Intra-group IT services to Singapore affiliate not taxable as FTS; demonstration assets' ALP to be redetermined

The ITAT ruled on two transfer pricing issues. Regarding intra-group services, the Tribunal deleted the adjustment, holding that IT and administrative services provided to the Singapore affiliate did not constitute Fees for Technical Services under the India-Singapore DTAA, following precedent from earlier assessment years. On purchase of fixed assets used for demonstration purposes, the ITAT remanded the matter to the AO/TPO for redetermination of arm's length price. The Tribunal directed that ALP should be determined based on input cost of traded goods, noting that the assessee had capitalized demonstration assets and claimed depreciation, which was already factored into the trading margin previously accepted as arm's length by the TPO. The AO/TPO must verify costs and redetermine the ALP after giving the assessee proper hearing. .....

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