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TMI Blog2017 (1) TMI 1776X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Dispute Resolution Panel ("DRP" for short). 3 We are concerned in this case with the questions of law termed as substantial and formulated at pages 5 and 6 of the appeal. 4 Essentially the argument centered around Question No.V which reads as under : "Q.V On the facts and circumstances of the case and in law, whether the Income-tax Appellate Tribunal was right in upholding the order of the Respondent A.O. in rejecting claim of the appellant of abnormal expenses of Rs. 2,06,11,944/-?" 5 It is contended by the learned counsel appearing for the assessee-appellant that the Tribunal has, on facts and in the circumstances of the case so also in law, completely erred in rejecting the claim of abnormal expenses of Rs. 2,06,11,944/-. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer pricing adjustment proposed by the Transfer Pricing Officer before the DRP. The assessee objected to rejection of the claim of the assessee of abnormal expenses in relation to the manufacturing segment as well as selection of certain comparables by the Transfer Pricing Officer. The DRP observed that the claim of the assessee of lower capacity utilization lacked sound financial analysis and, therefore, the claim of abnormal expenses was rejected. 10 It is this very ground which was projected before the Tribunal and in dealing with that, the Tribunal found that the claim of the assessee is of adjustment on account of the low capacity utilization. The assessee sought adjustment of Rs. 2,06,11,944/-. The argument was that this is on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsorbers for passenger cars and locomotives and other activities. The business of the assessee was segregated into two parts, namely, manufacture and distribution. There were various international transactions with the aforesaid associate enterprises, but there was a transfer pricing report which adopted the transaction net margin method considering it to be the most appropriate method for the purpose of benchmarking its activities under the manufacturing and distribution segments separately. The details of all these activities are set out and then what has been argued is that the item No.3 of the table is of Professional Consultancy. That was a case where a team of experienced professionals visited the assessee's vendors and performed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer noticed that the assessee has entered into various international transactions with its associate enterprises, including export of studded jewellery. He, therefore, made the reference and the Transfer Pricing Officer determined the arm's length price. As far as the capacity utilization is concerned, there is an explanation offered by the assessee that it was operating at 50% of its actual capacity during the year under consideration and, therefore, its operating profit margin was lower as compared to all comparables selected. Thus, there were comparables and on record. It is in relation to the comparables performance that the Transfer Pricing Officer was, by taking that as a benchmark, applying the same to the assessee before th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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