TMI Blog2015 (11) TMI 1619X X X X Extracts X X X X X X X X Extracts X X X X ..... the last occasion that is on 23 September 2015 Revenue sought time to take instructions on whether Clause IV as reproduced hereinabove is applicable in the case of respondent assessee. Today Mr. Tejveer Singh, on instructions, states that the respondent assessee is covered by clause IV of the Press Note 9 (2000 series) dated 8 September 2000. Therefore, the bench marking of the Royalty paid at 3% by the respondent to arrive at the ALP is much below the Royalty for trade mark / brand name which is allowed to be paid by wholly owned subsidiary to its offshore parent company. The grievance of the Revenue that the Tribunal ought to have lowered the bench marking on application of Clause III of the Press Note 9 (2000 series) dated 8 Septembe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purpose of transfer pricing, respondent assessee contended that 3% of the revenue generated should be considered as reasonable Royalty for use of trade mark provided by its parent company. This 3% according to the respondent would be the appropriate benchmark while considering the Arms Length Price (ALP) in respect of its transactions with its Associated Enterprise i.e. parent company. In support the respondent placed reliance upon the approval granted by Foreign Investment Promotion Board (FIPB) dated 25 September 2000. However, the Transfer Pricing Officer (TPO) did not accept the same and placed reliance upon the Press Note No.9 (2000 series) issued by the Ministry of Commerce and Industries, Government of India, wherein the roya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of royalty payable by the respondent to its parent company has to be lower than 3% for the purposes of arriving at the ALP. 8. As against the above, the respondent assessee pointed out that the Press Note No.9 (2000 series) being relied upon by the Revenue, even if applied would indicate that in case of wholly owned subsidiaries such as respondent, a Royalty payment is allowed for user of brand name upto 8% on export and 5% on domestic sales. In support reliance is placed on Clause (IV) of the Press Note which reads thus: IV. Payment of royalty upto 8% on exports and 5% on domestic sales by wholly owned subsidiaries to offshore parent companies is allowed under the automatic route without any restriction on the duration of royalty pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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