INCOME TAX ACT, 1961

Section 92C

Transfer pricing - Determination of ALP - Payment of Royalty to AE -

Assessee claimed deduction of royalty paid to AE abroad. TPO determined ALP thereof at Nil. Held: Technical collaboration agreement entered between assessee and AE explained that AE was having considerable engineering know-how and technical information and equipment for manufacture of metrology products. Assessee had been desirous of manufacturing metrology products and export the same to AE and any company in which AE owned 20% or more of the voting share capital (Affiliate) on terms and conditions as detailed therein. The technical know-how includes all inventions, processes, patents, engineering and manufacturing skill and other technical information owned by AE had been agreed to be used without intimation by assessee. Further, AE granted an exclusive license to make in India the products by use of any or all of the know-how and a nonexclusive license to use and sell the said products throughout India and outside India to AE and its affiliates. Therefore, it was clear that technical know-how owned by AE including technical and engineering data, calculation and information, design data, calculations and information, details of layout of works, including details and specification of machinery and license to make in India and nonexclusive license to use and sell the said products throughout India and outside India had been granted to assesse and, therefore ALP could not be determined at Nil, that too, without applying any of the prescribed methods.

REFERRED :

FAVOUR : in assessee's favour

A.Y. :

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