Juniper Networks Solutions India Private Limited Vs ACIT (ITAT Delhi)
TP Segment Split Rejected as Trading & After-Sales Services Are Inextricably Linked; TNMM at Entity Level Upheld: ITAT Delhi
The appeal arises from the final assessment order dated 28.10.2024 for Assessment Year 2021–22, passed under Sections 143(3), 144C(13), and 144B of the Income-tax Act pursuant to the directions of the Dispute Resolution Panel (DRP). The assessee challenged multiple aspects of the assessment, including an upward revision of income, transfer pricing (TP) adjustments, segmentation of business activities, benchmarking methodology, allocation of expenses, selection of comparables, denial of risk adjustment, and initiation of penalty proceedings.
A key issue before the Tribunal was whether the tax authorities were justified in segregating the assessee’s operations into a trading segment and a service segment, and consequently rejecting the application of the Transactional Net Margin Method (TNMM) at the entity level. The assessee argued that its business model was integrated and that trading and service functions were inextricably linked.
The assessee relied on the Tribunal’s decision in its own case for the immediately preceding assessment year (A.Y. 2020–21), where identical issues had been considered. In that earlier decision, the Tribunal had accepted the assessee’s contention that its business model could not be artificially segmented and had upheld the application of TNMM at the entity level. The assessee submitted that the facts for the current year were identical and that the earlier ruling should be followed.
