

Order date: 28 August 2026

Reported: 24 September 2026

Topic: Corporate and performance guarantees | Internal CUP | Guarantee commission

Background

KEC International Limited, an engineering, procurement and construction (EPC) group, provided corporate guarantees to banks in support of financing facilities obtained by overseas associated enterprises (AEs), as well as performance guarantees relating to contracts awarded to overseas AEs.

KEC charged a guarantee commission of 0.60% and relied upon pricing contained in its own third-party bank facility letter as an internal comparable uncontrolled price (CUP).

The taxpayer's primary position was that the guarantees represented shareholder activity and therefore did not constitute international transactions. Alternatively, it argued that the 0.60% commission already charged represented an arm’s-length price supported by reliable internal CUP evidence.

The Transfer Pricing Officer (TPO) treated the guarantees as international transactions under Section 92B of the Indian Income-tax Act and benchmarked them by reference to commercial bank guarantee rates. A 1% rate was ultimately applied, resulting in an adjustment of approximately INR 5.083 crore, which was sustained by the Dispute Resolution Panel.

Tribunal decision

The ITAT confirmed that the guarantees constituted international transactions. However, following KEC’s own cases from earlier years and recognizing the economic differences between guarantees issued by commercial banks and corporate guarantees provided within a group, the Tribunal accepted 0.60% as the arm’s-length guarantee commission for the relevant transactions.

Why it matters

The decision provides further support for the use of taxpayer-specific internal CUP evidence in pricing intercompany financial transactions.

More importantly, it is another reminder that a bank guarantee and a corporate guarantee should not become economically identical merely because they both happen to contain the word “guarantee.”

Commercial bank guarantee rates should not automatically be treated as arm’s-length benchmarks for parent-company guarantees. Differences in functions, risks, economic circumstances and the nature of the guarantee must first be considered.

For multinational groups, contemporaneous third-party bank quotations, facility agreements and similar external financing documentation may therefore provide particularly valuable evidence when establishing or defending an intercompany guarantee fee.

Practitioner’s note: Before reaching for a generic guarantee-rate database, it may be worth checking the CFO’s filing cabinet. Sometimes the best comparable is already sitting inside the group’s own financing documentation.

2. India — ACIT v. Brocade Communications Systems Pvt. Ltd.

Jurisdiction: India

Court: Income Tax Appellate Tribunal (ITAT), Bengaluru

Case: IT(TP)A No. 167/Bang/2015, AY 2010–11

Order pronounced: 21 September 2026

Reported: 24 September 2026

Topic: TNMM | Functional comparability | Product and IP differences | Segmental information | Onsite filter

Background

Brocade Communications Systems Pvt. Ltd. provided contract software R&D and marketing-support services to its associated enterprise and applied the transactional net margin method (TNMM), using separate comparable-company sets for the respective activities.

The TPO modified the comparable-company analysis and initially proposed adjustments of approximately INR 4.55 crore for software-development services and INR 1.31 crore for marketing-support services. Following directions from the Dispute Resolution Panel, the aggregate adjustment was reduced to approximately INR 1.35 crore.

The dispute before the Tribunal concerned the suitability of several comparable companies. Brocade supported the exclusion of companies whose activities differed materially because of software products, licensing and royalty income, inadequate segmental information, scale, brand value or broader functional profiles.

Revenue sought to reinstate several companies—including Sasken Communication Technologies, ICRA Techno Analytics, Persistent Systems & Solutions, Persistent Systems and Infosys—principally on the basis that they satisfied the TPO’s screening criteria.

Tribunal decision

The ITAT upheld the exclusions. The Tribunal found that product activities, diversified operations, licensing or royalty income and the absence of reliable segmental information rendered several of the companies unsuitable as comparables.

Infosys was also considered insufficiently comparable in light of factors including its scale, product revenue, technology activities, marketing expenditure and valuable brand.

Significantly, the Tribunal further held that a taxpayer may challenge a comparable before the DRP even where that company had previously been accepted by the taxpayer before the TPO. The overriding objective remains the determination of the correct arm’s-length price.

In other words, there is no doctrine of “you picked it, so now you’re stuck with it” in a comparability analysis. If subsequent scrutiny shows that a company is not genuinely comparable, getting the arm’s-length result right takes precedence.

Why it matters

The ruling reinforces a fundamental principle of TNMM benchmarking: quantitative database screening is a starting point, not the conclusion of the comparability analysis.

A company satisfying numerical screening criteria may nevertheless be unsuitable where its actual business activities, functions, assets, risks, products, intellectual property, scale or available segmental information differ materially from those of the tested party.

Or, put less technically: passing the filters does not magically make two businesses comparable.

That may sound obvious. Anyone who has spent enough time reading annual reports after running a database search knows that it occasionally needs repeating.

The decision therefore reinforces the importance of reviewing annual reports and other underlying company information rather than relying exclusively on database classifications and quantitative filters.

For benchmarking studies involving software development, R&D and other service providers, the decision provides useful support for excluding product companies, IP-rich businesses and companies for which sufficiently reliable segmental information is unavailable.

Practitioner’s note: The database finds candidates. The transfer pricing analysis determines whether they actually belong in the set. Unfortunately, the database still refuses to read the annual reports for us.

3. India — Himatsingka Seide Limited v. PCIT

Jurisdiction: India

Court: Supreme Court of India

Case: Special Leave Petition (Civil), Diary No. 44885/2026

Order date: 18 September 2026

Reported: 21 September 2026

Topic: Validity of TP adjustment following abatement of assessment | TPO reference

Status: Monitor

Background

The dispute relates to Assessment Year 2008–09 and concerns an unusual intersection between transfer pricing procedure and India’s search-assessment regime.

A transfer pricing determination had originally been made following a reference to the Transfer Pricing Officer (TPO). Following a search under Section 132, however, the pending assessment abated under Section 153A.

The ITAT subsequently deleted transfer pricing adjustments of approximately INR 69.09 million, finding that the original TPO determination could not simply be carried into the Section 153A assessment without a fresh reference under Section 92CA.

The Calcutta High Court admitted Revenue’s appeal in April 2026, finding that the status and usability of the earlier TPO report following abatement raised substantial questions of law.

The taxpayer maintained that once the original assessment had abated, the earlier TPO determination ceased to be effective for purposes of the subsequent Section 153A assessment and a fresh TPO reference was required.

Revenue, by contrast, argued that abatement of the assessment did not erase the underlying international transactions or invalidate the specialized determination already undertaken by the TPO.

Supreme Court decision

The Supreme Court declined to interfere with the Calcutta High Court’s order and dismissed Himatsingka’s Special Leave Petition on 18 September 2026.

Importantly, however, the Supreme Court did not decide the underlying transfer pricing issue on its merits. The substantive questions concerning the effect of abatement on the earlier TPO determination therefore remain to be addressed in the High Court proceedings.

Why it matters

At first glance, Himatsingka looks more like an assessment-procedure case than a transfer pricing case. In practice, the distinction may be academic if a procedural defect determines whether a multimillion-rupee TP adjustment survives at all.

The case highlights an easily overlooked aspect of transfer pricing controversy: a technically sound economic analysis still needs to sit inside a legally valid assessment process.

Where search proceedings, reassessments or other procedural events intervene after a TPO reference has already been made, taxpayers should carefully preserve and review the entire procedural chain—including the original reference, the TPO order and the legal status of the underlying assessment.

Practitioner’s note: Transfer pricing professionals understandably spend a great deal of time worrying about methods, margins and comparables. Himatsingka is a useful reminder that occasionally the most important question is much simpler: was the adjustment procedurally alive in the first place?

For multinational groups facing Indian TP controversy, the High Court proceedings are therefore worth monitoring.

4. India — Savista Global Solutions Pvt. Ltd.

Jurisdiction: India

Court: Income Tax Appellate Tribunal (ITAT), Delhi

Case: ITA No. 3939/Del/2024, AY 2020–21

Reported: 21 September 2026

Topic: Aggregation of transactions | Support services | Subcontract receipts | Delayed receivables

Background

Savista Global Solutions Pvt. Ltd. provides information technology-enabled services (ITeS), principally revenue-cycle-management services, to the U.S. healthcare industry. For AY 2020–21, Savista separately benchmarked two controlled transaction streams: support services, on which it reported a 14% margin, and receipts from subcontracts, on which it reported a 5% margin.

The TPO instead adopted an aggregated benchmarking approach, modified the comparable-company analysis and initially proposed a transfer pricing adjustment of approximately INR 329.3 million. A separate adjustment was also made for imputed interest on delayed receivables from associated enterprises.

Savista maintained that the support-service and subcontract arrangements represented economically distinct controlled transactions, supported by different contractual and functional profiles, and should therefore be evaluated separately. The TPO’s position effectively treated the two streams together for benchmarking purposes and separately characterized outstanding AE receivables as giving rise to an interest adjustment.

Tribunal decision

According to the newly reported ruling, the ITAT rejected the aggregation of the support-service and subcontract-receipt streams and granted relief to the taxpayer. The Tribunal also deleted the adjustment relating to delayed receivables.

The result places the focus where transaction delineation arguably belongs: on the economics of the individual arrangements rather than simply on the fact that the transactions involve the same related parties or form part of the same broader commercial relationship.

Why it matters

Savista provides a useful reminder that aggregation under TNMM should not become a matter of convenience. Controlled transactions may appropriately be evaluated together where they are so closely linked that separate analysis would be unreliable. But where service streams have different contractual terms, functions, economics or remuneration structures, those differences need to be considered before placing everything into a single benchmarking basket.

Or, put somewhat differently: “same group, same year” is not itself a transfer pricing method.

The receivables aspect is equally relevant. Delayed intercompany receivables remain a recurring source of Indian TP controversy, particularly where tax authorities seek to characterize the delay as a separate financing transaction rather than part of the economics and working-capital profile of the underlying service arrangement.

The appropriate analysis therefore remains fact-specific: payment terms, actual collection patterns, third-party behavior, working-capital adjustments and the broader pricing of the underlying controlled transaction may all matter.

Practitioner’s note: Aggregation can make a benchmarking analysis considerably tidier. Unfortunately, the arm’s-length principle has never promised us tidy. For groups operating multiple intercompany service arrangements, Savista reinforces the importance of documenting why transactions are being aggregated—or why they are not—rather than allowing the benchmarking model to make that decision implicitly.

Overall Takeaway

The four decisions make this an India-heavy week, but they also cover four different pressure points in transfer pricing: financial transactions, comparable-company selection, procedural validity and transaction delineation.

KEC International demonstrates the potential value of transaction-specific internal CUP evidence and reinforces that commercial bank guarantees should not automatically be treated as economically equivalent to corporate guarantees.

Brocade Communications reinforces that quantitative screening alone does not establish TNMM comparability. Product and IP activities, segmental information, scale, brand and the underlying functional profile remain critical.

Himatsingka shifts the focus from economics to legal machinery: even a substantive TP determination may depend on whether the procedural chain supporting it remains legally effective after an assessment abates.

Savista returns to transaction delineation, reinforcing that economically distinct service streams should not be aggregated merely because they arise within the same broader related-party relationship, while also keeping delayed receivables firmly on the Indian TP controversy radar.

Put together, this week’s message is broader than any single method: get the economics right, get the evidence right, and make sure the procedural foundation is right as well.

India may have dominated this week’s Monitor, but the lessons travel rather well.

Sources: KEC International Limited v. DCIT, ITA No. 2157/Mum/2026; ACIT v. Brocade Communications Systems Pvt. Ltd., IT(TP)A No. 167/Bang/2015; M/s Himatsingka Seide Limited v. Principal Commissioner of Income Tax, Central 2, SLP (Civil), Diary No. 44885/2026; Savista Global Solutions Pvt. Ltd. v. Income Tax Department, IT