Journal of Intellectual Property Rights

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Taxing the Trade of the Trade Mark


Affiliations
1 J Sagar Associates, Gurugram — 122 009, Haryana,, India
2 Saikrishna & Associates, Delhi — 110 003,, India
3 University School of Law and Legal Studies, GGSIP University, Dwarka, Delhi — 110 078,, India
 

Trade marks generate recognition to businesses by providing and protecting their distinctive features, among others, in a competitive market. Trade marks, being intangible property, can be transferred to third parties by various modes like assignment/ transmission/license. Since, trade marks have the potential to be commercially exploited and thereby attract tax (direct and/or indirect) on its commercial exploitation. This paper highlights the various modes through which trade marks can be commercialised and the implication under both direct and indirect taxation of such commercialisation. The paper also discusses recent issues with respect to the taxation of the income generated from the transfer of trade marks.

Keywords

Trade mark, Economic Rights, Commercial Exploitation, Taxation, Royalty, Income Tax, GST.
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  • Ramdev Food Products Pvt Ltd v Arvind bhai Rambhai Patel & Ors, (2006) 8 SCC 726.

  • Section 2(m) of the TM Act.

  • Taj Mahal Palace Hotel and the BSE Building.

  • Mary Cohr Store Layour.

  • Yahoo’s yodel.

  • Section 2(1)(e) of the TM Act.

  • Section 2(1)(g) of the TM Act.

  • Section 2(1)(zg) of the TM Act.

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  • Section 2(1)(zc) of the TM Act.

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  • (2002) 3 SCC 65.

  • Section 42 of the TM Act.

  • Section 43 of the TM Act.

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  • Section 5(1) of the IT Act.

  • Section 5(2) of the IT Act.

  • Section 2(45) of the IT Act.

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  • CIT v Manmohan Das [1966] 59 ITR 699 (SC).

  • Section 2(13) of the IT Act.

  • Section 37(1) of the IT Act.

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  • Section 56(1) of the IT Act.

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  • Section 194J(1) of the IT Act.

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  • Plus applicable surcharge and cess

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  • Section 44DA of the IT Act.

  • Section 90(2) of the IT Act.

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  • Section 9(1) of the CGST Act and Section 5(1) of the IGST Act.

  • Section 7(1) of the CGST Act.

  • Section 2(52) of the CGST Act.

  • Section 2(102) of the CGST Act.

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  • Chapter X of the IT Act.

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  • Section 92 of the IT Act.

  • Section 92B(1) of the IT Act.

  • Section 92A(1) of the IT Act.

  • Section 92A(2) of the IT Act.

  • Some of the instances of such deeming fiction are: a. one enterprise holds, directly or indirectly, shares carrying not less than 26% of the voting power in the other enterprise; or b. any person or enterprise holds, directly or indirectly, shares carrying not less than 26% of the voting power in each of such enterprises; or c. more than half of the board of directors or members of the governing board, or one or more executive directors or executive members of the governing board of one enterprise, are appointed by the other enterprise; or d. more than half of the directors or members of the governing board, or one or more of the executive directors or members of the governing board, of each of the two enterprises are appointed by the same person or persons; or e. the manufacture or processing of goods or articles or business carried out by one enterprise is wholly dependent on the use of know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, or any data, documentation, drawing or specification relating to any patent, invention, model, design, secret formula or process, of which the other enterprise is the owner or in respect of which the other enterprise has exclusive rights.

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  • Para 6.71 to the OECD Transfer Pricing Guidelines.

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  • Karol Dziwinski, The DEMPE Concept and Intangibles: Definition, Practical Approach and Analysis in the Context of Licence Model (Chapter 3, Section 3.3.4) (Kluwer Law International BV 2022).

  • [2014] 52 taxmann.com 215 (Delhi).


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  • Taxing the Trade of the Trade Mark

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Authors

Shiv Singhal
J Sagar Associates, Gurugram — 122 009, Haryana,, India
Anjali Agrawal
Saikrishna & Associates, Delhi — 110 003,, India
M Sakthivel
University School of Law and Legal Studies, GGSIP University, Dwarka, Delhi — 110 078,, India

Abstract


Trade marks generate recognition to businesses by providing and protecting their distinctive features, among others, in a competitive market. Trade marks, being intangible property, can be transferred to third parties by various modes like assignment/ transmission/license. Since, trade marks have the potential to be commercially exploited and thereby attract tax (direct and/or indirect) on its commercial exploitation. This paper highlights the various modes through which trade marks can be commercialised and the implication under both direct and indirect taxation of such commercialisation. The paper also discusses recent issues with respect to the taxation of the income generated from the transfer of trade marks.

Keywords


Trade mark, Economic Rights, Commercial Exploitation, Taxation, Royalty, Income Tax, GST.

References