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2017 (4) TMI 1060 - AT - Income TaxTPA - selection of comparables - Held that:- If there is a change in functions carried out, assets employed and risk taken (FAR analysis) of the comparables in the year under consideration viz-a-viz earlier years, the comparables selected in earlier year might be rejected in the year under consideration, but following the observation of the Tribunal in the Thomas Cook (India) limited (2016 (7) TMI 318 - ITAT MUMBAI) the TPO should assign reasons as what are the differences in the FAR analysis of the comparables as compared to the earlier years, which led to rejection of those in the current year. The departmental authorities (i.e. ld. TPO/DRP) are required to bring on record the salient feature of the year under consideration as compared to the facts of the earlier years, in absence of which, the departmental authorities cannot taken opposite view. This issue was taken up by the assessee before the Ld. DRP while challenging the approach of bifurcating single transaction of marketing and after sales support service into the separate transaction of marketing support service and technical support service, however, the issue of consistency was not addressed by the Ld. DRP . Similarly, on the issue of following the rule of consistency in respect of rejection of the comparables in both the segments, the Ld. counsel has submitted that FAR analysis of the assessee as well as comparables was similar in earlier years and therefore there was no reason for rejection of the comparables chosen by the assessee. On the other end, the Ld. CIT(DR) contended that the AO/TPO has given reasons for rejection of the comparables chosen by the assessee. In our opinion, issue before us is if the comparables chosen by the assessee in earlier years were having FAR analysis similar to FAR analysis in year under consideration, how the same were accepted by the TPO in earlier years but rejected in the current year. If there is no change in the FAR analysis of the comparables and the assessee in earlier years viz-a-viz current year, then the rule of consistency demands that comparables chosen by the assessee should be accepted. We find that in absence of records of earlier years, the Ld. CIT(DR) could not address on the issue, and therefore in such circumstances, we feel it appropriate to restore following issues to the file of the Assessing Officer for deciding afresh in the light of rule of consistency: (i) the issue of single transaction of marketing and sales support services viz-a-viz two separate transactions of marketing support services and technical support services, (ii) accepting the comparables chosen by the assessee for marketing and sales support services segment (iii) accepting the comparables chosen by the assessee for technical services segment The learned AO/TPO is directed accordingly to re-compute the arm’s length price of the international transaction carried out by the assessee.
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