Brief Facts:
Lloyd’s Register U K is having a subsidiary in the name Lloyd’s Register Asia UK, which has an Indian branch in India. In other words, the assessee is an Indian branch of Lloyd’s Register Asia UK, which in turn is a subsidiary of Lloyd’s Register UK. The main holding company is into the business of survey and inspection of ships, industrial inspection activity and drawing appraisal. Earlier Lloyd’s Register UK was operating in India through its branch. From the relevant financial year (i.e. A Y 2005-06), it floated a subsidiary company, Lloyd’s Register Asia and all the Indian operations thereafter are being carried out through branch of this entity. Lloyd’s Register UK entered into a license agreement on 16.07.2003 with all its subsidiaries all over the world, including Lloyds Register Asia UK, whereby it has granted license to use the brand “Lloyd’s Register” i.e. use of trademark and trade name owned by Lloyd’s Register UK. Besides this, the licensor (Lloyd’s Register UK) also provides general, technical and marketing support services to all its products, which have been referred in the license agreement as “Intellectual Property Rights”. The royalty and the license fees was payable as per Schedule VI of the license agreement, which has been incorporated at page 3 of the appellate order and also at page 23 of the paper-book. As per the worldwide policy, the invoices are sent from Lloyd’s Register UK to Lloyd’s Register Asia UK which in turn, allocates the royalty attributable to its Indian branch. The Indian branch pays the same to Lloyd’s Register Asia UK, which in turn pays Lloyds Register UK. Further, another “Management Services Agreement” dated 16.07.2003 was entered into between Lloyd’s Register UK and Lloyd’s Register Asia UK for providing services such as:
