The Tax Publishers2020 TaxPub(DT) 2068 (Del-Trib)

INCOME TAX ACT, 1961

Section 92C

As assessee was operating at 51.29% of its installed capacity as against 7% in preceding assessment year and, as such, it could not achieve economics in utilizing fixed costs, therefore, AO TPO was directed to re-consider assessee's claim for capacity utilization adjustment while computing PLI.

Transfer pricing - Determination of ALP - Comparables and adjustment - Capacity utilization adjustment

Assessee having entered into international transactions with AE sought for capacity utilization adjustment while computing PLI. Assessee's case was that it was operating at 51.29% of its installed capacity as against 7% in preceding assessment year and, as such, it could not achieve economics in utilizing fixed costs, therefore, capacity utilization adjustment was to be granted to assessee. Held: There was merit in the arguments advanced by assessee. However, same required verification at the level of TPO and, therefore, matter was remanded to TPO.

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2011-12

INCOME TAX ACT, 1961

Section 37(1)

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