PFIZER CORPORATION Vs. STATE

JUDGEMENT

(1.) K.D. Gupta, Member 1. The applicant, Pifzer Corporation Panama (PC), a non-resident company, is part of the Pfizer Group, one of the world's largest pharmaceutical conglomerates. The applicant owned the technology information pertaining to the manufacture of nutritional food supplement product manufactured and sold by Pfizer India, another group company, under the "Protinex" and "Dumex" trade marks. Both the trade marks are registered in India. Under an arrangement, the Indian company has been using the technology information in respect of the above mentioned products without payment of any royalty.

(2.) In November, 2003, the EAC Nutrition Limited, A/s. Denmark (EAC) acquired from the applicant the trade marks and technology information related to the said products by two separate agreements. A separate agreement was entered into between EAC Denmark and Pfizer India for early termination of the licence granted to the Indian company to manufacture under the said trademarks. A sum of US $ 7 million was paid as consideration for extinguishment of the licence. The technology information, which is the subject matter of this application was sold for US $ 5 million. Clause 2(2.5) of the agreement stipulates that in exchange for the purchase consideration, the applicant shall on the effective date, deliver, transfer or make available to EAC, the technology information in the form of a dossier with technical information and contents as outlined in Schedule 1 to the satisfaction of the EAC. It is claimed that the handing over of the dossier containing technical information took place in Bangkok. EAC has withheld tax at 21 per cent, on payment of consideration to the applicant for the transfer of technology information and the tax has been deposited with the Government of India.

(3.) ALONG with the written submissions, the applicant has sought permission of the authority to revise the question mentioned above. The revised question is as under : "Whether the receipt by the applicant, a company incorporated in and the tax resident of Panama, from the transfer of documents containing know-how and technical information, outside India, to EAC Nutrition Ltd. A/s, a corporation incorporated under the laws of Denmark, under the Sale and Purchase of Technology Agreement dated November 30, 2002, would be taxable in India having regard to the provisions of the Income-tax Act, 1961 ?"