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2018 (1) TMI 1158 - HC - Income TaxDirections for fresh Transfer Pricing (TP) study for benchmarking of the international transactions involving the Assessee and its Associated Enterprises (AE) - Held that:- A perusal of the impugned order of the ITAT reveals that there was indeed no occasion for the ITAT to direct the TPO to undertake a fresh TP study analysis to benchmark the international transactions undertaken by the Assessee. The issue before the ITAT was whether three comparables viz., Apitco, Choksi and Wapcos were rightly included and the Assessee’s three comparables viz., Educational Consultants (India) Limited, ITDC and In House Productions Ltd. were rightly excluded. This required an FAR analysis to be undertaken vis-a-vis these comparables. Direction to the TPO to allocate the expenses on the basis of gross margin in the agency segment and not in the ratio of sales for the purpose of computing ALP of the international transactions, had nothing to do with the above issue concerning selection of comparables. For the latter purpose, Rule 10B (2) read with Rule 10B (3) of the Income Tax Rules require the said exercise to be undertaken with reference to inter alia “the functions performed/taken into account, assets ought to be employed and the risks assumed” by the tested party and the comparable. A specific characteristic of the property transferred or services provided in both the controlled and uncontrolled transactions had to be taken into consideration. It is not understood why the ITAT did not undertake such exercise regarding the correctness of the inclusion and exclusion of comparables. - matter restored before ITAT - Consequently, the Court answers the question framed in the affirmative, that is, in favour of the Assessee and against the Revenue
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