Transfer-pricing comparability under TNMM permits rational turnover filters and excludes software-product developers from captive software-services benchmarking.

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....Transfer-pricing comparability under the Transactional Net Margin Method may apply a turnover ceiling where it rests on a rational and logical basis, despite no prescribed turnover filter. Comparable entities must be closely aligned in functions, assets and risks because enterprise size and significant turnover differences can affect pricing. A software-product developer that owns intellectual property or develops and markets products is functionally distinct from a captive software-development service provider developing solely for its associated enterprise. Where the final comparable set has been determined, remand may be confined to reconsideration of identified exclusions rather than requiring a wholly fresh arm's-length-price exercise.....