Functional Comparability Trumps Product Similarity in Chemical Trading Transfer Pricing Methodology Under RPM

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....ITAT ruled on transfer pricing methodology for chemical product distribution, focusing on functional comparability rather than product similarity. The tribunal determined that five identified chemical trading companies were valid comparables for benchmarking international transactions using the Resale Price Method (RPM). The tribunal directed the Transfer Pricing Officer (TPO) to include these five companies in the comparability analysis, emphasizing operational attributes over product differentiation. The assessee's appeal was allowed, with the TPO instructed to recalculate transfer pricing adjustments using the approved comparable companies, thereby potentially aligning the gross margin within the arm's length range.....