BBC Global News Limited v. Deputy Commissioner of Income Tax, ITAT Delhi, ITA Nos. 52 to 56/Del/2025 & 1847/Del/2025, 10 August 2026.

The Delhi Bench of the Income Tax Appellate Tribunal held that profit attribution to a Dependent Agency Permanent Establishment (“DAPE”) must reflect the functions actually performed by the Indian PE. A profit attribution rate adopted under a Mutual Agreement Procedure (“MAP”) for earlier assessment years cannot be mechanically applied to subsequent years where the factual matrix has materially changed.

MAP Attribution Rate Cannot Be Mechanically Applied

The Tribunal held that a profit attribution rate determined under a Mutual Agreement Procedure for earlier assessment years cannot be mechanically applied to subsequent years where there is material evidence of a change in the functions performed by the Indian PE.

In the present case, survey material indicated that the Indian entity was undertaking additional activities in relation to the advertisement business, including:

• Solicitation of orders
• Business development
• Collection of dues
• Marketing and market research

The Tribunal therefore held that the earlier attribution rate of 8.75% of advertisement revenue could not automatically be continued.

Tribunal Restricted Attribution to 12% of Advertisement Revenue

While the Tribunal found that an increase from the earlier 8.75% attribution was justified in view of the additional functions identified, it held that the Assessing Officer had not provided a sufficient empirical or analytical basis for adopting a 15% attribution rate.

The Tribunal therefore restricted the profit attribution to 12% of advertisement revenue.

Arm’s Length Remuneration Does Not Preclude Further PE Attribution

The Tribunal rejected the contention that arm’s length remuneration to the Indian entity necessarily eliminated the possibility of further PE attribution. Where the transfer pricing analysis does not adequately capture all functions performed by the PE, further attribution may be warranted.

Tax Credit and Interest Under Section 234B

On tax credit, the Tribunal held that although the MAP resolution was binding only for the assessment years specifically covered by it, the underlying principle of granting credit for taxes paid by the Indian PE could not be disregarded without material justification. The issue of tax credit was therefore restored to the Assessing Officer for verification and quantification.

The Tribunal also treated interest under Section 234B as consequential and mandatory. Accordingly, the appeals were partly allowed, with the principal profit attribution restricted to 12% of advertisement revenue.

Last Updated on 4 September, 2026