Use of Cash Profit / Sales and Cash Profit / Cost emphasized as an appropriate PLI for use of TNMM

In the case of Schefenacker Mother son Ltd v. ITO, ITA  No. 4459/DEL/07 for AY 2003-04 and schefenacker Mother son Ltd Vs DCIT, ITA No. 4460/DEL/07 for AY 2004-05, the Delhi Bench of the Income-tax Appellate Tribunal (the Tribunal), held that cash profit on sales “CP/Sales” or cash profit on total cost excluding depreciation “CP/ TCdep” can be adopted as an appropriate profit level indicator (PLI) under Transactional Net Margin Method (TNMM), to adjust for material differences in the assets utilised between tested party and comparable companies and thereby enable better comparabili...