Transfer pricing remand for fresh benchmarking was unjustified where only comparables needed merits-based scrutiny.

The High Court held that the Tribunal was not justified in remanding the transfer pricing matter for a fresh benchmarking exercise when the surviving dispute was limited to the inclusion and exclusion of comparables. Since the exercise turned on functional, asset and risk comparison under Rule 10B(2) and Rule 10B(3) of the Income-tax Rules, the Tribunal could have decided the issue on merits without reopening the entire matter before the Transfer Pricing Officer. The remand direction was therefore unsustainable and was set aside in favour of the assessee.

---

---

Issues: Whether the Tribunal was justified in remanding the transfer pricing matter to the Transfer Pricing Officer for a fresh benchmarking exercise instead of deciding the dispute on the selection and exclusion of comparables.

Analysis: The appeal concerned the correctness of the Tribunal's direction for a fresh transfer pricing study after it had already decided the expense-allocation issue. The High Court held that the remand was unwarranted because the surviving dispute before the Tribunal was confined to the inclusion and exclusion of specific comparables. That exercise required a functional, asset and risk comparison under Rule 10B(2) and Rule 10B(3) of the Income-tax Rules, and could have been decided on merits without reopening the entire benchmarking exercise before the Transfer Pricing Officer.

Conclusion: The remand direction was held to be unsustainable and was set aside, in favour of the assessee.

---