Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: ACCOUNTING STANDARD :: TAX RATES - GOODS TAXABLE @ 4% :: form 3cd :: ACCOUNTING STANDARDS :: list of goods taxed at 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: due date for vat payment :: VAT Audit :: Central Excise rule to resale the machines to a new company :: VAT RATES :: TDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: empanelment :: cpt :: articles on VAT and GST in India
 
 
From the Courts »
  Amira Pure Foods Pvt. Ltd vs. Pr CIT (ITAT Delhi)
 Stovekraft India vs. CIT (Himachal Pradesh High Court)
 CIT vs. Goodwill Theatres Pvt Ltd (Supreme Court)
 DCIT vs. Ace Multi Axes Systems Ltd (Supreme Court)
 Pr. Commissioner Of Income Tax Vs. B. C. Management Services Pvt. Ltd.
 Commissioner Of Income Tax Vs. M/s International Tractor Ltd.
 Maharaj Garage & Company vs. CIT (Bombay High Court)
 Amira Pure Foods Pvt. Ltd vs. Pr CIT (ITAT Delhi)
 Hindustan Coca Cola Beverages Pvt. Ltd vs. CIT (Rajasthan High Court)
 Pr CIT vs. Baisetty Revathi (Andhra Pradesh High Court)
  Pr CIT vs. Paradise Inland Shipping Pvt. Ltd (Bombay High Court)

Cadbury India Ltd vs. ACIT (ITAT Mumbai)
November, 29th 2013

Transfer Pricing: ALP of royalty for trademark usage and technical know-how fee can be determined as per TNMM. Approval of RBI & Govt. means payment is as at arms length

The assessee entered into an agreement with its parent company, Cadbury Schweppes, pursuant to which it agreed to pay royalty for the use of trademarks and royalty for the use of technical know-how at 1.25% each of the net sales. This was approved by the RBI and the SIA (Government). The assessee adopted the Transaction Net Margin Method (“TNMM”) for computing the ALP of the international transactions by comparing the net margin of the company at entity level with that of companies engaged in food products, beverages and tobacco business. The TPO held that the transactions pertaining to payment of royalty for trademarks and technical know-how fee had to be separately and independently bench-marked using the Comparable Uncontrolled Prices (“CUP”) method. He held that the ALP of royalty and technical know-how fee should be computed at 1% of sales the instead of at 1.25% of the sales. This was reversed by the CIT(A) who held that the royalty and technical know-how fee paid by the assessee were at ALP. On appeal by the department to the Tribunal HELD dismissing the appeal:

The assessee has been paying royalty on technical know-how to its parent AE since 1993. Other group companies across the Globe are also paying the same royalty. Also, the payment is as per the approval given by the RBI and the SIA. Hence there cannot be any scope of doubt that the royalty payment on technical know-how is at arms length. As regards the royalty on trademark usage, the assessee is in fact paying a lesser amount if the payment is compared with the payment towards trademark usage by other group companies using the brand “Cadbury” in other parts of the world. Accordingly, the royalty payment on trademark usage is also within the arms’ length and does not call for any adjustment (Lumax Industries (ITAT Del) (attached) followed). The Department’s request for a remand to the TPO to examine the AMP expenses in the light of Maruti Suzuki 328 ITR 210 (Del) (and L. G. Electronics 140 ITD 41 (Del)(SB)) rejected

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
SEO Company Search Engine Optimization Company US SEO Local SEO Company Website SEO Company Alabama SEO Company Alaska SEO Company Arizona SEO Company Arkansas SEO Company California SEO Company Colorado SEO Company Connecticut SEO Company Delawa

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions