Related party transaction filter governs comparable selection in TNMM; ANZ's inclusion was sent back for verification.

In TNMM benchmarking of learner support and customer care services, ANZ Support Services India Pvt. Ltd. could not be retained as a comparable without verifying whether its related party transactions exceeded the 25% filter applied by the TPO and whether it otherwise met functional similarity criteria. The Tribunal found that the financial material suggested the threshold may have been crossed, but the lower authorities had not verified that factual position. The issue was therefore restored to the TPO for examination, and ANZ must be excluded if the assessee's objection on the related party transactions filter is found correct.

---

---

Issues: Whether ANZ Support Services India Private Limited could be retained as a comparable for benchmarking the arm's length price of the assessee's learner support and customer care services under the TNMM, particularly in view of the related party transactions filter and functional comparability.

Analysis: The assessee confined its challenge to the inclusion of ANZ as a comparable. The Tribunal noted that the TPO had adopted a related party transactions filter excluding companies where such transactions exceeded 25% of sales, and that the DRP had directed inclusion of ANZ only if it satisfied the functional similarity criteria and the quantitative filters applied by the TPO. On the financial material produced, the Tribunal found that ANZ's related party transactions, on the figures examined, were above the 25% threshold and therefore attracted the very filter applied by the TPO. Since this contention had not been verified by the lower authorities, the Tribunal held that the factual position required examination by the TPO.

Conclusion: The issue of ANZ's inclusion as a comparable was restored for verification, and if the assessee's objection on the related party transactions filter is found correct, ANZ must be excluded from the comparable set.

---