Assessee provides software development services and quality assurance (testing) services to its AE on exclusive basis as a captive unit. Assessee applied Transactional Net Marginal Method (TNMM) as the most appropriate method for benchmarking the international transaction with Profit Level Indicator (PLI) of Operating Profit to Total Cost (OP/TC). Such profit rate of the assessee was 14.72%. Certain comparables were chosen with average PLI of 15.03%. The AO benchmarked the transaction by rejecting certain companies from the assessee’s list of comparables and introducing certain fresh companies. In this manner, he shortlisted 4 companies with their average operating profit margin at 22.18% and made transfer pricing addition.  On appeal, CIT(A) granted partial relief. Aggrieved, assessee filed an appeal before Tribunal.  Before Tribunal, the preliminary objection by Department was that assessee once assessee had chosen a comparable (Vama Industries Ltd), thereafter during the course of assessee stand cannot be changed to exclude the same comparable. Tribunal relied on various decisions and held that assessee is not barred in law from withdrawing from its list of comparables, a company included on account of mistake. Accordingly Tribunal rejected this objection of department.  With regard to the exclusion of comparable on merits, Tribunal held that the same is functionally different Accordingly, Tribunal rejected the same as comparable. (AY. 2012-13)