Case Law Details
Reckitt Benckiser (India) Pvt. Ltd Vs DCIT (ITAT Kolkata)
ITAT Kolkata held that TPO failed to demonstrate that royalty payment by assessee to Associated Enterprises (AEs) is embedded in the process of the imported goods. Accordingly, upward adjustment thereon unsustainable.
Facts- Reckitt Benckiser (India) Limited or ‘RBIL’ or ‘the company’ is a subsidiary of Reckitt Benckiser Plc., UK. RBIL is engaged in the business of manufacturing and trading of FMCG products. RBIL manufactures and distributes various brands of household products, and over the counter pharmaceutical products.
RBIL has entered into a License Agreement with Reckitt Benckiser N. V. and Reckitt & Colman Limited for the transfer of Intellectual Property Rights for the production, sale, distribution and marketing of Reckitt Benckiser “products” domestically and internationally. These include all IPR(s) owned by the AEs such as trademarks, design and model rights, know-how, and all current and future copyrights and rights to databases relating to design, distribution, marketing and sale of licensed products in the licensed territory.
In the course of transfer pricing assessment, Transfer Pricing Officer (TPO) dealt with various transactions between the assessee and its Associated Enterprises (AEs) and made adjustments, resulting into increase of the total income assessed. Assessee raised its objection before the DRP who had given its directions which were incorporated in the assessment completed by the AO for which the assessee is in appeal before the Tribunal.
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