The Bombay High Court is set to decide whether TNMM benchmarking can apply to determine the arm's length price at the entity level for combined transactions. The court has allowed the appellant to raise additional questions of law.
Can TNMM Bench Markings Determine ALP at Entity Level for Combined Transactions?
The Bombay High Court has listed a matter for further hearing regarding whether Transaction Net Margin Method (TNMM) benchmarking is applicable for determining arm's length price (ALP) under Section 92 for combined transactions at the entity level. The court has granted the appellant the opportunity to raise additional legal questions as needed.
This case has significant implications as TNMM is a commonly used method for transfer pricing. The court's decision will clarify the extent to which ALP can be established at the entity level, particularly in the context of combined transactions, which is pertinent for multinational corporations engaging in inter-company financial arrangements.
Legal practitioners should closely monitor this case as it may affect methodologies employed in transfer pricing studies and compliance. A ruling affirming the use of TNMM in this manner could change the landscape for assessing ALP in complex financial arrangements.
Citations
- Matter of TNMM Bench Markings (2026) Bom HC
