International transaction benchmarking restricts transfer pricing adjustments to associated-enterprise dealings, while functional comparability governs software service margins.

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....Transfer pricing adjustments for the manufacturing segment must be confined to associated-enterprise transactions and cannot be applied to total turnover. The reported decision also treats foreign exchange fluctuation on import purchases as operating cost, goodwill amortisation from an extraordinary acquisition as non-operating expenditure, and permits adjustment for materially higher non-cenvatable customs duty. For capacity utilisation, authorities must obtain unavailable comparable-company data directly and provide a hearing. Software comparables were selected or excluded based on functional similarity, product development, intangibles and segmental data. Royalty was treated as revenue expenditure, while a warranty provision based on historical experience was allowable.....