The High Court of Delhi recently ruled on whether the structure of a transaction may be disregarded for transfer pricing purposes on the basis of not being commercially rational. The case involved two related appeals by Denso India Ltd. (Denso), a company engaged in the manufacture and sale automotive electronic products.
For the assessment years 2002-03 and 2003-04, Denso used the transaction net margin method (TNMM) to determine the transfer prices for all its controlled transactions, whic…