Transfer pricing comparability: different accounting year alone cannot exclude a functionally similar company, while dissimilar publishing services must be removed.

In transfer pricing comparability, an otherwise functionally similar company cannot be excluded merely because it follows a different accounting year end, so Caliber Point Business Solutions Limited was retained as a comparable. A company with a materially different business model and functions, such as one engaged in publishing solutions, digitization and content creation, is not comparable to a captive low-end ITeS provider, so MPS Limited was excluded. The transfer pricing adjustment was to be recomputed accordingly, with the remaining grounds treated as not pressed.

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Issues: (i) Whether Caliber Point Business Solutions Limited was a proper comparable for benchmarking the assessee's international transactions; (ii) Whether MPS Limited was comparable with the assessee and liable to be retained in the final set of comparables.

Issue (i): Whether Caliber Point Business Solutions Limited was a proper comparable for benchmarking the assessee's international transactions.

Analysis: The assessee was a low-end support services provider and the comparable was accepted as functionally similar. The only objection to its inclusion was that it followed a different accounting year end. A different accounting period, by itself, was held not to be a sufficient reason to reject an otherwise functionally comparable company, especially when a coordinate bench had already directed inclusion of the same comparable on similar facts.

Conclusion: Caliber Point Business Solutions Limited was directed to be included in the final set of comparables, in favour of the assessee.

Issue (ii): Whether MPS Limited was comparable with the assessee and liable to be retained in the final set of comparables.

Analysis: MPS Limited was engaged in publishing solutions, digitization, content creation and related technology-driven publishing services, with a business model and functional profile materially different from a captive low-end ITeS or back-office service provider. The record showed that its operations were dominated by digital publishing and allied activities, making it functionally dissimilar from the assessee for transfer pricing comparison.

Conclusion: MPS Limited was directed to be excluded from the final set of comparables, in favour of the assessee.

Final Conclusion: The transfer pricing adjustment was required to be recomputed after including Caliber Point Business Solutions Limited and excluding MPS Limited, while the remaining grounds were treated as not pressed.

Ratio Decidendi: In transfer pricing comparability analysis, an otherwise functionally comparable company cannot be rejected merely because it follows a different accounting period, while a company carrying on a materially different business model and functions must be excluded from the comparable set.

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