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2017 (8) TMI 1561 - AT - Income TaxTP Adjustment - Comparable selection - TP issue including the turnover filter and 0% RPT filter applied by the DRP - HELD THAT:- As regards the turnover filter applied by the DRP and challenged by the revenue, the learned Authorised Representative of the assessee has submitted that the assessee has no objection if the directions of the DRP to the extent of applying the turnover filter are set aside. However the companies which were excluded by the DRP on this ground may be excluded on functional dissimilarity. In view of the statement of learned Authorised Representative that the assessee has no objection if the directions of the DRP to the extent of applying the turnover filter are set aside. We set aside the directions of the DRP to the extent of applying turnover filter in respect of the comparables selected by the TPO. The functional comparability of those companies will be examined separately. 0% RPT filter by DRP - when there is good number of comparables available then, we concur with the view of the co-ordinate bench that the RPT filter of 15% is proper in the case of the assessee. Accordingly we direct the Assessing Officer/TPO to exclude the comparable companies having the revenue of more than 15% from related parties. Since we have determined the RPT filter at 15% and the assessee has agreed not to apply any turnover filter, the only issue remained to be decided is functional comparability of various companies selected by the TPO and objected by the assessee. Tribunal in the case of DCIT Vs. Electronics for Imaging India (P.) Ltd. [2016 (2) TMI 1123 - ITAT BANGALORE] companies not functionally comparable to the assessee and therefore the TPO / A.O is directed to exclude these companies from the set of comparables. MINDTREE LIMTIED - There is a restructuring in this company which has influenced the profits however, the decision relied upon by the learned Authorised Representative in the case of HSBC Electornic Data Processing (I) Pvt. Ltd. Vs. ACIT [2015 (1) TMI 1063 - ITAT HYDERABAD] is not directly on the comparability of this company but it was in respect of some other company which was under restructuring of event like merger, demerger, etc. In the facts and circumstances of the case and in the interest of justice, we set aside the issue of functional comparability of this company to the record of the TPO/A.O. for considering the objections raised by the assessee and fresh adjudication. Exclusion of telecommunication expenses from the export turnover while computing the deduction under Section 10B - HELD THAT:- As per the definition of export turnover provided in Expln. 2 below Section 10B(9A), the export turnover does not include freight, telecommunication charges or insurance attributable to the delivery of article or thing or computer software outside India or expenses if any incurred in foreign exchange in providing the technical services outside India. Thus from the plain language of the definition of the export turnover, it is clear that the expenses which are not in the nature of freight, telecommunication charges or insurance attributable to the delivery of article or thing or computer software outside India but expenses incurred in foreign exchange are to be excluded only when the same are incurred for providing technical services outside India. In the case of the assessee, the assessee has claimed that the traveling expenses incurred by the assessee are not for providing the technical services outside India and therefore the same are not required to be excluded from the export turnover. On principle, we do agree with the contention of the learned Authorised Representative that if the expenditure other than the freight, telecommunication charges or insurance attributable to the delivery of article or thing or computer software outside India incurred in foreign exchange not for providing the technical services outside India then the same are not required to be excluded from the export turnover.
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