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STI, a wholly owned subsidiary of Samsung Korea, was engaged in the manufacture and sale of mobile handsets under the Samsung brand in India and overseas markets. The tax authorities concluded that STI was acting as a contract manufacturer for Samsung Korea and was not remunerated as an independent manufacturer utilizing technical know-how. However, the ITAT held that STI was operating as an independent manufacturer and not a contract manufacturer for the following reasons: STI was engaged in manufacturing and selling goods as per its own volition, not under directives from Samsung Korea. The transfer of technical know-how and licensing of technology from Samsung Korea was necessary for STI to undertake its activities independently. There was no evidence that the transactions between STI and its AEs were motivated by directives from Samsung Korea or lacked commercial prudence. The mere fact of being a subsidiary did not imply that STI was engaged solely at the behest of Samsung Korea.
STI, a wholly owned subsidiary of Samsung Korea, was engaged in the manufacture and sale of mobile handsets under the Samsung brand in India and overseas markets. The tax authorities concluded that STI was acting as a contract manufacturer for Samsung Korea and was not remunerated as an independent manufacturer utilizing technical know-how. However, the ITAT held that STI was operating as an independent manufacturer and not a contract manufacturer for the following reasons: STI was engaged in manufacturing and selling goods as per its own volition, not under directives from Samsung Korea. The transfer of technical know-how and licensing of technology from Samsung Korea was necessary for STI to undertake its activities independently. There was no evidence that the transactions between STI and its AEs were motivated by directives from Samsung Korea or lacked commercial prudence. The mere fact of being a subsidiary did not imply that STI was engaged solely at the behest of Samsung Korea.
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
TaxTMI 
