Transfer pricing tested party principle: foreign associated enterprise accepted as the proper benchmark on available comparables.

In transfer pricing analysis, the tested party should be the entity for which reliable and readily available comparables exist. Applying that principle, and following the assessee's position accepted in earlier assessment years, the foreign associated enterprise was treated as the proper tested party on the facts. The assessee's objection to the selection of tested party was therefore accepted, and the foreign AE was directed to be used as the benchmark for comparison.

---

---

Issues: Whether, for transfer pricing analysis, the foreign associated enterprise ought to be accepted as the tested party in place of the assessee.

Analysis: The assessee's own case for earlier assessment years had already accepted the foreign AE as the tested party. The tested party is the entity in respect of which reliable and readily available data for comparison exists. Since the foreign AE comparison was held to be the proper benchmark on the facts and the settled transfer pricing principle, the assessee's challenge to the selection of tested party was accepted.

Conclusion: The foreign AE was directed to be treated as the tested party, and the assessee succeeded on this issue.

---