Wipro GE Healthcare Pvt. Ltd. Vs DCIT (ITAT Bangalore)
Wipro GE Healthcare Pvt. Ltd., a joint venture between General Electric Company, USA and Wipro Limited, is engaged in contract manufacturing of medical diagnostic equipment, engineering and software services, and distribution of medical and life-sciences products. For AY 2016-17, the TPO made transfer-pricing adjustments of Rs.383,84,57,641, comprising Rs.20,27,37,762 towards royalty, Rs.253,10,21,733 towards the distribution segment and Rs.110,46,98,146 towards the software-development segment. Other disallowances aggregated Rs.87,38,88,152.
The TPO passed the order under Section 92CA on 31.10.2019, followed by the draft assessment order dated 30.12.2019. The assessee filed objections before the DRP on 27.01.2020. The DRP issued directions on 11.02.2021, after which the AO passed the final assessment order on 30.03.2021.
Royalty Adjustment Allowed
The assessee had paid Rs.20,27,37,762 to its AE, Monogram Licensing International, Inc., for use of the GE trademark and trade name. The TPO determined the ALP of the royalty at Nil and treated the entire amount as a transfer-pricing adjustment.
The Tribunal followed its earlier orders in the assessee’s own case. It noted that the comparable adopted by the TPO, Advanced Micronic Devices Ltd., had not incurred royalty and had no trademark licensed to it. The Tribunal held that, in the absence of a comparable transaction, the adopted CUP methodology could not be sustained. Following the earlier decisions, the Tribunal allowed the assessee’s ground on royalty.
