Transfer pricing consistency protects identical non-interest-bearing debenture terms from a later notional-interest adjustment without valid statutory proceedings.

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....Consistency in transfer pricing assessment required deletion of a notional-interest adjustment on non-interest-bearing Non-Convertible Debentures where identical terms had been accepted at arm's length in an earlier year. The debentures provided no periodic interest and included a redemption premium linked to the holding period. Although res judicata does not apply to tax assessments, unchanged fundamental facts and arrangements require consistent treatment. The Transfer Pricing Officer could not reverse the earlier accepted position by imputing interest on both current and prior subscriptions without initiating a permissible statutory proceeding. The notional-interest adjustment was deleted.....