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The MAP Trap: Why One Size Doesn’t Fit All in Transfer Pricing
Comments on the AON Consulting Case
On February 6th, 2025, the Delhi High Court made it clear that Mutual Agreement Procedure (MAP) settlements are not a blueprint for all. It ruled that the transfer pricing framework agreed between India and the US under the MAP cannot be extended to non-US transactions. By rejecting the ITAT’s directive to apply the same pricing approach to unrelated jurisdictions, the court reinforced that MAP outcomes are jurisdiction-specific and must not override the independent application of domestic transfer pricing rules.
1. Introduction
The Delhi High Court’s recent ruling in AON Consulting Pvt. Ltd. v. Principal Commissioner of Income Tax - 1 and Ors (ITA 244/2024) provides significant judicial clarification on the scope and application of the Mutual Agreement Procedure (MAP) in the context of transfer pricing disputes under India’s international tax framework. The case centers on a critical legal question: whether a MAP settlement reached between India and the United States under Article 27 of the India - US Double Taxation Avoidance Agreement (DTAA) can be extended to transactions involving jurisdictions not party to the MAP negotiation. The court’s judgment affirms the principle that MAP...