Case Law Details
Court – Delhi Tribunal
Citation: Abhishek Auto Industries Vs. DCIT (2010- TII-54-ITAT-DEL-TP)
Brief :Payment of royalty and know how fee under an agreement can not be ignored by the Revenue while doing the Transfer Pricing analysis, the transfer pricing adjustment can be made only to the international transactions and not transactions at the enterprise level which include domestic transactions, and internal comparability is most efficient when it involves the transactions of the tested party itself.
Facts: Abhishek Auto Industries (assessee) was engaged in manufacturing of car seat belts in technical collaboration with Takata of Japan (Takata), which was an Associated Enterprise (AE) of the assessee by virtue of holding 30 % share in share capital of the assessee. The assessee imported complete knock down Kits (CKD) from Takata and then carried out a manufacturing process by assembly on these CKD Kits, by adding certain indigenous raw materials and made the car seat belts. This manufacturing process by assembly was carried out with the technical know-how received from Takata. These seat belts were then supplied to the car manufacturers such as Maruti, Honda and Tata etc. The assessee had capitalized the technical fee paid to Takata.
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