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2017 (1) TMI 1673 - AT - Income TaxTP Adjustment - comparable selection - turnover filter applied by the DRP - HELD THAT:- Assessee has no objection if no turnover filter is applied for the purpose of deciding the functional comparability of these companies however the issue of functional comparability has been raised by the assessee in its appeal. AR has submitted that the assessee has no objections if the directions of the DRP is reversed and no turnover filter is applied. Accordingly, in view of no objection of the assessee's counsel, we decide this ground in favour of the revenue and set aside the directions of the DRP so far as applying the turnover filter. Deduction u/s 10A - exclusion of reduction of expenses on telecommunications, freight and insurance incurred in foreign currency from export turnover as well as total turnover - HELD THAT:- On perusal thereof we find that the issue before us for adjudication i.e. if expenditure incurred on telecommunication, insurance and freight charges and on travel in foreign currency attributable to the delivery of computer software abroad is reduced from export turnover an equal amount should also be reduced from total turnover while computing the deduction u/s 10A is covered in favour of the assessee by the decision in the case of Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT]. Exclusion of 7 companies from the set of 10 comparables selected by the TPO - HELD THAT:- Exclusion of Functionally dissimilar /indifferent companies not comparable with a captive service provider as that of assessee. Companies also excluded as not satisfying the tolerance range of 15% RPT filter. E-clerx Services Limited - As discussed by the Special Bench in the case of Maersk Global Centres (India ) (P) Ltd [2015 (1) TMI 917 - ITAT MUMBAI] this company provides data analysis, operating management, audits, reconciliation, metrics management and operating services. It has two business verticals – financial services, retail and manufacturing. It was found to have being providing complete business solutions in the nature of high end services. The nature and different field of services provided by this company clearly show that it is not functionally comparable with the ITES. Accordingly, we direct the TPO/AO to exclude this company from the set of comparables. Infosys BPO Ltd. - Annual Report of this company to submit that this company commands substantial brand value, owns intellectual property rights and is a market leader with brand value, whereas the assessee is merely an ITES operating its business in India and does not possess either any brand value or own any intangible or intellectual property rights (IPRs). Disallowance of lease rentals - HELD THAT:- Tribunal has decided this issue by following the decision of Hon'ble Supreme Court in the case of ITDS Vs. CIT [2013 (1) TMI 344 - SUPREME COURT] as well as decision in the case of Rajshree Roadways Vs. Union of India [2003 (3) TMI 50 - RAJASTHAN HIGH COURT] . Following the decision of Hon'ble Gujarat High Court as well as Hon'ble Supreme Court (supra), we decide this issue in favour of the assessee and accordingly allow the claim of the assessee regarding lease rentals as an allowable revenue expenditure. It covers both the grounds of the assessee as well as revenue’s appeal. Consequently the Ground No.2 of the revenue’s appeal is dismissed and Ground II of the assessee's appeal is allowed.
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