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Case Law Details

Case Name : DCIT Vs Teradata India Pvt. Ltd. (ITAT Delhi)
Appeal Number : ITA No. 2397/Del/2017
Date of Judgement/Order : 20/05/2020
Related Assessment Year : 2009-10
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DCIT Vs Teradata India Pvt. Ltd. (ITAT Delhi)

Subvention Fee consider in Distribution Segment for calculating Segment wise Margin

The issue under consideration is whether the TPO is correct in considering subvention fee in the BPO segment instead of distribution segment?

ITAT states that, assessee operate as a limited risk distributor and is assured 3% operating profit margin for its distribution activity. Any shortfall in the margin is made good by its AE by payment of subvention fee. During the year the assessee received subvention fee of Rs.21,75,54,831/-. While working out the margin of the assessee the learned transfer-pricing officer took it as operating income correctly. However, while working the segment wise margin of weighted average basis this subvention income was considered in BPO segment instead of distribution segment. The learned DRP has directed the AO / TPO to consider the amount of subvention fee for distribution segment. Such direction does not have any infirmity. Therefore, appeal filed by revenue is dismissed.

ITAT upheld determination of ALP as nil for duplicative services

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