Transfer pricing comparability for non-Korean transactions must be rechecked against MAP-covered Korean transactions

Transfer pricing treatment for non-Korean associated enterprise transactions was held to require fresh verification where the assessee claimed factual similarity with Korean transactions already covered by a Mutual Agreement Procedure resolution. The Tribunal accepted that the surviving dispute depended on whether the non-Korean dealings matched the MAP-covered transactions in functions, assets and risks, and directed the Transfer Pricing Officer to examine that comparability on the same methodology, if established, in accordance with law.

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Issues: Whether the transfer pricing adjustment relating to non-Korean associated enterprises, not covered by the Mutual Agreement Procedure resolution, could be directed to be examined on the same basis as the Korean transactions covered by the resolution.

Analysis: The assessee had obtained a MAP resolution for the Korean transactions and substantial relief had already been given effect to by the Assessing Officer. The surviving dispute related only to the non-Korean transactions. The Tribunal noted the assessee's contention that the non-Korean transactions were similar in functions performed, assets employed and risks assumed, and that the same methodology used in the MAP resolution could be applied to the remaining transactions. Relying on the factual similarity pleaded and the support drawn from prior tribunal decisions, the Tribunal held that the question required verification by the Transfer Pricing Officer.

Conclusion: The issue was restored to the Transfer Pricing Officer for fresh consideration limited to whether the non-Korean transactions were similar to the MAP-covered transactions and, if so, for applying the same treatment in accordance with law.

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