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2022 (10) TMI 474 - AT - Income TaxTP Adjustment - Adjustment towards under utilization of capacity - HELD THAT:- Considering the decisions of Continental Automotive Components India Pvt. Ltd [2021 (11) TMI 1059 - ITAT BANGALORE] and Moog Control (India) Pvt. Ltd [2019 (8) TMI 1839 - ITAT BANGALORE] we are of the considered view that the adjustment for capacity under utilization needs to looked at afresh and hence, we remit the issue back to TPO/AO. Needless to say that opportunity of being heard should be given to the assessee. The appeal on this ground is allowed for statistical purposes. Adjustment for foreign exchange fluctuations - TPO denied the Adjustment on the ground that the laws in the manufacturing segment has a arisen on account of import cost and the assessee did not suitably negotiate the Purchase cost from its AEs, the computation made by the assessee is not in line with AS11 and the assessee has failed to show the difference between comparables and the assessee in respect of the exchange fluctuation loss - HELD THAT:- We remit this issue to AO/TP with a direction to consider the foreign exchange fluctuation adjustment for computing the ALP of the assessee. This ground is allowed in favour of the assessee for statistical purposes. Adjustment for customs duty - assessee imported 83.12% of its raw materials whereas the comparable companies imported only an average of 15.14% of their raw materials whereby the assessee incurred significant customs duty charges warranting an adjustment for TP comparison - HELD THAT:- We notice that the coordinate bench of the Tribunal in the case of M/s. Continental Automotive Components (India) Pvt. Ltd [2021 (11) TMI 1059 - ITAT BANGALORE] has considered the similar issue. Thus we are remitting this issue to the AO/TPO for fresh consideration. This is ground is allowed in favour of the assessee for statistical purposes. Re-computation of operating margins pursuant to the Mutual Agreement Procedure (MAP) resolution covering the transaction between the assessee and its AE Denso Corporation Japan (DNJP) - HELD THAT:- Keeping into consideration the entire conspectus of the facts and circumstances of the case and the additional ground raised, before us we are convinced that its adjudication does not require any fresh investigation of facts and involves substantial question of law. Respectfully following the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. [1996 (12) TMI 7 - SUPREME COURT] we admit this additional ground for disposal on merits. Computation of operating margin - HELD THAT:- MAP resolution which resulted in the reduction of the cost (thereby reduction in the returned loss) and as contended by the Ld AR will have an impact on the other TP adjustment done with AEs other than Japan. The argument of the Ld AR that the impact of reduced loss which resulted in additional income being offered to tax should be given effect in re-computing the segmental margin requires looking at the matter afresh. Hence we remit the issue back to the AO for re-computation of the operating margins. The AO is directed accordingly. This ground is allowed in favour of the assessee for statistical purposes.
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