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2018 (6) TMI 1822 - AT - Income TaxTP Adjustment - Comparable selection - HELD THAT:- Assessee is engaged in the business of providing non-binding investment advisory services pertaining to investment opportunity available in India to its Associated Enterprises (AE) named Apax Partners UK Ltd., located in UK, thus companies functionally dissimilar with that of assessee need to be deselected from final list. Computation of RPT transactions - The co-ordinate bench in the case of Goldstar Jewellery Design P Ltd [2014 (11) TMI 904 - ITAT MUMBAI] has observed that “the term “related party transaction” cannot be considered in its generic sense. It will encompass only such transactions between the related parties which directly affect the overall profitability in one way or the other”. A.R submitted that the reimbursements do not affect profitability and hence the same has to be excluded. We find merit in the said submissions. The reimbursement of expenses does not result in any profitability, i.e., it is mere compensation for the expenses incurred by one party on behalf of another party. Accordingly we direct the AO/TPO to exclude the reimbursements and accordingly compute RPT transactions. Accordingly we restore this comparable to the file of AO/TPO for considering it afresh. Assessee has opted for Advance Pricing Agreement (APA) for AY 2010-11, wherein the assessee has accepted determination of higher margins - We notice that Rule 10MA provides for the methodologies of Roll back of the APA and clause (iv) of sub rule (2) of Rule 10MA states that there should be a request from the assessee for roll back of APA. In the instant case, admittedly, there is no request from the assessee for roll back. Hence we do not agree with the submissions made by the Ld D.R. Accordingly we restore the issue of determination of ALP to the file of AO/TPO by considering the comparables approved by us in the preceding paragraphs by adopting single year data in terms of Rule 10B(4) of IT Rules. In the result, the appeal of the assessee is treated as allowed and the appeal of the revenue is dismissed.
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