Transfer pricing comparables need reasoned scrutiny; detailed objections can justify remand for fresh merits-based consideration.

Selection of comparables in transfer pricing must be examined with reasoned consideration of the assessee's specific objections. Here, the objections to HSIL Limited and Cera Sanitary Ware Limited concerned functional dissimilarity, absence of segmental financials, and related R&D activity. Because these objections were not substantively dealt with, the matter was remanded for fresh adjudication on merits after considering the material already filed and granting effective opportunity of hearing. The assessee therefore obtained relief by restoration of the issue for de novo consideration.

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Issues: Whether the selection of comparables, particularly HSIL Limited and Cera Sanitary Ware Limited, required fresh consideration in view of the assessee's detailed objections.

Analysis: The assessee confined the dispute to the inclusion of the two comparables. The objections raised before the appellate forum included functional dissimilarity, absence of segmental financials, and research and development activity. The disposal recorded that the DRP had not considered these detailed objections in a reasoned manner. In these circumstances, the issue was sent back for fresh adjudication on merits after considering the material already filed and after granting effective opportunities of hearing.

Conclusion: The issue was restored to the DRP for de novo consideration, with the assessee obtaining relief on this ground.

Ratio Decidendi: Where detailed objections to the inclusion of comparables are not substantively examined, the matter warrants remand for fresh adjudication on merits.

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