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2018 (7) TMI 70 - HC - Income TaxTPA - finding of facts arrived at by the ITAT based on the relevant material - comparable selection - ALP - substantial question of law or fact - adjustment sought by the assessee for under utilization of rated capacity - adjustments towards depreciation to make the operative profit positive - Held that:- The claim of Depreciation does not have a direct, linear or proportionate relationship with the capacity utilization. The Tribunal has rightly held that even without actual utilization of the Plant and Machinery, Depreciation can still be claimed as a deduction from the Operating Profits. Not only the learned Tribunal has found similar situation in the case of two named comparables in the year but, the reason assigned by the learned Tribunal itself in the quoted portion of the Order above cannot be said to be per se incorrect or a wrong statement of Accounting Principles. The Assessee Company could not have insisted upon a proportionate reduction of the claim of Depreciation in relation to the under-utilization of its capacity. The different comparables Entities may have different Depreciation Policies, Accounting Methods and despite general economic conditions being common to all, their Profit Margins and claim of Depreciation may differ. Neither the Transfer Pricing Officer(TPO) nor the Tribunal, muchless this Court can undertake any such exercise of comparing the Operating Profit Margins down to the extent of a hair-splitting exercise. It is the broad comparison of the homogeneous comparables, which is envisaged and is done under Section 92-CA of the Act. The findings or the premise taken by the Dispute Resolution Panel (DRP) in the subsequent year does not render the findings in the previous years per se illegal or unsustainable merely because the Dispute Resolution Panel (DRP) takes a different view in the subsequent years. As already held in M/S. SOFTBRANDS INDIA P. LTD. [2018 (6) TMI 1327 - KARNATAKA HIGH COURT] this entire exercise is in the realm of fact finding exercise and unless on the face of it, the findings of the learned Tribunal or the Authorities below is found to be perverse and it can be said that the view taken by them is wholly unsustainable according to the legal provisions, we do not find that any substantial question of law would arise in the matter.
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