Tribunal allows appeal, excludes TTK healthcare Ltd from comparables list, no transfer pricing adjustment needed. Higher margins upheld.

The tribunal allowed the appeal based on the recalled order's mandate, determining that TTK healthcare Ltd was not functionally comparable to the Assessee for transfer pricing purposes. The exclusion of TTK healthcare Ltd from the comparables list led to no transfer pricing adjustment being warranted as the Assessee's margins were higher. The tribunal found no reason to dispute the correctness of the transfer pricing officer's decision, resulting in the allowance of the appeal on the grounds related to the inclusion/exclusion of TTK healthcare Ltd.

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Issues involved:
Whether TTK healthcare Ltd is functionally comparable to the Assessee for determining the arm's length price of the international transaction.

Analysis:
The judgment pertains to a recalled matter where the order passed by a coordinate bench was recalled to decide Ground no 1 & 2 of The Appeal for assessment year 2011-12. The issue revolved around the inclusion/exclusion of TTK healthcare Ltd as a comparable company. The coordinate bench accepted the arguments of the assessee, stating a mistake was apparent on record, and recalled the matter to decide the mentioned grounds of appeal.

Regarding Ground no. 1, it was contended that the Ld. DRP erred in upholding the selection of TTK Healthcare Ltd as a comparable company without providing the search process to the appellant, which was deemed impermissible as per Transfer Pricing Regulations. Ground no. 2 highlighted errors in selecting TTK Healthcare as a comparable company, citing reasons such as differing activities, abnormally high margins, and exceeding related party transactions.

Subsequently, the learned transfer pricing officer, pursuant to the coordinate bench's order, examined the inclusion/exclusion of TTK healthcare Ltd. After considering explanations, it was found that TTK healthcare Ltd was not a suitable comparable due to its manufacturing activity and high related party transactions. Consequently, TTK healthcare Ltd was excluded from the final comparables list, leading to the conclusion that no transfer pricing adjustment was warranted as the assessee's margins were higher.

The judgment emphasized that the exclusion of TTK healthcare Ltd resolved the only dispute in the recalled order. The tribunal, after hearing contentions and reviewing the transfer pricing officer's orders, found no reason to dispute the correctness of the officer's decision. Consequently, Grounds 1 and 2 of the assessee's appeal were allowed, leading to the overall allowance of the appeal based on the recalled order's mandate.

In conclusion, the judgment focused on the crucial issue of determining the comparability of TTK healthcare Ltd with the Assessee for transfer pricing purposes, ultimately resulting in the exclusion of TTK healthcare Ltd as a comparable company and the allowance of the assessee's appeal based on the recalled order's directions.

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