{"id":57321,"date":"2025-10-30T13:23:42","date_gmt":"2025-10-30T07:53:42","guid":{"rendered":"https:\/\/itatonline.org\/digest\/netflix-entertainment-services-india-llp-v-dcit-mumtrib-www-itatonline-org\/"},"modified":"2025-10-30T13:28:42","modified_gmt":"2025-10-30T07:58:42","slug":"netflix-entertainment-services-india-llp-v-dcit-mumtrib-www-itatonline-org","status":"publish","type":"post","link":"https:\/\/itatonline.org\/digest\/netflix-entertainment-services-india-llp-v-dcit-mumtrib-www-itatonline-org\/","title":{"rendered":"Netflix Entertainment Services India LLP v. DCIT (Mum)(Trib) www.itatonline .org"},"content":{"rendered":"<p>The assessee, <strong>Netflix Entertainment Services India LLP<\/strong><strong>,<\/strong> engaged in distribution of access to the global Netflix streaming service, applied TNMM as the most appropriate method for benchmarking its payment of distribution fee to its Associated Enterprises (AEs). The TPO rejected this characterization and recharacterised the assessee as an entrepreneurial content and technology provider, applying the \u201cOther Method\u201d under Rule 10AB based on royalty rates derived from third-party agreements, leading to a transfer pricing adjustment of \u20b9444.93 crore. The DRP affirmed this approach. On appeal, the Tribunal held that Netflix India was a limited-risk distributor performing routine functions of marketing, billing, customer support, and compliance, without owning or controlling any content, intellectual property, or technology. The Open Connect Appliances (OCAs) were only cache devices for bandwidth efficiency and not core technology assets. The TPO\u2019s reliance on unrelated royalty agreements was found to be arbitrary, unsupported by comparables, and contrary to the contractual and factual framework. The Tribunal held that the TNMM, based on software-product distributors as comparables, remained the most appropriate method, and the TPO and DRP had erred in discarding it in favour of a speculative \u201cOther Method.\u201d The re-characterisation of a bona fide distribution arrangement into a licence transaction was impermissible. Following <em>Engineering Analysis Centre of Excellence (P.) Ltd. v. CIT<\/em> (2021) 432 ITR 471 (SC), it was held that the assessee neither received nor transferred any copyright or licence and that the payment of distribution fee did not constitute royalty. Accordingly, the entire adjustment was deleted. <strong>(AY. 2021\u201322)<\/strong> <strong>( \u00a0ITA No. 6857\/Mum\/2024; dt. 17-10-2025)<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>S. 92C :  Transfer Pricing \u2013 Arm\u2019s length price &#8211; Avoidance of tax -International transaction &#8211;   Characterisation of Indian Entity \u2013 Limited Risk Distributor -Entrepreneurial Service Provider-  Transactional Net Margin Method (TNMM) &#8211; Other Method  under Rule 10AB \u2013 Re-characterisation of Transactions \u2013 Royalty Computation \u2013 Transfer Pricing Adjustment of \u20b9444.93 Cr  held to be unsustainable .[ R. 10AB ] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-57321","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-eUx","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/57321","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=57321"}],"version-history":[{"count":2,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/57321\/revisions"}],"predecessor-version":[{"id":57323,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/57321\/revisions\/57323"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=57321"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=57321"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=57321"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}