Delhi High Court Sets Aside TPO Order for Failure to Supply Comparable Agreements

The petitioner, Lindstrom Services India Private Limited, challenged an order dated 05.01.2026 passed by the Transfer Pricing Officer under Section 92CA(3) of the Income-tax Act, 1961.

During the transfer pricing proceedings, the TPO issued a show cause notice relying on four royalty agreements to allege that the petitioner had paid excess royalty. When the petitioner sought copies of these agreements to submit an effective reply, the request was declined on the ground that the Act did not require such disclosure.

Main Issue: Whether a transfer pricing order passed without supplying copies of the agreements relied upon for benchmarking violates principles of natural justice and is liable to be set aside.

HC’s Order: The Hon’ble High Court held that it is a settled principle of law that an authority must furnish copies of all documents relied upon while proceeding against a party. The Court observed that royalty agreements may vary widely depending on the nature of business, transactions, and commercial considerations, and without access to such agreements, the taxpayer’s right to defend itself is seriously prejudiced.

The Court set aside the TPO’s order dated 05.01.2026. The TPO was directed to supply redacted copies of the relied-upon agreements by 15.02.2026, permit the petitioner to file its reply by 02.03.2026, and pass a fresh order by 16.03.2026. All statutory timelines before the TPO and DRP were extended by 45 days.

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