Transfer pricing comparability can be revisited when a tribunal order contains conflicting findings on key comparable companies.

Rectification under section 254(2) was found appropriate where the Tribunal's own order contained contradictory findings on the comparability of Persistent Systems Ltd., because the inconsistency affected the transfer pricing analysis. The order was recalled to that limited extent for reconsideration of comparability. On Sasken Communication Technologies Ltd., the Tribunal noted that the comparable had already been remanded to the Transfer Pricing Officer, and directed that the assessee's further functional comparability objections and cited coordinate bench ruling be considered in the fresh exercise. The miscellaneous application was partly accepted for limited rectification and reconsideration of comparability issues.

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Issues: (i) whether the earlier Tribunal order required limited recall for rectification on the ground of contradictory findings concerning the comparability of Persistent Systems Ltd.; (ii) whether the Tribunal's observations concerning Sasken Communication Technologies Ltd. warranted reconsideration of its comparability and remand to the Transfer Pricing Officer.

Issue (i): whether the earlier Tribunal order required limited recall for rectification on the ground of contradictory findings concerning the comparability of Persistent Systems Ltd.

Analysis: The order recorded inconsistent conclusions on Persistent Systems Ltd. One part of the reasoning excluded the company by following earlier coordinate bench treatment, while another part upheld its inclusion after examining the standalone financials for the relevant year. Since such inconsistency affected the determination of comparability, the error was treated as requiring correction within the scope of rectification.

Conclusion: The order was recalled to a limited extent for reconsideration of the comparability of Persistent Systems Ltd.

Issue (ii): whether the Tribunal's observations concerning Sasken Communication Technologies Ltd. warranted reconsideration of its comparability and remand to the Transfer Pricing Officer.

Analysis: The earlier order had already set aside the comparable to the Transfer Pricing Officer because the margin in the show-cause notice and the transfer pricing order differed. In view of that remand, the Tribunal directed that the assessee's further objection on functional comparability and the cited coordinate bench decision be considered while deciding the issue afresh.

Conclusion: The Transfer Pricing Officer was directed to consider the assessee's comparability objection concerning Sasken Communication Technologies Ltd. while redeciding the matter.

Final Conclusion: The miscellaneous application was partly accepted for limited rectification and reconsideration on comparability issues, while the other application was treated as withdrawn.

Ratio Decidendi: A rectification under section 254(2) is warranted where the Tribunal's own order contains contradictory findings on a material issue affecting the decision, and a remand on a comparable permits reconsideration of all relevant comparability objections in the fresh exercise.

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