Chapter X confines transfer-pricing adjustments to income from...

Chapter X confines transfer-pricing adjustments to income from international transactions with associated enterprises and does not permit entity-level enhancement of profits from unrelated-party dealings. Under TNMM, operating margins must reflect appropriate treatment of non-operating marketing and promotional expenses, warranty provisions and bad debts, while business liability write-backs and export incentives linked to export sales are operating income; other operating income must not be excluded twice. Comparable selection for Air Handling Unit manufacturers depends on functional similarity, retaining industrial HVAC and refrigeration manufacturers but excluding final consumer, commercial refrigeration, or mobility-product businesses. Delayed associated-enterprise receivables linked to goods sales require combined benchmarking; a working-capital adjustment removes the need for separate notional interest. Brought-forward unabsorbed depreciation cannot be set off against income from other sources.