India: Section 10A tax benefit and additional income from MAP

India: Section 10A tax benefit, additional income MAP

The Bangalore Bench of Income-tax Appellate Tribunal issued a decision in a case concerning the interaction of the tax benefit allowed under section 10A and the additional (enhanced) income resulting from a mutual agreement procedure (MAP) resolution, and held that the denial of the allowance of the section 10A benefit on the enhanced income applies only with regard to a transfer pricing adjustment made by the Assessing Officer and not to any other determination of the arm’s length price.


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The tribunal, thus, concluded that the taxpayer could apply the section 10A tax benefit against the additional amount of income determined under the MAP.

The case is: Dell International Services India Pvt. Ltd. v. DCIT


The taxpayer provided support services to the multinational group entities. For assessment year 2007-2008, the taxpayer received payments for providing call-center services, software development services, and back-office support services.

The Transfer Pricing Officer determined there was a shortfall in the amounts received by the taxpayer from the related parties, and added this shortfall to the total income of the taxpayer as a transfer pricing adjustment. The taxpayer sought an administrative appeal, and during this process, the taxpayer’s U.S. related party approached the competent authority under the MAP for a determination of the arm’s length price of the transactions between the taxpayer and the related parties.

The competent authorities of the United States and India mutually arrived at terms with respect to the mark-up on the costs to be earned by the taxpayer for the services rendered to the U.S. tax residents. Under the MAP resolution, the export income of the taxpayer was “enhanced,” and under the terms of the agreement, the Assessing Officer issued an order giving effect to the MAP resolution, but did not allow a section 10A incentive against the enhanced export income arrived at in the MAP.

The tribunal, however, held that the taxpayer was to be allowed the benefit of section 10A with respect to the amount settled under the MAP.

Read a June 2020 report [PDF 325 KB] prepared by the KPMG member firm in India

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