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2017 (9) TMI 1340 - AT - Income TaxTPA - selection of comparable - Held that:- The assessee company, engaged in the business of providing Information Technology Enabled Services and Software Development services to its AE’s, thus companies functionally different with that of assessee need to be deselected from final list. International transaction of recovery of expenses - assessee prayed for deletion of 5% mark-up while the Revenue wants it to be recomputed at 25.73% as done by the TPO - Held that:- The expenses reimbursed are travel and visa processing charges. In our opinion, there could not be any markup on such expenses and particularly in the absence of any material on record that unreasonable credit facility has been extended to the AEs of the assessee for such reimbursement of costs. Further, the assessee has also adopted the CUP method to hold the transactions to be at ALP. Except for aggregating both the transactions at TNMM, the TPO has not been able to bring out any material on record to show that the reimbursement of expenses are excessive and therefore, at a markup. Further, in the case of Kirby Building Systems India Ltd [2014 (11) TMI 728 - ITAT HYDERABAD], the issue was of cost sharing exercise in implementing ERP systems in the group and ITAT held that it involves services by the said company, but in the case of the assessee, it is pure reimbursement of expenses incurred by the assessee and no service element is involved. Thus, DRP’s reliance on the said decision is clearly misplaced. Assessee’s ground of appeal is allowed and the AO/TPO is directed to treat the transaction to be at ALP and adjustment to be made at Rs. Nil.
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