Where an Australian company which owned trademarks, brands and other intellectual property had registered and licensed such trademarks etc to parties in India and after termination of the license agreements had assigned the said trademarks etc and the question arose whether the “situs” of such trademarks etc can be said to be in India so as to be exigible to tax on capital gains, HELD:
(i) As the trademarks etc had been registered and used in India and enjoyed high reputation and goodwill in the Indian market, they had a “tangible presence” in India and were located in India. The facts showed that they became inextricable components of the business of manufacture and marketing of Foster’s lager beer in India by the group company of the applicant.
(ii) It is not correct to say that on the termination of the license agreements with the Indian parties, the situs shifted back to Australia because the predominant component of trademarks and brands is good-will associated with them which cannot be said to have perished in India and shifted to Australia on termination.
(iii) There is no legal principle that the situs of intangible assets such as trademark and goodwill would always go with ownership and they have no situs other than the country of fiscal residence of the owner. On the other hand, there is sufficient authority for the proposition that the intangible assets or incorporeal property can have more than one situs. Goodwill is territorial in the sense that it exists at a place where the related business exists. The fact that the trademarks etc originated in Australia is irrelevant.
(iv) Though the trademarks etc property can be notionally treated to be existing also at the place where the owner resides, there is no legal basis for apportionment on the ground that the situs of the property transferred is fictionally at another place. The entire consideration is chargeable to tax in India.
(v) However, the brewing intellectual property represented by the Brewing Manual, though in the nature of a trade intangible, was also in the nature of goods and as it was located abroad at the point of transfer was not exigible to tax.