Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (7) TMI 1488 - ITAT MUMBAITP adjustment - comparable selection - as argued benefit of underutilisation of capacity should be allowed before making any adjustment - Held that:- Without considering all the relevant and material facts due taxes cannot be assessed. In the case before us, the basic fact of capacity-underutilisation has been ignored. Besides, depreciation would also have bearing on taxable income. Even in cases of domestic companies it plays a vital role. In the initial years most of the manufacturing companies suffer losses because of high depreciation. In short, for determining fair TP adjustments, the TPO/FAA should have considered these vital factors and given finding. Along with the depreciation certain fixed operating costs, like Factory Rent,Testing Research & Development Cost etc.would have to be incurred irrespective of the level of production. Respectfully following the cases relied upon by the AR we hold that appropriate adjustment has to be allowed while computing the net margins in the case of tested party also to facilitate comparability analysis - in the interest of justice, matter should be restored back to the file of the AO/TPO for fresh adjudication who would consider the capacity under-utilisation factor along with the other factors for determining TP adjustments. Difference in closing stock of gold - AO observed that gold had been valued at 532.80 per gram, that the value shown by the assessee of gold was abnormally below the market value of ₹ 1,213/- per gram as on 31.03.2008 - difference between value of closing stock shown by the assessee and value of closing stock computed by AO - assessee had argued that there was a typographical mistake in the audit report, that a revised report was submitted that indicated the mistake committed while filing the original return - Held that:- AO should have made further inquiries and should have examined who had issued two audit reports to find out the truth of the claim of the assessee that there was mistake in the first audit report. Audit reports are not simple piece of papers-they are prepared and signed by the professionals. Therefore, the AO should have verified the facts before making an addition. We are restoring the issue to the file of the AO, as we are of the opinion that matter needs verification about the claim made by the assessee - matter needs verification about the claim made by the assessee - Decided in favour of assessee partly
|