IT/ILT : Capacity underutilization by enterprises is certainly an important factor affecting net profit margin in open market because lower capacity utilization results in higher per unit costs, which, in turn, results in lower profits
IT/ILT : If a comparable is being sought to be rejected on ground of its differences vis-à-vis tested party, similar criteria must be adopted for deciding suitability of other comparables as well
■■■
[2014] 42 taxmann.com 420 (Delhi - Trib.)
IN THE ITAT DELHI BENCH 'I'
Deputy Commissioner of Income-tax, Circle 14(1), New Delhi
v.
Panasonic AVC Networks India Co. Ltd.*
PRAMOD KUMAR, ACCOUNTANT MEMBER
AND RAJPAL YADAV, JUDICIAL MEMBER
IT APPEAL NO. 4620 (DELHI) OF 2011
[ASSESSMENT YEAR 2004-05]
FEBRUARY 21, 2014
I. Section 92C of the Income-tax Act, 1961, read with rule 10B of Income-tax Rules, 1962 - Transfer pricing - Computation of arm’s length price (Comparables and adjustments) - Assessment year 2004-05 - Whether capacity underutilization by enterprises is certainly an important factor affecting net profit margin in open market because lower capacity utilization results in higher per unit costs, which, in turn, results in lower profits and, thus, adjustment of capacity utilization is to be made to determine ALP of international transaction - Held, yes [Para 5] [In favour of assessee/Matter remanded]
II. Section 92C of the Income-tax Act, 1961 - Transfer pricing - Computation of arm’s length price (Comparables and adjustments) - Assessment year 2004-05 - Whether if a comparable is rejected on ground of its differences vis-à-vis tested party, similar criteria must be adopted for deciding suitability of other comparables as well - Held, yes - Whether it cannot be open to any judicial authority to reject a comparable on ground that comparable has significant differences vis-à-vis tested party, unless differences are broad enough of general application - Held, yes [Para 9] [In favour of revenue/Matter remanded]
IT/ILT : If a comparable is being sought to be rejected on ground of its differences vis-à-vis tested party, similar criteria must be adopted for deciding suitability of other comparables as well
■■■
[2014] 42 taxmann.com 420 (Delhi - Trib.)
IN THE ITAT DELHI BENCH 'I'
Deputy Commissioner of Income-tax, Circle 14(1), New Delhi
v.
Panasonic AVC Networks India Co. Ltd.*
PRAMOD KUMAR, ACCOUNTANT MEMBER
AND RAJPAL YADAV, JUDICIAL MEMBER
IT APPEAL NO. 4620 (DELHI) OF 2011
[ASSESSMENT YEAR 2004-05]
FEBRUARY 21, 2014
I. Section 92C of the Income-tax Act, 1961, read with rule 10B of Income-tax Rules, 1962 - Transfer pricing - Computation of arm’s length price (Comparables and adjustments) - Assessment year 2004-05 - Whether capacity underutilization by enterprises is certainly an important factor affecting net profit margin in open market because lower capacity utilization results in higher per unit costs, which, in turn, results in lower profits and, thus, adjustment of capacity utilization is to be made to determine ALP of international transaction - Held, yes [Para 5] [In favour of assessee/Matter remanded]
II. Section 92C of the Income-tax Act, 1961 - Transfer pricing - Computation of arm’s length price (Comparables and adjustments) - Assessment year 2004-05 - Whether if a comparable is rejected on ground of its differences vis-à-vis tested party, similar criteria must be adopted for deciding suitability of other comparables as well - Held, yes - Whether it cannot be open to any judicial authority to reject a comparable on ground that comparable has significant differences vis-à-vis tested party, unless differences are broad enough of general application - Held, yes [Para 9] [In favour of revenue/Matter remanded]
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