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2018 (8) TMI 378 - AT - Income TaxTransfer pricing - transaction with AE at arm’s length or not - Taxpayer not contract manufacturer of its AE - Held that:- On facts as it transpired, the inferences of the TPO were not correct. The CIT (A) appraising the facts noted that there were negligible purchases of raw material from the AE and the total sales to its AE were also negligible. In the facts of the present case, we note that it has not been disputed by the Revenue that the total export sales of the assessee to the AE was only 5% of its total sales and the assessee conducts sales to some OEM outside India through the AE to utilize its capacity. Some of these companies are Ford, General Motors, etc. for their production facilities outside India and since the AE of the assessee is a global leader in automotive glass segment, the assessee takes advantage of the AE’s reputation and business base “to have exports on good commercial and price terms with secured payment from the AE for better logistic and best payment through the AE”. In the facts of the present case, the goods produced by the assessee are directly supplied to the OEMs and in the circumstances, out of the total consumption of raw material consumed by the assessee which, it has been noticed, is less than 20% procured from the AE and import of stores and spares from the AE is also 10% of the total consumption. The allegation of the TPO that the assessee has purchased raw material from the AE and is exporting again to the AE in the facts of the present case is misplaced. At the cost of reiteration, the export to the AE is only 5% and royalty paid on sales to the extent of 94% is for sales to non-AE and only 6% sale to the AE. The inferences drawn by the TPO, it is found, were de hors facts. It is also being claimed on behalf of the assessee that the export turnover of the assessee over the years has been reducing and most of the years, sales made to the AE is less than 2%. Be that as it may, in the facts of the present case, we find that where admittedly from the turnover of ₹ 1,300 crores, the export sales is only ₹ 65 crores and noting the fact that the assessee is domestically selling its product to Maruti Udyog Ltd., Honda Motors, Hyundai, Toyota, Mitsubishi, VoxWagon, General Motors, Skoda and Tata Motors, we find that the appeal of the Revenue on facts has to be dismissed. - Decided against revenue
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