Transfer pricing comparability and make-available test govern deletion of support service adjustment and withholding disallowance.

Transfer pricing comparability requires functional similarity and reliable period alignment: Alphageo (seismic data services) and TCG Lifesciences (contract research) were functionally different from technical support services, and Pfizer's November year-end data was not comparable with a March year-end basis, so the corresponding adjustment was deleted. Back-office support services were treated as requiring the same fresh adjudication already ordered in the assessee's earlier year, so that matter was restored to the Assessing Officer/TPO. For withholding tax, global support service fees paid to a Singapore entity were not fees for technical services because the services did not satisfy the "make available" test, so the section 40(a)(i) disallowance was deleted.

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Issues: (i) Whether Alphageo (India) Ltd., TCG Lifesciences Ltd. and Pfizer Ltd. (service segment) were valid comparables for determining the arm's length price of the assessee's technical support services; (ii) Whether the transfer pricing adjustment relating to back-office support services required fresh adjudication; (iii) Whether the disallowance under section 40(a)(i) in respect of global support service fee was sustainable.

Issue (i): Whether Alphageo (India) Ltd., TCG Lifesciences Ltd. and Pfizer Ltd. (service segment) were valid comparables for determining the arm's length price of the assessee's technical support services.

Analysis: Alphageo was engaged in seismic data acquisition, processing and interpretation, which was functionally different from the assessee's technical, marketing and back-office support services. TCG Lifesciences derived its income from contract research operations and was likewise functionally different. Pfizer's financial year ended in November, while the assessee reported on a March year-end basis, making the data drawn from different periods unsuitable for comparability. The rejected comparables therefore could not be retained in the final set.

Conclusion: The comparables were excluded and the resulting adjustment of Rs. 40,49,175 was deleted in favour of the assessee.

Issue (ii): Whether the transfer pricing adjustment relating to back-office support services required fresh adjudication.

Analysis: The issue had already been remitted in the assessee's own earlier year on similar facts. Since the present year was identical on the material facts, the matter was taken to require the same course of action.

Conclusion: The issue was restored to the file of the Assessing Officer/TPO for fresh adjudication.

Issue (iii): Whether the disallowance under section 40(a)(i) in respect of global support service fee was sustainable.

Analysis: The payment to the Singapore entity was examined in the light of the India-Singapore tax treaty and the "make available" requirement. The services did not transmit technical knowledge or skill to the assessee so as to enable independent use, and the payment was covered by an earlier consistent course of treatment in the assessee's own case. On that basis, the amount could not be treated as fees for technical services for withholding purposes.

Conclusion: The disallowance was deleted in favour of the assessee.

Final Conclusion: The appeal succeeded substantially, with deletion of the technical support adjustment and the section 40(a)(i) disallowance, while the back-office support segment was sent back for reconsideration.

Ratio Decidendi: A comparable must be functionally similar and based on comparable financial-period data, and a payment is taxable as fees for technical services only if it makes technical knowledge or skill available to the recipient for independent use.

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