Boeing TP relief on Technical and Training services

The dispute arose from transfer pricing adjustments exceeding INR 38 crores made in respect of payments by Boeing India Defense Private Limited to its associated enterprise, Boeing Aerospace Operations, for technical and training services relating to C-17 and BBJ aircraft support contracts involving the Indian Air Force. 

The Transfer Pricing Officer rejected the assessee’s characterization as a limited-risk service provider and instead treated it as the principal provider of services, thereby substantially disallowing payments made to the associated enterprise. 

The Tribunal, after an extensive examination of contractual arrangements, actual conduct, risk allocation, assets employed, and operational realities, held that the assessee lacked the technical infrastructure, simulators, proprietary know-how, and operational capacity to independently perform the substantive services. 

The Tribunal concluded that the associated enterprise bore the core functions and risks while the assessee merely undertook liaison and coordination activities on a cost-plus basis. The ruling significantly reinforces substance-based FAR analysis and the principle of consistency in transfer pricing jurisprudence.