The SAP Conundrum: Fact Or Law?

Recently, the Supreme Court in the case of Sap Labs India Private Ltd. v ITO¹, held that in transfer pricing matters, a High Court cannot be precluded from examining the correctness of the determination of the arm's length price by the Tribunal in an appeal on the ground that it does not raise a substantial question of law. The appeals before the Supreme Court were against the decision of the High Court of Karnataka, which dismissed the appeals preferred by the Revenue by relying upon its earlier judgment in the case of PCIT v. Softbrands India (P) Ltd². Interestingly, the Supreme Court, a few days after the Sap Labs judgment in the case of DIT v. Travelport Inc.,³ has ruled that what proportion of profits arose or accrued in India is essentially one of facts and there is no question of law involved and hence, it doesn't require any interference.