Assessee is  engaged in business of providing information technology solutions to banks and financial institutions worldwide  Business model was that overseas subsidiaries entered into contracts with third party customers in their own names and then outsourced same to assessee for execution by entering into marketing service agreement and license agreement. Overseas subsidiaries retained 15 per cent/20 per cent of contract value and remit balance amount to assessee. Assessee contended that its international transaction with AEs was at arms length. Assessee selected itself as tested party and adopted TNM method as most appropriate method. Net Profit Margin was selected as Profit Level Indicator (PLI) and assessee’s margin was 22 per cent. Assessee identified 43 comparable-TPO held that foreign AEs should be taken as “tested parties” and selected three unknown Indian comparable companies Accordingly, he held that assessee should have remunerated AEs at cost plus 10 per cent margin.  Accordingly, TPO proposed transfer pricing adjustment of certain amount. Admittedly said approach of TPO was against transfer pricing provisions and in gross violation of principles of natural justice and was accordingly liable to be rejected. Further, net profit margin declared by assessee was 22 per cent and average margin of comparable companies selected by CIT(A) was 22.53 per cent, hence, difference in margin rate falls within tolerance limit of 5 per cent, in which case, international transactions of assessee should be considered to be at arms length and accordingly, no transfer pricing adjustment was called for. Held that  TPO had computed interest by taking average quarterly balances but same was not correct method of computing interest on delayed receivables as details of realization of individual bills were available, it would be possible for assessee/TPO to compute interest individually after allowing accepted credit period. Matter remanded.(AY. 2006-07)