Where assessee-company made payment of royalty to its AE for mere use
of trademark, that too by means of non-exclusive licence, it was to be
allowed as revenue expenditure while determining ALP.
Assessee-company (GKN Driveline (India) Ltd.) was engaged in business of
manufacture and sale of Constant Velocity Joints (CVJ) – During
relevant year, assessee made payment of royalty to AE for use of its
trademark in respect of manufactured products – In transfer pricing
proceedings, TPO taking a view that payment in question was capital in
nature, disallowed same and made certain addition to assessee’s ALP – It
was noted that Tribunal in assessee’s own case relating to earlier
assessment year, opined that assessee did not acquire any ownership
right in trademarks by paying amount of royalty – It was further noticed
that royalty was paid simply for use of trademarks, and that too
tax consultancy firms in delhi,
by means of a non-exclusive license – Tribunal had thus concluded that
royalty payment was to be allowed as revenue expenditure – Whether in
absence of any change in circumstances, following aforesaid order of
Tribunal, impugned disallowance was to be deleted – Held, yes [In favour
of assessee].
Companies With More Than 10 Times of Turnover of Assessee Couldn’t be Selected as Comparables.
Assessee-company (Acusis Software India (P.) Ltd.) was rendering ITES
to its AE – Whether companies providing KPO services cannot be
considered as comparable – Held, yes – Whether companies having turnover
in excess of 10 times of turnover of assessee could not be selected as
comparable – Held, yes – Whether companies having employees’ cost of
less than 25 per cent were incomparable to assessee – Held, yes [Partly
in favour of assessee] in
chartered accountant firms in mumbai.
Read more information visit at
: http://bit.ly/2ka0GoH
