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Transfer pricing benchmarking and receivables adjustments remanded: segmental financials need proper scrutiny, and foreign-currency interest must track LIBOR.
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Segmental financials for transfer pricing cannot be rejected at the threshold merely because they are not audited or show variance between AE and non-AE margins; the proper course is to test allocation keys, verify expense apportionment, and then independently decide acceptance for arm's length price determination. The Tribunal therefore restored the segmental benchmarking issue for fresh examination. On working capital adjustment, the TPO had to apply transfer pricing principles to the assessee's claim and could not reject it on broad grounds; if allowed, the receivables adjustment would fall away. If interest remains leviable on overdue foreign-currency invoices, it must be benchmarked with LIBOR-based rates, not SBI PLR. The matter was remanded for fresh determination.
Segmental financials for transfer pricing cannot be rejected at the threshold merely because they are not audited or show variance between AE and non-AE margins; the proper course is to test allocation keys, verify expense apportionment, and then independently decide acceptance for arm's length price determination. The Tribunal therefore restored the segmental benchmarking issue for fresh examination. On working capital adjustment, the TPO had to apply transfer pricing principles to the assessee's claim and could not reject it on broad grounds; if allowed, the receivables adjustment would fall away. If interest remains leviable on overdue foreign-currency invoices, it must be benchmarked with LIBOR-based rates, not SBI PLR. The matter was remanded for fresh determination.
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