“transactional net margin method”

Transfer PricingSection 92CSection 92C691 judgments

The decision most relied on for transactional net margin method is Rampgreen Solutions Pvt. Ltd. v. CIT (377 ITR 533), cited in 196 judgments on BharatTax.

Leading authorities on transactional net margin method

Rampgreen Solutions Pvt. Ltd. v. CIT

377 ITR 533 · 2015 · High Court

196

citing judgments

Knowledge Process Outsourcing (KPO) service providers are functionally dissimilar to Business Process Outsourcing (BPO) or Information Technology Enabled Services (ITeS) providers and cannot be compared for transfer pricing purposes, even under the Transactional Net Margin Method (TNMM). Further, companies with significantly different business models, such as those with extensive subcontracting, should be excluded as comparables.

DIT (IT) v. Morgan Stanley & Co Inc.

162 Taxmann 165 · 2007 · Supreme Court

citing judgments

The profits of a Permanent Establishment (PE) must be determined on the basis of what an independent enterprise would derive, using the Transactional Net Margin Method (TNMM) for profit attribution. When applying TNMM, the operating profit from an international transaction should be compared with the operating profit margin of comparables.

CIT v. Pentair Water India (P.) Ltd.

381 ITR 216 · 2016 · High Court

citing judgments

Companies with significantly higher turnover, indicating differing functional and risk profiles, are not comparable for transfer pricing benchmarking. Such large companies must be excluded from the list of comparables when benchmarking against an assessee with a much smaller turnover.

Huawei Technologies India Pvt. Ltd. v. JCIT

101 Taxmann.com 313 · 2019 · ITAT

citing judgments

Working capital adjustments are permissible and crucial for comparability analysis when determining the arm's length price of international transactions, especially when an assessee's claim for such adjustment has been denied.

Trilogy E-Business Software India (P.) Ltd. v. Dy. CIT

29 Taxmann.com 310 · 2013 · ITAT

citing judgments

For Transfer Pricing, this case clarifies that foreign exchange gains can be considered operating revenue for ITES providers, acknowledges the impact of offshore versus onsite development pricing on margins even when using TNMM, and affirms the use of a turnover filter for selecting comparable companies.

Dresser-Rand India (P.) Ltd. v. Addl. CIT

13 Taxmann.com 82 · 2011 · High Court

citing judgments

An Assessing Officer cannot disregard an assessee's decision to avail services from associated enterprises, even if the assessee has internal expertise, as the determination of necessity is the assessee's prerogative. The Transfer Pricing Officer's role is to determine the arm's length price, not the need for the service itself.

Serdia Pharmaceuticals (India) (P.) Ltd. v. Asstt. CIT

44 SOT 391 · 2011 · ITAT

citing judgments

The Comparable Uncontrolled Price (CUP) method is preferred over indirect methods for determining the arm's length price in transfer pricing matters, especially for royalty payments.

Mobis India Ltd. v. Dy. CIT

38 Taxmann.com 231 · 2013 · ITAT

citing judgments

A working capital adjustment is unreliable if it is based on broad approximations, estimations, and assumptions, and the assessee fails to demonstrate how the adjustment was arrived at.

Judgments citing transactional net margin method

Gbt India Private Limited, New Delhi vs. ACIT, OSD, Delhi

In the result, the assessee’s appeal is allowed as above

ITA 1764/DEL/2022[2018-19]Status: DisposedITAT Delhi26 Nov 2025AY 2018-19

Bench: Shri Challa Nagendra Prasad & Shri Avdhesh Kumar Mishra

Section 143(3)Section 234ASection 36(1)(vii)Section 36(2)

AO/Ld. Transfer Pricing Officer ("TPO") erred in determining the Arm's Length Price ("ALP") of transition support services as NIL, by rejecting the Transactional Net Margin Method ("TNMM") applied by the Appellant, applying the Comparable Uncontrolled Price ("CUP") method and consequentially making an upward adjustment of Rs.7,34,54,905/Thus

Lintas India Private Limited, Mumbai vs. DCIT, Circle 16(1), Mumbai

The appeal of the assessee is partly allowed for statistical purposes

ITA 5889/MUM/2024[2021-22]Status: DisposedITAT Mumbai19 Nov 2025AY 2021-22

Bench: Shri Narender Kumar Choudhry & Shri Prabhash Shankarassessment Year: 2021-22 M/S. Lintas India Private Assessment Unit, Limited, Income Tax Department Or A Wing, 16Th Floor, Deputy Commissioner Of Parinee Crescenzo, Income Tax, Bandra-Kurla Complex, Circle 16(1), Bandra (East), 1) National Faceless Mumbai – 400 051 Assessment Centre (Nafac), Vs. Pan: Aaacl0124F Delhi 2)Aayakar Bhawan, Maharshi Karve Road, New Marine Lines, Churchgate, Mumbai – 400020 (Appellant) (Respondent) Present For: Assessee By : Shri Ajit Jain, Ld. A.R. Shri Karnik Kansara, Ld. A.R Ms. Neha Rai, Ld. A.R. Ms. Sakshi Chimanani, Ld. A.R. Revenue By : Shri Kiran Unavekar, Ld. Sr. D.R. Date Of Hearing : 22.08.2025 Date Of Pronouncement : 19.11.2025 O R D E R Per : Narender Kumar Choudhry: This Appeal Has Been Preferred By The Assessee Against The Order Dated 15.05.2023, Impugned Herein, Passed By The Ld. Commissioner Of Income Tax (Dispute Resolution Panel-1) (In Short Ld. Commissioner) U/S 144C(5) Of The Income Tax Act, 1961 (In Short ‘The Act’) For The A.Y. 2021-22. 2 M/S. Lintas India Private Limited

For Appellant: Shri Ajit Jain, Ld. A.RFor Respondent: Shri Kiran Unavekar, Ld. Sr. D.R

Section 144Section 144CSection 144C(5)Section 92C

planning and research. Pricing policy Charged by Associated Enterprise Charged by AE at cost plus 5% (‘AE’) at cost plus 5% markup markup Transactional Net Margin method TNMM Method used for (‘TNMM’) benchmarking Benchmarking AE as tested party. AE as tested party. of Comparable’s : Comparable’s: services European Region

Shell India Markets Private Limited, Mumbai vs. Deputy Commissioner of Income Tax Circle 3(4), Mumbai

ITA 4828/MUM/2024[2020-21]Status: DisposedITAT Mumbai19 Nov 2025AY 2020-21

Bench: SHRI AMIT SHUKLA, JUDICIAL MEMBER\n&\nMS. PADMAVATHY S (Accountant Member)

Section 143(3)Section 144BSection 144C(1)Section 144C(13)Section 144C(5)Section 270ASection 40Section 92C

entered income. 8. For benchmarking this suo motu mark-up of 12%, the assessee, in its contemporaneous transfer pricing study, adopted the Transactional Net Margin Method (TNMM) as the most appropriate method, with Operating Profit to Operating Cost (OP/OC) as the Profit Level Indicator (PLI), and selected itself

Sap India Private Limited, Bangalore vs. Jurisdictional Assessing Officer - Deputy Commissioner of Income Tax Circle 6(1)(1), Bangalore

The appeal of the assessee is allowed to the extent indicated above

ITA 1519/BANG/2024[2020-21]Status: DisposedITAT Bangalore17 Nov 2025AY 2020-21

Bench: Shri Prashant Maharishi & Shri Soundararajan K, Jm

Section 143Section 144BSection 144C

associated enterprises of ₹ 5,814,382,000 117/–. With the respect to the total international transactions of ₹ 4096 crores, the assessee adopted transactional net margin method as the most appropriate method. The assessee computed the independent margin in its distribution activity and consultancy at operating profit/operating revenue ... assessee is allowed with above directions. 15. In the software distribution segment, the margin computed by the assessee by adopting the transactional net margin method is 6.18% whereas the learned transfer pricing officer has considered the median margin of 11.08% and computed the adjustment

Sempertrans India Private Limited, Roha vs. Income-Tax Officer, Panvel

In the result, appeal filed by the assessee is partly

ITA 1778/PUN/2024[AY 2020-21]Status: DisposedITAT Pune14 Nov 2025

Bench: Dr.Manish Borad & Ms. Astha Chandraआयकर अपील सं. / Ita No.1778/Pun/2024

For Appellant: Shri Ajit Jain andFor Respondent: Shri Prakash L. Pathade

Section 144Section 144CSection 144C(8)Section 153Section 37(1)Section 92CSection 92D

Counsel for the assessee stated that the ALP of the Intra Group Services has been calculated by applying Transactional Net Margin Method (TNMM) and the same is duly incorporated in the TP study report and Audit Report on Form 3CEB. He further submitted that various services relating to Information Technology ... Study Report (TPSR) as well as in Audit Report on Form No.3CEB has calculated the ALP of the Intra Group Services based on Transactional Net Margin method (in short TNMM) in order to prove that the alleged expenditure claimed in the profit and loss account towards Intra Group Services

Pcl Foods Pvt. Ltd., Gurgaon vs. Addi CIT, National E- Assesment Centre, New Delhi

In the result, this appeal of the assessee is partly allowed

ITA 442/DEL/2021[2016-17]Status: DisposedITAT Delhi14 Nov 2025AY 2016-17

Bench: Ms. Madhumita Roy & Shri Brajesh Kumar Singh[Assessment Year: 2016-17] Pcl Foods Private Limited, Additional / Joint/ Unit No.-219, Plot No. 2, Deputy/Assistant Vardhman Crown Mall, Lsc, Vs Commissioner Of Income Sector 19, Dwarka, New Tax/ Income Tax Officer, Delhi-110075. National E-Assessment Centre, Delhi. Pan- Aahcp3493L Assessee Revenue

Section 143(3)Section 92C

trading in rice, had in its transfer pricing study initially identified only one comparable, namely M/s Sakuma Exports Ltd., and applied the Transactional Net Margin Method (TNMM) as the most appropriate method. The TPO observed that the assessee's business of rice trading is not of such a unique

Concur Technologies (India) Private Limited, Bangalore vs. Assistant Commissioner of Income Tax Circle 2(2)(1), Bangalore

Appeal of the assessee is partly allowed as indicated above

ITA 2550/BANG/2024[2021-22]Status: DisposedITAT Bangalore11 Nov 2025AY 2021-22

Bench: Shri Prashant Maharishi & Shri Soundararajan K.Assessment Year : 2021-22

For Appellant: Shri Chavali Narayan, CAFor Respondent: Dr Divya K J, CIT(DR)(ITAT), Bengaluru

Section 144Section 144BSection 144C

Appellant with its AE and is subsumed within the arm's length price determination of the principal transactions itself using the transactional net margin method ("TNMM") as the most appropriate method in the TP study report. The learned AO/ TPO has also erred in law and facts by treating outstanding ... paid 232,07,13,740/–, has also paid various other charges to its associated enterprises. The assessee has adopted the transactional net margin method as the most appropriate method for benchmarking its international transactions the reference was made to determine the arm's-length price of the international transaction

Dgs Technical Services Private Limited, Hyderabad vs. DCIT., Circle-8(1), Hyderabad

In the result, the appeal filed by the assessee is partly allowed for statistical purposes

ITA 1095/HYD/2024[2021-22]Status: DisposedITAT Hyderabad31 Oct 2025AY 2021-22

Bench: SHRI VIJAY PAL RAO, HON’BLE (Vice President), SHRI MANJUNATHA G, HON’BLE (Accountant Member)

Section 143(3)Section 144C(5)Section 92C

providing structural steel engineering and detailing services at Rs. 51,16,93,970/-. The assessee has conducted a Transfer Pricing study by adopting Transactional Net Margin Method (TNMM) as 5 DGS Technical Services Private Limited the most appropriate method with OP/OC @ (-)0.02%. The assessee company has selected 8 comparable with ... services. 14. Insofar as the rejection of the TP documentation submitted by the assessee, we find that, the assessee has adopted the Transactional Net Margin Method (TNMM) as the Most Appropriate 14 DGS Technical Services Private Limited Method (MAM) and selected eight comparable companies, with a 35th percentile

Weg Industries (India) Private Limited, Bengaluru vs. Assessing Officer, Bmtc Building

In the result, the appeal by the assessee is partly allowed

ITA 2501/BANG/2024[2021-22]Status: DisposedITAT Bangalore28 Oct 2025AY 2021-22

Bench: Shri Prashant Maharishi & Shri Keshav Dubeyassessment Year : 2021-22

For Respondent: Shri Sumeet Khurana , CA

Section 143(3)Section 144BSection 144C(13)Section 153Section 92C(3)

allocation keys used by the Appellant in preparation of the segment; iii) adopting entity level margin of the Appellant; iv) rejecting the internal Transactional Net Margin Method ('TNMM') selected by the Appellant. 5. On the facts and circumstances of the case ... margin was negative at (-) 1.24%. In the TPSR the assessee selected itself as a tested party, combined all other transactions together and adopted Transactional net margin Method [ TNMM ] as the most appropriate method selecting the PLI of OP/OC and internal TNMM was adopted as comparable. The claim of assessee

Idp Education Exam Services Pvt Ltd, Haryana vs. ACIT, Circle-1(1) Gurgaon, Haryana

In the result, appeal of the assessee is partly allowed

ITA 2041/DEL/2022[2018-19]Status: DisposedITAT Delhi28 Oct 2025AY 2018-19

Bench: SHRI VIKAS AWASTHY (Judicial Member), SHRI AVDHESH KUMAR MISHRA (Accountant Member)

For Appellant: S/Shri Vishal Kalra, Ankit Sahni Advocates &For Respondent: Shri S K Jadhav, CIT-DR

Section 143(3)Section 154

reimbursement of expenses for conducting of exams. For provision of exam support services, the assessee charged Rs.227,61,44,912/-. The assessee applied Transactional Net Margin Method (TNMM) to bench mark the transaction. The TPO accepted the transaction at Arm’s Length Price (ALP), hence, no adjustment was proposed

Erevmax Technologies Pvt. Ltd., Kolkata vs. D.C.I.T./A.C.I.T., Tp-1, Kolkata

Appeal of the assessee is partly allowed for statistical purposes

ITA 2551/KOL/2024[2021-2022]Status: DisposedITAT Kolkata27 Oct 2025AY 2021-2022

Bench: Us In The Paper Book)

Section 143(3)

disclosed the calculation of receipts on that basis is the Return of Income. However, the Ld. TPO has substituted the PSM with the Transactional Net Margin Method (TNMM) and worked out an upward adjustment of Rs. 1,76,78,365/- with the following observations: “6.3 The assessee had relied ... With respect to the international transaction of export of software &ITes services, the undersigned has determined the arm's length price/margin by adopting Transactional Net Margin Method ("TNMM") as the most appropriate method ("MAM") with a profit level indicator ("PLI") of 'Operating Profit ("OP")/ Operating Cost ("OC"). As part

Juniper Networks Solution India Private Limited, New Delhi vs. Assessment Unit, NFAC Itd, New Delhi

In the result, ground no 3 raised by the assessee is allowed in its favour

ITA 4400/DEL/2024[2020-21]Status: DisposedITAT Delhi24 Oct 2025AY 2020-21

Bench: Shri S. Rifaur Rahman & Shri Yogesh Kumar U.S.Juniper Networks Solution India Pvt. Ltd., Vs. Assessment Unit, Unit No.Iia, 06Th Floor, Dlf Centre, Nfac Itd, Parliament Street, Connaught Place, New Delhi – 110 001. (Pan : Aaecj1345A) (Appellant) (Respondent) Assessee By : Shri Sachit Jolly, Sr. Advocate Shri Sandeep Bhalla, Advocate Shri Anurag Singhal, Ca Revenue By : Shri S.K. Jadhav, Cit Dr Date Of Hearing : 05.08.2025 Date Of Order : 24.10.2025 O R D E R Per S. Rifaur Rahman: 1. This Appeal Preferred By The Assessees Is Directed Against The Assessment Order Dated 27.07.2024 Passed By The Income Tax Department, Assessment Unit U/S 143(3) Read With Section 144C(13)/144B Of The Income-Tax Act, 1961 (For Short ‘The Act”) For Assessment Year 2020-21 Pursuant To The Directions Of The Dispute Resolution Panel U/S 144C(5) Of The Act.

For Appellant: Shri Sachit Jolly, Sr. AdvocateFor Respondent: Shri S.K. Jadhav, CIT DR

Section 115JSection 142(1)Section 143(2)Section 143(3)Section 144C(13)Section 144C(5)Section 92C

carving out alleged trading segment by not accepting the inextricably linked i.e., integrated business model of the Appellant and rejecting the application of Transactional Net margin Method (TNMM') at entity level. The Appellant prays that the Ld. Assessing Officer/ Ld. TPO be directed to accept the inextricably linked business model

Vodafone Idea Ltd. (Earlier Knwon As Vodafone Mobile Services Ltd.), Mumbai vs. ACIT, . Circle-26(2), New Delhi

In the result, all above said grounds are allowed for statistical purpose

ITA 8361/DEL/2019[2012-13]Status: DisposedITAT Delhi24 Oct 2025AY 2012-13

Bench: Shri S. Rifaur Rahman & Shriyogesh Kumar U.S.Vodafone Idea Ltd Vs. Acit, (Earlier Known As Vodafone Circle-26(2), Mobile Services Ltd) New Delhi 10Th Floor, Birla Centurion, Century Mills Compound, Pandurang Budhkar Marg, Worli, Mumbai, Maharastra (Appellant) (Respondent) Pan: Aaacb2100P

For Appellant: Shri Salil Kapoor, AdvFor Respondent: Shri S. K,. Jadav, CIT DR

Section 115JSection 143(3)Section 144C(5)Section 92C

overseas associate enterprises, namely, M/s. Vodafone Ireland Marketing Ltd. and M/s. Rising Groups Ltd.; respectively. It adopted the transaction net margin method (TNMM) to benchmark the same. We find from Transfer Pricing Officer's order dated 28.01.2013 that he rejected assessee's method after holding that the same ... methods namely; comparable un-controlled price method (CUP), re-sale price Vodafone Idea Ltd method (RPM), cost method (CPM), profit split method (PSM), transactional net margin method (TNMM) and the residuary one such other methods as may be prescribed by the Central Board of Direct Taxes. An Assessing Officer

Netflix Entertainment Services India LLP, Mumbai vs. Deputy Commissioner of Income Tax- Circle 23(1), Mumbai

In the result, appeal of the assessee is partly

ITA 6857/MUM/2024[2021-22]Status: DisposedITAT Mumbai17 Oct 2025AY 2021-22

Section 143(3)Section 144C(5)Section 234ASection 270ASection 40

reflected complete financial insulation. 15. For benchmarking its international transaction of payment of distribution fee to its Associated Enterprises, Netflix India applied the Transactional Net Margin Method (TNMM) as the Most Appropriate Method (MAM) under section 92C of the Income Tax Act, using Operating Profit/Operating Revenue (OP/OR) as the Profit ... reasoning that the traditional transfer-pricing methods failed to capture the complexities of the streaming-media business. It observed that the Transactional Net Margin Method (TNMM) adopted by the assessee in its Transfer Pricing Study Report (TPSR) was “unscientific, misdirected, and incompatible with the business model actually carried

Altera Digital Health (India) LLP (Formerly Known As Allscripts (India) LLP), Vadodara vs. The Dy.CIT, Circle-1(1)(1), Vadodara

In the result, Ground Number 11 of the assessee’s appeal is allowed for statistical purposes

ITA 359/AHD/2022[2018-19]Status: DisposedITAT Ahmedabad15 Oct 2025AY 2018-19

Bench: Smt. Annapurna Gupta (Accountant Member), Shri Siddhartha Nautiyal (Judicial Member)

Section 92C(1)

relevant year, the assessee earned an operating margin of 15.25% from these services. For benchmarking the international transaction, the assessee adopted the Transactional Net Margin Method (TNMM) as the most appropriate method with Operating Profit/Operating Cost as the Profit Level Indicator. In its transfer pricing study, the assessee had selected ... provider rendering software development services exclusively to its Associated Enterprise and earning an operating margin of 15.25%. For benchmarking, it had applied the Transactional Net Margin Method (TNMM) and selected eight comparables, arriving at an arm’s length margin of 5.98% to 7.32%. I.T.A No. 359/Ahd/2022

Lg Electronics India Private Limited, Mathura Road, New Delhi vs. Deputy Commissioner of Income Tax, Delhi

In the result, the appeal of the revenue in ITA No

ITA 433/DEL/2024[2005-06]Status: DisposedITAT Delhi15 Oct 2025AY 2005-06

Bench: Shri Mahavir Singh & Shri M. Balaganesh

For Appellant: Shri Ajay Vohra, Sr. AdvFor Respondent: Shri Dharm Veer Singh, CIT(DR)

Assessment years involving AMP issue. 5.8 We find that the assessee in the instant case had benchmarked its international transaction by adopting Transactional Net Margin Method (TNMM). The ld AR submitted that the issue in dispute is settled in favour of the assessee by the decision of the coordinate bench ... Sony Ericsson Mobile Communications India Pvt Ltd in Tax Appeal NO. 16 of 2014 has held that if the Indian entity has satisfied Transactional Net Margin Method (TNMM), i.e., as long as the operating margins of the Indian enterprise are higher than the operating margins of comparable companies, no further