Transfer pricing comparability analysis requires remand input before deleting an adjustment when factual objections remain unresolved.

Transfer pricing relief was found unsustainable where the first appellate authority deleted the adjustment without obtaining a remand report from the Assessing Officer or Transfer Pricing Officer and without properly addressing comparability objections. The Tribunal noted that the order accepted and rejected comparables largely on the assessee's submissions, yet did not deal meaningfully with the reasons given by the Transfer Pricing Officer for rejecting the assessee's comparables or the basis of the assessee's challenge to the selected comparables. As the dispute turned on factual comparability and alleged non-supply of financial statements and FAR analysis, fresh adjudication after remand was required.

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Issues: Whether the deletion of the transfer pricing adjustment by the first appellate authority, without obtaining a remand report from the Assessing Officer / Transfer Pricing Officer and without adequately dealing with the comparability objections, was sustainable.

Analysis: The Tribunal noted that the first appellate authority accepted and rejected comparables largely on the basis of the assessee's submissions, but did not call for comments from the Assessing Officer / Transfer Pricing Officer on material aspects of the comparability analysis. The order was found to be cryptic, as it did not meaningfully address the specific reasons recorded by the Transfer Pricing Officer for rejecting the assessee's comparables or the basis on which the assessee disputed the comparables selected by the Transfer Pricing Officer. Since the dispute turned on factual comparability and the assessee had also alleged non-supply of financial statements and FAR analysis, the Tribunal held that the matter should have been confronted to the tax authorities through a remand report before final relief was granted.

Conclusion: The deletion of the transfer pricing adjustment was not sustained in its present form and the matter was set aside for fresh adjudication after obtaining a remand report from the Assessing Officer / Transfer Pricing Officer.

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