Juniper Networks Solution India Pvt. Ltd. Vs Assessment Unit (ITAT Delhi)
Delhi ITAT held that Juniper’s trading and after-sales service activities were inseparably linked, forming one integrated business. Rejecting the TPO’s revenue-based segmentation as artificial, the Tribunal applied the “egg-or-chicken” analogy to emphasize their interdependence, upheld entity-level TNMM, and deleted the ₹16.86-crore transfer pricing adjustment.
Delhi Tribunal allowed Juniper’s appeal by holding that its trading & service operations formed one integrated business, not separable for transfer pricing purposes.
Assessee, a Limited Risk Distributor for Juniper Networks International BV, imported networking equipment & provided after-sales/customer services. TPO treated trading & service activities as distinct, reallocated common costs based on revenue, applied TNMM on trading segment alone, & proposed TP adjustment of ₹16.86 crore, which the DRP later reduced to nil after allowing working capital adjustment but upheld segmentation.
Tribunal found that Juniper’s after-sales & AMC services were intertwined with its product sales, relying on the agreement clauses & revenue recognition policy showing common performance obligations. It held that the core business was trading, & customer support existed only as an integral extension of that activity. The TPO’s revenue-based segmentation was termed arbitrary & contrary to commercial reality.
Accordingly, Tribunal accepted entity-level TNMM as the proper method, deleted the TP adjustment, & allowed the appeal — observing that in such cases, trading & service functions are inseparable, “like the egg-or-chicken story”.
