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TMI Blog2023 (12) TMI 629X X X X Extracts X X X X X X X X Extracts X X X X ..... xed for hearing. 3. Since both the appeals pertain to the same assessee and involve a similar issue that arises out of a similar factual matrix, therefore, these appeals were heard together and are being decided by way of this consolidated order. With the consent of the parties, the appeal for the assessment year 2011-12 is taken up as a lead case and the decision rendered therein shall apply mutatis mutandis to the assessee's appeal for the assessment year 2010-11. ITA No. 1162/Mum/2019 Assessee's appeal - A.Y. 2011-12 4. In this appeal, the assessee has raised the following grounds:- "1. The appellant is franchisee of M/s Pepsico India Holdings Pvt Ltd since 9/6/2003 and continued the business of producing and selling the water under brand "Aquafina" bulk water jar. The franchisee agreement secures the interest of Franchisor and Franchisee. During the financial year 2010-11 relevant to assessment year 2011-12, M/s Pepsico India Holdings Pvt Ltd raised the invoices amounting to Rs.1,44,01,878/-being royalty @ 7.50/ Jar for 19,20,250 jars produced during the year. The appellant deducted the tds @ 10% amounting to Rs.15,88,528/-, deposited the same and issued TDS certificate t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Royalty agreement and details of Royalty payment. From the details filed by the assessee, it was observed that Pepsi Foods Private Ltd entered into Bulk Water Manufacturing Appointment and Trade Mark Licence Agreement with the assessee on 09/06/2003. It was further observed that the said agreement was for a period of 5 years, with clause for extension of the agreement at the option of Pepsi Foods Private Ltd. Accordingly, the assessee was asked to produce the copy of the renewal of agreement with Pepsi Foods Private Ltd. In response thereto, the assessee filed correspondences with PepsiCo India Holdings Pvt. Ltd. dated 26/12/2012. Notice under section 133 (6) of the Act was also issued to Pepsi Foods Private Ltd calling for various information. As the said notice was not complied with by Pepsi Foods Private Ltd, the assessee was asked to produce the said party. Since after the expiry of 5-year tenure there was no correspondence between the assessee and Pepsi Foods Private Ltd regarding the extension of the aforesaid agreement and the assessee also failed to produce the said party, the Assessing Officer ("AO") vide order dated 30/12/2016 passed under section 143(3) read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o use the trademark "LEHAR" in conjunction with trademark "Aquafina" on bulk packaged drinking water. The assessee was also authorised under the aforesaid agreement to sell Aquafina bulk packaged drinking water in Mumbai in the package size of 25 Liter jar. Under the aforesaid agreement, Pepsi Foods Private Ltd was under obligation to provide technical assistance to the assessee to enable it to meet the technical specifications for producing bulk packaged drinking water. As a consideration for the use of the trademark by the assessee in the manufacture and distribution of Aquafina bulk packaged drinking water, it was agreed that Pepsi Foods Private Ltd will charge Royalty @ 7.50% for each jar of Aquafina bulk packaged drinking water produced by the assessee. It was further agreed that the term of this agreement shall be for a period of 5 years and at the expiration of the said term, the appointment may be extended at the option of Pepsi Foods Private Ltd for the successive terms of 5 years each. The relevant clause of the aforesaid agreement pertaining to tenure is reproduced as under:- "3. TENURE The term of this PFL Bottling Appointment and Trademark License Agreement (the " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id agreement dated 09/06/2003 be replaced with PepsiCo India Holdings Pvt. Ltd., and other terms and conditions to the said agreement shall remain the same. Further, vide letter dated 26/12/2012, forming part of the paper book on page 27, again by referring to the Bottling Appointment and Trademark License Agreement dated 09/06/2003, PepsiCo India Holdings Pvt. Ltd. agreed to authorise the assessee to manufacture and sell Aquafina bulk packaged drinking water in Mumbai in the package size of 20 Liter jar. Vide letter dated 10/05/2013, forming part of the paper book on page 28, the assessee and PepsiCo India Holdings Pvt. Ltd. agreed to reduce the rate of Royalty to Re.1 for the period starting from 01/01/2013 to 31/12/2013 in respect of bulk packaged drinking water of 25 and 20 liters capacity. Further, from the copy of monthly invoices raised by Pepsi Foods Private Ltd, we find that the assessee was charged Royalty for the use of the trademark as agreed under the aforesaid agreement dated 09/06/2003. Thus, it is evident that even though the Bulk Water Manufacturing Appointment and Trademark License Agreement dated 09/06/2003 was not extended in strict terms of clause 3 of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of Royalty expenses is allowed. 14. Other grounds raised in the assessee's appeal were not pressed during the hearing and accordingly the same are dismissed as not pressed. 15. In the result, the appeal by the assessee for the assessment year 2011-12 is partly allowed. ITA No. 1163/Mum/2019 Assessee's appeal - A.Y. 2010-11 16. In this appeal, the assessee has raised the following grounds:- "1. The appellant is franchisee of M/s Pepsico India Holdings Pvt Ltd since 9/6/2003 and continued the business of producing and selling the water under brand "Aquafina" bulk water jar. The franchisee agreement secures the interest of Franchisor and Franchisee. During the financial year 2009-10 relevant to assessment year 2010-11, M/s Pepsico India Hodlings Pvt Ltd raised the invoices amounting to Rs. 1,49,81,157/- being royalty @ 7.50/ Jar for 19,97,487 jars produced during the year. The appellant deducted the tds @ 10% amounting to Rs. 17,41,090/-, deposited the same and issued TDS certificate to M/s Pepsico India Holding Pvt Ltd. Against the invoices raised by it. In addition to monthly invoices raised by M/s Pepsico, it also reduced the royalty to Rs.1/ Jar on 10/05/2013 and referr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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