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2023 (4) TMI 517 - AT - Income TaxTP Adjustment - financial adjustments undertaken to eliminate material differences in respect of capacity utilization adjustment and working capital adjustment - As contended that comparables were operating at a much higher capacity per year than what the assessee operated at, during its first year of operation - HELD THAT:- We agree with the contention of assessee to permit making adjustment in respect of capacity utilization and working capital levels vis-à-vis the comparables based on the methodology adopted by it. Since the grounds taken by the assessee on the selection of comparables by the Ld. TPO is not pressed upon in the instant appeal and the categorical finding of the Ld. CIT(A) on the same holding the selection of comparables by TPO as undisturbed, we find it proper to direct the Ld. TPO/AO to consider the claim of adjustment in respect of capacity utilization and working capital levels so as to allow adjustment to the profit margin on comparables selected by him (TPO/AO), after affording the assessee reasonable opportunity of being heard. In a situation where the data about comparable companies is not available for the purpose of allowing adjustments towards capacity utilization and working capital levels, the only way to get the data in a current case would be by Ld. TPO collecting the same from the comparable companies so selected by him by exercising his powers u/s 133(6) of the Act. We direct the Ld. TPO to exercise powers u/s. 133(6) of the Act to call for information on capacity utilization and working capital levels of the selected comparable companies in those cases whose data is not available in public domain. After obtaining the information, the assessee be given an opportunity to put up its case by sharing details so obtained and accordingly grant the adjustment for capacity utilization and working capital levels. We thus, remit the matter back to the file of Ld. TPO/AO in terms of our above directions and thus the appeal of the assessee is partly allowed for statistical purposes.
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