TMI Blog2016 (9) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant has to independently benchmark its international transaction with independent comparables so as to arrive at arm's length price, which has not been made in this case. The comparability analysis is the substratum of determining the ALP, which has not been done by assessee at any stage. At the very same time we found that the revenue authorities have not properly appreciated the relevant clauses of the trademark licence agreement, precisely the clauses which were highlighted by ld. AR during the course of hearing before us. Therefore, in the interest of justice and fair play, this case should be restored back to the file of AO, ho shall require the assessee to bench mark its international transaction of 'royalty' with independent comparables following suitable methods prescribed under the Act and on its compliance, the AO after giving adequate opportunity to the assessee shall decide this issue in accordance with the TP regulations. - Decided in favour of assessee for statistical purposes. - ITA No. 376/Mum/2012 - - - Dated:- 24-8-2016 - Shri R. C. Sharma, AM And Shri Amit Shukla, JM Assessee by : Shri F.V.Irani, Ms.Sonali Godbole Revenue by :Shri N.K.Chand, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been blackened out . Further, those agreements were not pertaining to any company operating in India and paying royalty for the use of trademark to its AE outside India. For the lack of clarity of those agreements and for the reasons that they do not pertain to India, the Ld. CIT(A) observed that the documents submitted by the assessee is of no use for deciding the issue on hand. On examining the copy of the Trademark License Agreement between the assessee and its AE and the approval letter of the DIPP, the CIT(A), inter alia, found that the licensor has specifically allowed licensee to use trade mark for manufacturing, packing, sale a d distribution of these products in the territory and the DIPP a approval is for the purpose of manufacturing / packing, sale and distribution of these products in the territory and the DIPP and the royalty rate approved @5% is for internal sales as well as export sales subject to taxes. The ld. CIT(A), held that although the DIPP approved the royalty rate for the purposes of manufacturing/collaboration, the assessee paid royalty for the use of the brand brylcreme only. Further, he held that the assessee has not independently bench marked its int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that there has been no benchmarking done by the assessee company. it was submitted by ld. AR that the assessee company has obtained specific approval from RBI permitting payment of royalty @5% and hence the Department and assessee have both relied on Government Approval for benchmarking. With regard to the objection taken by TPO in respect of the New Agreement is not an extension of the Original Agreement, it was contended by ld. AR that the New Agreement is a mere extension of the original agreement which is clear from the intention of the parties and the permission granted by Ministry of Commerce Industry, Department of Industrial Policy and promotion and the Reserve Bank of India, taking the extension of the original agreement on record. 6. With regard to objection of revenue authorities to the effect that the new agreement is not for transfer of technical knowhow but only for trademark license, ld. AR submitted that the new agreement is for transfer of technical knowhow and not merely for use of trademark, as it is a mere extension of the original agreement. 7. With regard to objection that the Government approval is not relevant for transfer pricing purpose, the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case, the AO/ TPO/Ld.CIT(A) have considered the issues in accordance with the law and hence pleaded that the order of the Ld.CIT(A) is to be upheld. 11. Ld. DR invited our attention to Schedule A of the agreement which stipulates that it is for the use of trademark BRYLCREEM . As per ld. DR Clause 3, 4 and 5 are for the protection of Trademark as the licensor wants to secure it s reputation and to ensure that the products meet the specification and quality desired by the Licensor. The contention of ld. DR was that the reliance on RBI approval is also misplaced as that approval is for collaboration only. There is not a single evidence on record to prove that there is any know how transfer under TRADEMARK LICENCE AGREEMENT'. As per ld. DR the knowhow must have been subject matter of License agreement of 1995. The same must have been completed as no technology transfer agreement is forever. Ld. DR seeks reliance on the decision in the following cases: 1. SKOL Brewaries Ltd., (29 taxmann.com 111) (Mumbai) 2. Perot System TSI (India) Ltd., 37 SOT 358 (Del) 3. Tata Autocomp Systems Ltd., (21 taxmann.com 48)dt. 30/04/2012 (Mumbai ITAT) 4. Tata Autocomp Systems Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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