The Tribunal held that the transactional net margin method was required to be computed with respect to the net profit margin only. The Rules did not support the computation of the gross profit margin while applying transactional net margin method. Therefore, the benchmarking methodology adopted by the assessee taking the gross profit margin was correctly rejected by the Revenue authorities. (AY.2007-08)
ACIT v. United Shippers Ltd. (2022) 97 ITR 94 (Mum) (Trib)
S. 92C : Transfer pricing-Arm’s length price-Transactional Net Margin Method-Assessee in the business of ship chartering services-Rules required Transactional Net Margin Method with respect to net profit margin-Assessee using internal comparables with associated enterprises-Incorrect approach-Revenue authority justified in rejecting methodology. [R. 10B(1)(e)]