Transfer pricing characterisation requires proper functional analysis and supporting documents before service profile and comparables are finalised.

Transfer pricing characterisation could not be sustained on incomplete material where the record lacked the memorandum and articles, the governing agreement, and supporting evidence for the services, billing basis, and duties performed. Without a proper functional, asset and risk analysis, the assessee's profile as a business support or technical support service provider could not be conclusively tested, and the comparables exercise also depended on the same factual foundation. The matter was therefore restored to the Transfer Pricing Officer for fresh examination of the documents, functions performed, and arm's length price analysis.

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Issues: Whether the assessee was correctly re-characterised as a technical support service provider for transfer pricing purposes and whether the matter required restoration for fresh examination of the functions performed, documents, and comparables.

Analysis: The assessee's claim of business support services was found to rest on incomplete material. The record lacked the foundational documents necessary to test the nature of services, including the memorandum and articles of association, a comprehensive agreement governing the parties' roles, and supporting evidence explaining the basis of billing and the services allegedly rendered. In such circumstances, the functional profile could not be conclusively accepted or rejected on the limited material available. The absence of a proper functional, asset and risk analysis and the need to examine the actual duties, documentation, and billing framework made the existing characterisation unsatisfactory. The related exercise of identifying comparables and determining arm's length price was therefore also dependent on a fresh examination of the service profile.

Conclusion: The issue was restored to the Transfer Pricing Officer for fresh consideration after calling for the relevant documents and undertaking a proper functional analysis, and the assessee obtained relief in the form of remand.

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