Rule 10B of Income Tax Rules provides methodology for computation of ALP. Under TNMM, ‘net profit’ is used as benchmark for ALP computation. Rule 10B(1)(e)(i) provides for considering “net profit margin realised by the enterprise from an international transaction or SDT entered into with an associated enterprise”. Rule 10B(1)(e)(ii) provides for computation of ‘net profit margin in uncontrolled comparable transactions’. Therefore, while computing net margin realized by the enterprises (tested party as well as comparables) all incomes and expenses that are representative or comprised of business obligation should be considered.
The taxpayers may amortisation of value of investment and debit to profit and loss account. The Court had to consider whether amortisation of value of investment can be considered as operating in nature.
ThyssenKrupp Industries India Private Limited v Addl CIT (2013) 154 TTJ 0689,  33 taxmann.com 107 (Mum-Trib) – While computing the margin of some of the comparables, the taxpayer contended that amortisation of value of investments is to be considered as operating in nature. The ITAT held that same has no relevance for the operations of the business and therefore is to be treated as non-operating in nature.