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Netflix India Transfer Pricing Case: ITAT Mumbai Delivers Landmark Ruling on Digital Distribution Model December 9, 2025
Published in: Alerts
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ITAT Mumbai Deletes ₹445 Cr TP Adjustment in Netflix India Case; Clarifies Characterisation of Digital Distribution Model.
The Mumbai Bench of the Income Tax Appellate Tribunal has delivered a landmark ruling in the case of Netflix Entertainment Services India LLP (AY 2021-22), deleting a transfer pricing adjustment of ₹445 crores proposed by the TPO.
The Tribunal held that Netflix India functions solely as a limited-risk distributor of access to the global streaming platform and does not own or exploit any intellectual property, technology, or content. Rejecting the TPO’s recharacterisation, the ITAT confirmed that all DEMPE functions, key assets, and entrepreneurial risks rest with foreign Associated Enterprises.
Upholding TNMM as the Most Appropriate Method, the Tribunal observed that Netflix India’s 1.36% margin fell squarely within the arm’s-length range and that the TPO’s use of the “Other Method” and royalty benchmarks was factually and legally untenable. The DRP’s ad-hoc attribution of 43% revenue to the Indian entity was also dismissed as lacking economic rationale.
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