AREAS OF LITIGATION AND POSSIBLE APPROACH

• Selection of Filters & Comparables

• To argue whether a particular filter should be applied or not, genesis of such filter will have to be traced back to the Rules. Some examples are below:

Filter Analysis

Related party transaction filter (companies having high RPT are excluded)

75% operating revenue filter (Revenue from similar functions or products)

ALP to be determined based on based on uncontrolled transactions as per section 92F(ii)

As per Rule 10B(2)(a) specific characteristics of property transferred or services provided should be compared

Export revenue filter (companies having low export revenue are excluded)

As per Rule 10B(2)(d) conditions prevailing in the market including geographical location should be considered for comparability

Salary cost filter (companies having low salary cost are excluded)

As per Rule 10B(2)(b), for determining comparability functions performed, assets employed and risks assumed should be analysed.