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of <h1>Court sets aside ITAT order, emphasizes functional analysis for comparables selection.</h1> <h3>Corning Sas-India Branch Office Versus Deputy Director of Income-Tax</h3> Corning Sas-India Branch Office Versus Deputy Director of Income-Tax - [2018] 400 ITR 505 (Del) Issues:1. Delay in re-filing condonation.2. Appeal under Section 260A of the Income Tax Act, 1961 against ITAT order.3. Correctness of TPO's direction for fresh TP study.4. Selection of comparables for benchmarking analysis.Delay in Re-filing Condonation:The High Court condoned the delay in re-filing based on the reasons provided in the application, disposing of the matter promptly.Appeal Against ITAT Order:The appeal was filed by the Assessee challenging the ITAT's order directing the TPO to undertake a fresh Transfer Pricing (TP) study for benchmarking international transactions. The primary question of law framed was whether the ITAT erred in law by this direction.Correctness of TPO's Direction for Fresh TP Study:The Assessee, a Branch Office of a French company, engaged in various business segments including distribution, agency, and market support services. The TPO recommended an upward TP adjustment, segregating agency services and combining them with market support services for benchmarking. The DRP upheld this decision, leading to an increased TP adjustment. The ITAT partly allowed the appeal, directing the TPO to rework the TP analysis, focusing on the allocation of expenses. The High Court set aside the ITAT's order, emphasizing the need for an FAR analysis in selecting comparables and criticizing the remand to the TPO.Selection of Comparables for Benchmarking Analysis:The Assessee challenged the inclusion of certain comparables by the TPO for benchmarking, arguing for a correct selection based on functions performed, assets employed, and risks assumed. The High Court found the ITAT's remand to the TPO unnecessary, setting aside the order and restoring the appeal to the ITAT for a decision on the validity of the comparables' selection.This detailed analysis of the judgment covers the issues of delay in re-filing condonation, the appeal against the ITAT order, the correctness of the TPO's direction for a fresh TP study, and the selection of comparables for benchmarking analysis, providing a comprehensive understanding of the legal proceedings and decisions involved.
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