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2017 (11) TMI 1758 - AT - Income TaxTPA - Comparable selection - functinal similarity - Held that:- The assessee is engaged in the business of range of software services and also business process/out sourcing services thus companies functionally dissimilar with that of assessee need to be deselected from final list. The related party transactions filter applied by Revenue for all over comparables at the rated of 25% for selecting comparables will not matter Only the companies incurring persistent losses ought to be rejected as comparable. Consider the employ cost to sales ratio at the Rate of 25% as filter for selective comparables Deduction u/s 10A - Held that:- We find that the ITAT for AY 2003-04 has remanded the matter back to the learned AO for verification of quantum of expenditure incurred in respect of reimbursement on account of telecommunication charges (with needs to be adjusted from the export turnover). However, for the subject year under consideration. Accenture, while calculating its export turnover, has suo-moto excluded the reimbursement on account of telecommunication charges. Deduction on the amounts payable under ISA under Section 37(1) - Held that:- Under the present circumstances of the business, such global arrangement is necessary for the purpose of business. The expenditure incurred for such global arrangement is allowable expenses u/s 37(1) of the Act. In addition to that, we find that the payment of expenditure is at arm’s length determined by the TPO u/s 92CA(3) of the Act. We do not find any substance in the case of the revenue because when an international transaction at arms length as determined by the TPO in the said transaction, it cannot be said that the assessee has paid the prices under the said transaction without obtaining any services. The contention of the revenue is baseless and under the facts and circumstances of the case, the expenditure is incurred for the purpose of business. Therefore, we are of the view that the CIT(A) has rightly allowed the claim of the assessee. Upward adjustment in respect of international transaction related to employees share purchase plan (ESPP) expenses - Held that:- CIT(A) has given a categorical finding after examining the relevant material and submission of the assessee that shares were allotted to its employees and not to the employees of the parent company. The expenses incurred by the assessee to motivate and award its employees for their hard work, which amounts salary cost of the assessee company. The expenditure incurred by the assessee for the purpose of business on employees is allowable expenses. The CIT(A) has examined the entire scheme and found that such expenses are business expenses and should be allowable as deduction. Since there is no contrary material to the findings of the CIT(A), in the light of that we confirm the order of CIT(A) on this issue
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