Method selection follows transaction economics. CUP, resale price, cost plus, profit split, TNMM and other prescribed methods are not interchangeable short
Finin2min summary
Method selection follows transaction economics. CUP, resale price, cost plus, profit split, TNMM and other prescribed methods are not interchangeable shortcuts.
Source review date: 4 July 2026. Read with the official text and the facts of the transaction.
Legal anchors
- Section 165
- Income-tax Rules, 2026 method and comparability rules
- Government notifications on tolerance range where applicable
How to analyse it
- Define the controlled transaction accurately.
- Evaluate internal comparables before databases.
- Apply reliable adjustments only where supportable.
- Document search strategy, rejection reasons and multi-year data treatment.
Practical illustration
A contract manufacturer with reliable third-party product prices may support CUP; a routine service provider without comparable prices may require a profit-based method.
What can go wrong?
- Choosing TNMM by default
- Cherry-picking comparables
- Applying unsupported working-capital or risk adjustments
Evidence pack
- Search strategy
- Comparable set
- Adjustment workbook
- Method-rejection memo
Decision workflow
- Freeze the facts and effective date.
- Identify the controlling Act, rule, notification, circular and jurisdictional overlay.
- Prepare a calculation or exposure note.
- Collect the evidence pack before filing, payment, signing or response.
- Record reviewer conclusion and assumptions.
Quick Q&A
Is the result automatic?
No. Define the controlled transaction accurately.
What is the most important control?
Document search strategy, rejection reasons and multi-year data treatment.
What should be escalated?
Choosing TNMM by default, especially where money, deadlines, enforcement, personal liability or irreversible transaction steps are involved.
Official source trail
Secondary commentary may help interpretation, but it is not the source of law.