Indian Court Holds CUP Method may be Applied using Industry Profit-Split Ratios

In a decision published 1 January 2016, the High Court of Delhi ruled on whether profit-split ratios may be used when applying the comparable uncontrolled price (CUP) method to determined the arm's length price. The case involved Toll Global Forwarding India (TGFI) and its split of residual profits earned from its controlled transactions between the exporting and importing members of its affiliated group for the 2006/07 and 2007/08 tax years.

In determining its transfer pricing, TGFI applied…