Retail trading and wholesale supply to OEM are not comparables

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that retail and aftermarket automobile parts distributors cannot be treated as valid comparables for benchmarking transfer pricing transactions of an assessee engaged in wholesale trading of automobile components supplied to Original Equipment Manufacturers (OEMs). 

The Tribunal emphasized that Rule 10B(2)(d) specifically requires consideration of market conditions, including whether a business operates in the wholesale or retail segment. 

Consequently, transfer pricing adjustments made on the basis of functionally dissimilar retail comparables were deleted for both assessment years under appeal.