The Delhi High Court has dismissed an appeal filed by the Income Tax Department against M/s TCK Advisers Pvt. Ltd., refusing to interfere with findings that had granted the company significant transfer pricing relief. The court not only upheld the merits of the earlier orders but also cited an unexplained delay in refiling the appeal as an additional ground for rejection.
Background of the Case
The case arose from Assessment Year 2010–11 and related to the transfer pricing of international transactions between TCK Advisers Pvt. Ltd. and its associated enterprise, Trikona Advisors Mauritius Limited.
TCK Advisers provided investment advisory services exclusively to its overseas associated enterprise. The arrangement was on a cost-plus model, meaning the company earned a fixed margin over costs and did not bear business risks such as market fluctuations, credit risks, or foreign exchange exposure.
The dispute began when the Transfer Pricing Officer (TPO) proposed an upward adjustment of over ₹3.33 crore, alleging that the pricing of services was not at arm’s length. The Assessing Officer accepted this proposal.
However, the Dispute Resolution Panel (DRP) partly allowed the company’s objections and directed a substantial reduction in the proposed addition by excluding six companies chosen as comparables by the TPO.
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Revenue’s Stand Before the Tribunal
The Income Tax Department challenged the DRP’s decision before the Income Tax Appellate Tribunal, arguing that the excluded companies were functionally similar and should have been retained as comparables.
According to the revenue, the DRP wrongly applied filters such as export turnover and failed to appreciate that “no exact comparable exists in reality” for investment advisory services.
The ITAT, however, found merit in the DRP’s reasoning and dismissed the department’s appeal in 2019.
Court’s Observations
Hearing the matter under Section 260A of the Income Tax Act, the Division Bench of Justice V. Kameswar Rao and Justice Vinod Kumar closely examined the findings of the DRP and the ITAT.
The bench noted that the DRP had carried out a detailed functional analysis of each excluded company. These entities were engaged in activities such as stock trading, merchant banking, debt syndication, NBFC operations, and capital-intensive financial services activities far removed from the low-risk, non-binding advisory role performed by TCK Advisers.
“The findings recorded by the DRP clearly establish functional dissimilarity,” the bench observed, noting that many of the excluded companies earned significant income from non-advisory or fund-based activities.
The court also accepted the application of the 75% export turnover filter, pointing out that TCK Advisers earned 100% of its revenue from exports, while several comparables had negligible or nil export income.
On Questions of Law and Delay
The revenue had proposed multiple “substantial questions of law,” including objections to the comparability standards applied and the export filter used. The High Court was unconvinced.
It held that the conclusions reached by the DRP and affirmed by the ITAT were pure findings of fact, not raising any substantial legal question that warranted interference.
Additionally, the court took note of a 1285-day delay in refiling the appeal. Finding no satisfactory explanation for this prolonged delay, the bench treated it as an independent ground to dismiss the case.
Final Decision
Concluding the hearing, the Delhi High Court dismissed the Income Tax Department’s appeal both on merits and on account of delay, thereby affirming the relief granted to TCK Advisers Pvt. Ltd. and closing the long-running transfer pricing dispute.
Case Title:- Principal Commissioner of Income Tax–7, Delhi vs M/s TCK Advisers Pvt. Ltd.
Case Number: ITA 778/2025
