Transfer pricing benchmarking required fresh review where segmental results and expense allocation were not fully appreciated.

Transfer pricing adjustment based on entity-level benchmarking was questioned because the assessee's segmental results and expense allocation basis were already on record. The material suggested the lower authorities had not fully appreciated those segmental details, and the methodology used in the relevant year had been accepted in later years. On that basis, the matter was restored to the Assessing Officer/Transfer Pricing Officer for fresh examination of the segmental results and recomputation in accordance with law; the transfer pricing grounds were not finally decided on merits.

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Issues: Whether the transfer pricing adjustment based on entity-level benchmarking and rejection of segmental results was justified, and whether the matter required reconsideration.

Analysis: The assessee's segmental results and the basis of allocation of expenses were available on record. The lower authorities had not fully appreciated those details. The record also indicated that the methodology adopted in the relevant year had been accepted in succeeding years. In these circumstances, the material on record warranted fresh examination of the segmental results and the related transfer pricing computation.

Conclusion: The matter was restored to the Assessing Officer / Transfer Pricing Officer for reconsideration of the segmental results and fresh adjudication in accordance with law. The transfer pricing grounds were thus not finally accepted or rejected on merits.

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