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2016 (10) TMI 1266 - AT - Income TaxTPA - comparable selection - functional similarity - HELD THAT:- Most of the comparables adopted by TPO does not have segmental information. Without the segmental information on record, it is difficult to adopt the filter of 75% of revenue from services. We are not sure, how the TPO has adopted this filter without this basic information. Accordingly, we direct the TPO to collect information from the respective comparables and adopt this filter with the segmental information. TPO can determine the comparables by adopting the above filter. Hence, we find it appropriate to remit this matter back to the file of AO/TPO to determine the comparables afresh by adopting the above filter. The assessee may be given proper opportunity of being heard. Accordingly, grounds raised by the assessee in this regard are allowed for statistical purposes. Reimbursement of income and expenditure - HELD THAT:- This issue is squarely covered by the decision of the coordinate bench of this Tribunal in assessee’s own case for AY 2007-08 [2014 (4) TMI 285 - ITAT HYDERABAD] as per segmental financials the margin in respect of transactions with AEs is 39.26% as against margin of 6.30% in respect of non AE transactions. Therefore, when segmental details have been furnished by the assessee the TPO should have considered them properly instead of rejecting them with broad and sweeping allegations. It seems, the TPO has not properly allocated the segmental expenditures. If the bad debts etc. are not related to AE transactions they cannot be considered as part of operating cost for determining ALP of the transactions with AE. Similarly, reimbursement on cost to cost basis also cannot be included in the operating cost. Since the issue in the current AY is identical to that of AY 2007-08, respectfully following the decision of the coordinate bench in that year, we remit the issue to the file of the TPO/AO to decide the issue following the directions given by the Tribunal in AY 2007-08. Addition of corporate guarantee - HELD THAT:- As decided in assessee own case since the issue in the present case is identical to the issue decided in case of Infotech Enterprises [2014 (1) TMI 1363 - ITAT HYDERABAD] following the same, we also remit this issue to the file of the TPO to decide the quantum of corporate guarantee rates accordingly. If the assessee is able to bring on record any comparables with regard to corporate guarantee, the TPO may also consider the same while determining ALP of corporate guarantee. The TPO must provide a reasonable opportunity of being heard to the assessee before deciding the issue. This ground is allowed for statistical purposes.
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