comparables were operating at
100% capacity utilization level, as was its basis for calculating
capacity utilization adjustment in its profit margin. In response ... assessee's capacity utilization during the year
is 80%. In order to claim any capacity adjustment, it is for the assessee
to show that
allowing the following
economic adjustments claimed by the Appellant while comparing
the operating margins:
5.1 Adjustment for differences in capacity utilisation ... that the adjustments
cannot be made on the results of the tested party. It was prayed
that the adjustment on account of capacity utilization should
would be difficult to make accurate adjustments for
this purpose Similarly adjustment for underutilization of capacity
cannot be considered in the absence of information ... average
percentage of their respective capacity utilizations. It is further
observed that in the calculation of such capacity utilization
adjustment
1201/Del/2014
S. Company Name Capacity Margins (after
No. utilized (%) capacity
utilization
adjustment)
Tested Party
Keihin Panalfa Ltd. 23.64 -5.18%
Comparable Companies ... ITAT in Claas India (supra):
S. No. Company Name Capacity Margins (after
Utilized (%) capacity
utilization
adjustment)
1 Clutch Auto Ltd. 53.69 -17.38%
2 Mahindra Sona
transparency of
comparability adjustments may depend upon the
availability of an explanation of any adjustments
performed the reasons for the adjustments being
considered appropriate ... issue of
adjustments and even OECD guidelines, impresses upon
time and again that the adjustment should be "reasonable
accurate adjustment".
Hence in view
Incap Limited.
(c) In not making working capital adjustment.
(e) In disallowing reasonable adjustment for capacity utilization by the assessee
company and comparable companies ... respect to the TPO not allowing the
working capital adjustment and the adjustment made towards capacity
utilisation. With regard to comparables, the DRP directed
granted working capital adjustment however rejected
the risk adjustment.
He thus proposed an adjustment of Rs.29,39,563/- being shortfall.
Manufacturing segment-EOU unit ... this segment assessee did not seek any risk adjustment,
however sought adjustment in terms of capacity underutilisation,
as assessee operated only
proposed an upward adjustment of ₹ 8,17,66,432/-. The TPO rejected
adjustment on account of capacity and other risk adjustments to the assessee ... average percentage of their respective capacity
utilizations. It is further observed that in the calculation of such
capacity utilization adjustment
Chny/2023
Duty Adjustment
c) Erroneous Rejection of Economic Adjustments - Foreign Exchange
Gain/Loss
d) Entity Level Adjustment
7. Brief facts in relation to manufacturing ... which
deserves to be appropriately adjusted for idle capacity. Accordingly, we hold that idle
capacity adjustment is allowable. In this regard, we find that
Chny/2023
Duty Adjustment
c) Erroneous Rejection of Economic Adjustments - Foreign Exchange
Gain/Loss
d) Entity Level Adjustment
7. Brief facts in relation to manufacturing ... which
deserves to be appropriately adjusted for idle capacity. Accordingly, we hold that idle
capacity adjustment is allowable. In this regard, we find that
