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TMI Blog2015 (4) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... ade allowance for the higher overhead expenditure during the initial period of production. In view of the above, we deem it appropriate to remit this issue back to the Assessing Officer with a direction to consider the claim of the assessee with respect to idle capacity adjustment during the relevant period while determining the ALP cost. The assessee is also directed to produce relevant documents in comparable units for the necessary analysis. - Decided in favour of assessee for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... computation. As a result, the loss in the Financial Year (FY) relevant to the AY under consideration has reduced. The Assessing Officer rejected the claim of the assessee for the reason that the claim has not been made by filing revised return of income and as per the Act, any claim made during the course of assessment by filing an application is not permissible. 3. As far as the international transactions are concerned, the assessee submitted detailed report in Form-3CEB. The assessee had adopted CUP method for the purchase of machinery and reimbursement of expenses and TNM method for purchase of finished goods, raw-material components and consumables, payment of royalty, management fee development fee etc. In transfer pricing study, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejudicial to the Appellant, is bad in law and liable to be quashed. Non Transfer pricing Related: 2. The Learned (Ld) Asst. Commissioner of Income Tax, Chennai (Assessing Officer or AO) and the Ld. Dispute Resolution Panel (DRP) erred both in law and in facts in not reducing from the taxable income of the Assessee the foreign exchange gain of ₹ 3,14,10,819/- which was already reduced from the cost of fixed assets. Transfer pricing Related: 3. That the Ld.AO and the Ld.DRP erred both in facts and law in confirming the action of the learned TPO of making an adjustment to the transfer price of the Appellant by ₹ 7,59,39,334 holding that the international transactions do not satisfy the arm's length principle envisaged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee as tested party whereas the TPO should have taken Korean company as tested party. The assessee had submitted comprehensive documents before the TPO to show that all compliances with regard to TP Regulations were made and had justified the ALP but the same were brushed aside by the TPO as well as DRP. In order to support his contentions, the ld.AR also took the support of OECD guidelines. The ld.AR further stated that the TPO made adjustments without issuing show cause notice to the assessee. If show cause notice have been issued, the assessee could have explained the reasons for loss such as abnormal wastage during the initial period. On the issue of deduction on account of exchange gain, the ld.AR contended that the amount of ₹ 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in numbers. The installed capacity and production are in different units. Therefore, capacity utilization cannot be determined. The ld.DR prayed for the dismissal of the appeal of the assessee. 6. We have heard the submissions made by the representatives of both the sides and have perused the orders of the authorities below. Primarily, the assessee is aggrieved by additions made in the return of income on the following two counts: I. Dis-allowance of foreign exchange gain ₹ 3,14,10,819/-; II. Adjustment of TP ₹ 7,59,39,334/-. 7. As far as the first issue is concerned, it is a fact that the assessee neither claimed the amount in its original return of income nor filed revised return of income to rectify the mistake. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered opinion that, since the deduction claimed by the assessee which has been left out at the time of filing return has not been considered at all, in the interest of justice, it would be just and proper if the issue is remitted back to the Assessing Officer to consider the claim of assessee and allow the same, if the assessee is entitled to it. 10. The second ground in appeal is with regard to downward adjustment of ₹ 7,59,39,334/-. The Revenue has not denied that the assessee is in initial year of its production. It is also a well known fact that in the initial years of production, the over head fixed costs are more due to under-utilization of resources. The TPO has brushed aside the contention of the assessee with regard to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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