Is there a necessity of payment of royalty in case the Indian Entity is an extended arm of the appellant company?

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Last updated: 06 July 2021
Quick Summary
The Income Tax Appellate Tribunal (ITAT) in Hyderabad addressed whether royalty payments are required when an Indian entity acts as an extended arm of a foreign parent company. The Tribunal reviewed adjustments made by the Transfer Pricing Officer (TPO) regarding royalty payments. Ultimately, the ITAT directed that a royalty of 4% of net sales should be allowed, following a previous decision in the assessee's own case for a different assessment year.

Court :
ITAT Hyderabad

Brief :
These two assessee’s appeals for A.Y. 2005-06 and 2010-11 arise against the CIT(A)-4 Hyderabad’s orders dated 24.3.2016 and 23.03.2016, passed in case nos.0349/2015-16 and 0108/15-16 involving proceedings u/s 143(3) rw.s. 92CA(3) of the Income Tax Act, 1961 [for short ‘the Act’]. Heard both the parties. Case files perused.

Citation :
ITA 826/HYD/2016

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1 Year PLAN
1999
(Excl. of GST ₹359)

2 Years PLAN
3499
(Excl. of GST ₹629)

BEST VALUE
3 Years PLAN
4999
(Excl. of GST ₹899)

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