The Delhi High Court recently passed a judgment in the matter of CUB Pty Ltd (formerly known as Foster’s Australia Ltd.) Vs. Union of India. The judgement was in response to a writ petition filed as a result of Authority for Advance Ruling’s (AAR) ruling that income from the sale of the Trademarks is deemed to be income accruing in India, although the owner of the Trademark was located outside India. The basis for AAR’s ruling was that the IP was used, developed and registered in India, and should therefore be regarded as ‘situated in India’.

The Court decided in favour of CUB by holding that the location of the owner of an intangible asset would be the closest approximation of the location of an intangible asset. The court’s decision was based on the well-accepted principle of ‘mobilia sequuntur personam’, in the absence of specific provision in this regard.

While the judgement will no doubt be well received by companies involved in cross-border IP transactions, mergers and acquisitions, there is a possibility that the tax authority may appeal at the Supreme Court, considering the far-reaching implications.

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