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the assessee bills the AE at a mark-up of 5% on cost. The assessee had followed the Profit Split Method (PSM) of pricing such exports and has disclosed the calculation of receipts on that basis is the Return of Income. However, the Ld. TPO has substituted the PSM with the Transactional Net Margin Method (TNMM) and worked out an upward adjustment of Rs. 1,76,78,365/- with the following observations:

"6.3 The assessee had relied on the Profit Split Method (PSM) and objected on the TNMM method applied by the undersigned as the Most Appropriate Method (MAM) On perusal of details as submitted by the assessee company, it was observed by the undersigned that the PSM method has not been properly applied, as the assessee has failed apply proper method to reach at ALP of the transactions. It is an accepted principle that PSM is applicable in cases involving transfer of unique intangibles or in multiple transactions which are so interrelated that they cannot be evaluated separately for the purpose of determining the arm's length price of any one transaction.

Re: Transfer Pricing Issue-Addition of Rs.17678365.00

a) That in the light of the facts and the law, Ld. TPO/DRP has grossly erred in rejecting the Profit Split Method/PSM of benchmarking the Appellant's International Transactions entered into with US based AE, and arbitrarily substituting the same with Transactional Net Margin Method/TNMM as the MAM, after omitting to appreciate, from the Financials, including that of the AE as well as the TPSR, the integrated and complementary nature of activities of the Erevmax Technologies Pvt. Ltd.

Accordingly, in the light of Cost and Billing Summary (Page 33 and 34), forming part of the Transfer Pricing Study Report (Page 1-50), the on the total cost of Rs.100261865.06, a mark-up @ 5% of Rs. 5013093.00 had been added, to as to constitute a Export value of Software Services of Rs.105274958.31 / 1420680.00 $ (Page 34 Cost, Mark-up and Billing Summary and Audited Accounts Page 177).

The Appellant had followed the Profit Split Method / PSM of Pricing of such Export and accordingly, in Form 3CEB (Page 3) such method had been duly disclosed.

PSM is not applicable unless the service or transaction relates to Unique Intangibles or Transactions of Repeated Nature.

Even the Group Profit had not been compared with any external comparable to verify the Profit Split.

As a result, the adoption of TNMM Method, the comparison of the Profitability rate with eleven external comparable companies Transfer Pricing Order, and the consequent determination of ALP amount of Rs.17678365/- being 16.85% of the Turnover of the Appellant of Rs. 105274894/-, had been proper and thus, deserved endorsement and confirmation.