Held  that the company AT was engaged in the business of medical transcription and coding, and provided integrated end-to-end software services. The company was remodelling its own business. It was to be excluded as it was functionally dissimilar to the assessee. That the company ES was functionally dissimilar to the assessee as it was a knowledge process outsourcing company providing data analytics, data management and process improvement solutions. It was to be excluded.  That with respect to CG, high or low turnover could not be a criterion for the acceptance or rejection of any company as a comparable when there was no dispute that the company was carrying on the same functions as the assessee. The Transfer Pricing Officer was directed to include this company in the final list of comparables.  That with respect to company IT, the direction of the Dispute Resolution Panel and the Transfer Pricing Officer to exclude the company IT from the final set of comparables was to be upheld. That with respect to company RS, considering that the Transfer Pricing Officer did not reject this company on functionality, the Transfer Pricing Officer was directed to include the business process outsourcing segment of company RS as a comparable even if it had a different accounting period if the figures for the tested party’s accounting period could be extrapolated from the data available. That with respect to the company IC, where the company was engaged in diversified activities of software development and consultancy, engineering services, web development and hosting, and substantially diversified itself into the domain of business analysis and business process outsourcing, that could not be regarded as functionally comparable with the assessee, which was rendering software development services to its associated enterprises. The Transfer Pricing Officer was directed to exclude IC from the final list of comparables. That with respect to company IB, for the assessment year under consideration, no extraordinary event was brought to the Tribunal’s notice. There were no material differences in functions, assets and risks. However, there was an order of the Tribunal for the assessment year under consideration in a different assessee’s case holding that IB was not a good comparable as it had significantly large operations and provided high-end integrated services for business platforms, customer service, outsourcing service, functions and accounting on account of resources outsourcing medical process, outsourcing sales and fulfilment, sourcing and procurement outsourcing, etc., and also had substantial goodwill. As these factors had not been examined by the Transfer Pricing Officer, the issue was restored to the file of the Transfer Pricing Officer for re-examination. That with respect to company TE, in view of the assessee’s contention that in the other case, certain business characteristics reported in the annual report of the company TE were not brought to the notice of the Tribunal, the matter was restored to the file of the Transfer Pricing Officer for re-examination keeping in view various decisions and the contentions raised by the assessee on functionality, brand value, intangible assets and extraordinary economic events.  That the Transfer Pricing Officer considered the engineering design segment of company AC on the ground of functional similarity. This company had been considered a high-end software development company and a knowledge process outsourcing services provider and could not be comparable to a company providing information technology enabled services. When one company was rendering a sophisticated set of services which involved a higher level of skill sets, and the other company did on a lower level, the companies would not be comparable. The Transfer Pricing Officer was directed to exclude the company AC from the final set of comparables. That the issue of risk adjustment was sent back to the Transfer Pricing Officer to decide afresh in view of the decided case law on the subject  That in computing the working capital adjustment, interest had to be determined as per the foreign currency and not as per the prime lending rate as applied by the Transfer Pricing Officer. The issue of the consideration of the foreign branch in the computation of the adjustment was restored to the file of the Transfer Pricing Officer for fresh examination in the light of the submission of the assessee that the branch had closed down and that no transactions had been carried out during the relevant previous year. The Transfer Pricing Officer was directed to give adequate opportunity to the assessee along with the proposed workings of the adjustment while recomputing the adjustment. That with respect to the issue concerning the treatment of foreign exchange gains and losses as operating in nature, in the case of the assessee, the gains and losses were related to the export sale price, which was in dollars. They were to be treated as operating in nature.(AY.2011-12)