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2019 (2) TMI 2023 - ITAT BANGALORETP adjustment made in respect of finished goods exported to the Associated Enterprises (AE) of the assessee - difference in the level of capacity utilization - assessee herein is a subsidiary of SKF Inc. US, which is a leading global supplier for products, sales and services for rolling bearing and seals business - Assessee had adopted TNMM method as most appropriate method and operating profit margin to sales ratio as PLI - HELD THAT:- We noticed that the Hon’ble Bombay High Court in the case of Petro Araldite (P.) Ltd. [2018 (6) TMI 452 - BOMBAY HIGH COURT] and the Delhi Bench of the Tribunal in the case of Claas India (P.) Ltd. [2015 (8) TMI 755 - ITAT DELHI] have held that the adjustment towards difference in capacity utilization is required to be made in terms of Rule 10B(1)(e)(iii) of the Income-tax Rules. We find merit in the prayer of the assessee for the adjustment towards the difference in the level of capacity utilization. Since this issue has not been examined by the tax authorities and since the assessee has to furnish necessary details in order to support its claim, which in turn requires examination at the end of AO, we deem it proper to restore it to the file of the AO / TPO for examining the claim of the assessee. Accordingly, we set aside the order passed by the learned CIT(A) on this issue and restore the same to the file of the AO / TPO for examining the claim of the assessee, in accordance with law, by duly considering the decisions rendered by the High Court / Tribunal on capacity utilization adjustment. After affording adequate opportunity of being heard to the assessee, the A.O. may take appropriate decision in accordance with law. Appeal filed by the assessee is treated as allowed for statistical purposes.
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