Transfer pricing comparable exclusion cannot be raised for the first time before the Tribunal after earlier acceptance.

A transfer pricing comparable already accepted by the TPO and retained by the first appellate authority could not be challenged by the Revenue for the first time before the Tribunal on the ground of functional dissimilarity. The comparable had formed part of the assessee's transfer pricing study and its segmental results were used for benchmarking the engineering, technical and inspection segment. The Tribunal held that the Revenue could not agitate exclusion at the second appellate stage when the issue had not been raised before the lower appellate authority. The ground seeking exclusion of Onward Technologies Ltd. was rejected, and the issue was decided in favour of the assessee.

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Issues: Whether the Revenue could, for the first time before the Tribunal, seek exclusion of Onward Technologies Ltd. as a comparable although it had been accepted by the Transfer Pricing Officer and confirmed by the Commissioner (Appeals).

Analysis: The comparable in question was part of the assessee's transfer pricing study and had been accepted by the Transfer Pricing Officer for benchmarking the engineering, technical and inspection segment. The Commissioner (Appeals) also retained it as a comparable. The Revenue's challenge before the Tribunal was raised for the first time on the ground of functional dissimilarity. The Tribunal held that the Revenue could not agitate before it a comparable that had not formed the subject matter of challenge before the lower appellate authority, and that the exclusion made in the earlier round was misconceived because the segmental results of the comparable had already been used for benchmarking by the transfer pricing authorities.

Conclusion: The Revenue's ground seeking exclusion of Onward Technologies Ltd. was rejected and the issue was decided in favour of the assessee.

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