Question 1

What are the key legal issues in Marks and Spencer (India) Private Limited vs. ACIT, Circle 1 (1)?

Accepted Answer

1. Whether the Transactional Net Margin Method (TNMM) is the most appropriate method for benchmarking the international transaction of ‘Payment for business services and license of proprietary marks’. 2. Whether the Transfer Pricing Officer (TPO) correctly applied the CUP method and selected appropriate comparables.

Question 2

What are the facts of Marks and Spencer (India) Private Limited vs. ACIT, Circle 1 (1)?

Accepted Answer

The assessee, Marks and Spencer (India) Private Limited, is a subsidiary of Marks and Spencer Investments Pte. Ltd. It is engaged in the wholesale business of procuring and selling branded apparels and accessories. The assessee also renders sourcing support services to its Associated Enterprise (AE). The assessee purchases branded apparels and accessories from third-party suppliers for resale to an affiliate joint venture entity in India. It has licensed various rights from its AE for efficient business operations in India and avails several services including strategy, marketing, logistics, and legal support. For these rights and services, the assessee pays a royalty of 6% on trading sales revenue to its AE. An amount of Rs.17,93,86,136 was paid by the assessee to its AE towards ‘Business services and license of proprietary marks’ being 6% of total revenue i.e., Rs.298,97,68,941. The international transaction was reported in the Accountant’s Report (Form No 3CEB) filed along with the assessee’s return of income.

Marks and Spencer (India) Private Limited vs. ACIT, Circle 1 (1)

Parties Involved

Facts Summary

Legal Issues

Judgment Outcome

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