Transactional Net Margin comparability standard upheld after tribunal's reasoned exclusion of software and IT-enabled services comparables

The Tribunal's exclusion of certain comparables in the software development and IT-enabled services segments under the Transactional Net Margin Method was sustained because it had recorded cogent reasons for the comparability adjustment. No legal infirmity was found in the standard applied, and the comparability exercise did not give rise to any substantial question of law. The Revenue's challenge therefore failed.

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Issues: Whether the exclusion of certain comparables in the software development and IT-enabled services segments under the Transactional Net Margin Method was legally sustainable, and whether the Tribunal had applied an unduly strict comparability standard.

Analysis: The Tribunal had recorded cogent reasons for excluding the identified companies while applying the Transactional Net Margin Method. No legal infirmity was shown in the approach adopted, and no substantial question of law arose from the comparability exercise.

Conclusion: The exclusion of the comparables was upheld, and the Revenue's challenge failed.

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