AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (9) TMI 907
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....nd sale of shore care, household care and personal care products. It had entered into a license agreement with Buttress B.V. Netherlands in 1995 for the use of knowhow, formulae and trademarks for the manufacture, packing, sale and distribution of Brylcreme, according to which royalty @5% on the net sales of Brylcreme is to be paid by the appellant. This agreement was approved by the Reserve Bank of India (RBI) on 5.6.1995. When the original agreement expired on 05.6.2002, the assessee approached the department of Industrial Policy and Promotion (DIPP) under the Ministry of Commerce & Industry for extension of their approval for a period of 5 years from 06.06.2002 to 05.6.2007.It approved it with certain terms and conditions on 28.7.2003. T....
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.... 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 t....
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.... et Sales as computed by the appellant. 2) Without prejudice to the above grounds, the appellant submits that the Transfer Pricing adjustment is excessive and ought to be deleted or reduced substantially. " 4. Based on certain clauses of the agreement dated 17.12.2003 and the approval of the RBI, the Learned AR appearing on behalf of the appellant has contended that the agreement is a mere extension of the original agreement of 1995 and hence the royalty payment cannot be regarded as being restricted to the use of Trademark alone. He contended that Press Note 9 (2000) series relied upon by the TPO and the Ld.CIT(A), in no way supports the TPOls/ Ld.CIT(A)'s restriction on rate of payment of royalty to 1% as the Para III of the Press....
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....regard to objection that the Government approval is not relevant for transfer pricing purpose, the contention of ld. AR was that the TPO/CIT(A) have themselves benchmarked the transaction with Press Note 9 (2000), whereas the assessee company has obtained specific permission from the RBI. 8. Ld. AR also invited our attention to the new agreement dated 17.12.2003, executed between the Appellant Company Buttress B.V. is a mere extension of the original agreement of 1995. Our attention was also invited to the Recital of the New Agreement dated 17.12.2003. Our attention was also invited to the permission granted by Ministry of Commerce & Industry, Department of Industrial Policy and Promotion, dated July 28, 2003. It was the contention of ld. ....
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....exchange and it would look into the matter from that angle only. Their approval for the purpose of remittance/ outflow of foreign exchange, does not ipso facto, partake the character of ALP, which has to be determined as per TP regulations. In this 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 contentio....
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....mark without transfer of technology. The assessee has not separately benchmarked the Royalty transaction at the time submission of Form 3CEB or at the time of preparation of Transfer Pricing Report. It is settled proposition of law that it is the onus of the assessee to prove that the transactions were taken at arm's length. Royalty is a separate international transaction, for this purpose, reliance can be placed on the decision of Punjab & Haryana High Court in the case of Knorr-Bremse India (P) Ltd., ITA No.182 of 2013. The RBI approval/FIPB approval is not determinative of ALP and cannot be considered to be a valid CUP. Automatic route under which FIPB approvals or RBI approvals are granted have been devised for the "ease of doing bu....