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2019 (10) TMI 1191 - AT - Income TaxTP Adjustment - Comparable selection - HELD THAT:- Referring to Software design and development service segment being technical support services provided by assessee to its AE’s companies functionally dissimilar with that of assessee need to be deselected from final list Comparability is to be carried out on broad object of benchmarking international transaction and according to law laid down under section 92B of the Act, read with rule 10 B (2) Income tax Rules, 1963. Comparables must be similar in material aspects and must be compared on basis of products/services characteristics, functions undertaken, assets used and risk assumed. Merely because certain comparables has been upheld for its exclusion/inclusion by various decisions, does not ipso facto lead to exclusion/inclusion in a given set of facts. In our considered opinion, exclusion/inclusion of any comparables must be strictly analysed on basis of FAR, in accordance with rule 10 B (2). We also are of opinion that comparables selected must be for relevant year which is to be compared and unless contemporaneous data as section 92D read with Rule 10 D (4), is not available for a relevant year, multiple year data should not be used. Treatment of royalty paid by assessee to its AE - HELD THAT:- It is observed that assessee has placed substantial evidence which was not before the authorities below. We are therefore inclined to set aside this issue back to Ld.TPO/AO, for determination of this issue in the light of these documents vis-a-vis the agreement entered into by assessee with its AE under which the royalty has been paid. - Set aside this issue back to Ld. TPO to verify the issue on basis of documents filed by assessee and to establish true nature of transaction regarding payment of royalty by assessee to its AE. Ld.TPO is directed to verify details and if necessary called for any further documents in order to establish the true nature of the transaction regarding the payment of royalties by assessee to its AE and consider the claim of assessee as per law. Deduction u/s 10 A - export turnover being unbilled revenue, which was yet to be billed - HELD THAT:- Before us assessee has not been able to establish that RBI extended time period to receive income arising out of export of services declared during the year under consideration. In decisions relied upon by Ld.AR in case of Tech Mahindra R&D Services Ltd [2018 (5) TMI 1081 - ITAT MUMBAI] assessee therein received income within 6 months of invoice being raised and therefore this Tribunal held that revenue should be included in export turnover and also the total turnover. In the facts of present case, assessee raised invoice in March 2008 that is end of subsequent financial year, for which assessee do not have any permission from RBI regarding extension of time. We are therefore unable to concur with the argument advanced by Ld.AR. Accordingly this ground raised by assessee stands dismissed. Deduction u/s 10A - Exclusion of telecommunication expenses while computing deduction - HELD THAT:- It is observed that, Hon’ble Karnataka High Court in case of CIT vs Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] on identical issue held that telecommunication expenses is to be included while computing deduction under section 10 A of the act as it is directly linked with earning of income. Ld CIT DR has not brought before us any contradictory/distinguishable facts in respect of present case before us - we direct Ld.AO to include telecommunication expenses while computing exempt income u/s10A of the Act.
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