Jubilant Foods will have to pay 10% tax on royalty, says ITAT

Tribunal says Jubilant Foods will have to pay 10% tax on royalty instead of the earlier demand of 40%

The Income Tax Appellate Tribunal (ITAT) has rejected tax officials’ demand of a 40 per cent tax on sales at Jubilant Foods stores, and instead allowed the chain to pay 10 per cent tax on royalty. Jubilant  Foods runs the chain of Domino’s Pizza stores in India.

The issue relates to permanent establishment (PE) of multinational corporations (MNCs) when these companies have a franchisee agreement with Indian players.  

The ITAT has turned down the revenue department’s appeal that Jubilant Foods constitutes a permanent establishment of US-based Domino’s Pizza International Franchising Inc. The case relates to assessment year 2012-13 and an