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2016 (2) TMI 995 - AT - Income TaxAddition on account of transfer pricing adjustment - Held that:- Unable to accept argument that the comparables should be selected on the basis of similarity even under TNMM. The Hon’ble High Court has laid down that selection of comparables does not differ with the method adopted. Ex consequenti, it is no more open to argue that the functional dissimilarity of the companies under the overall broader category can be ignored under the TNMM. In view of the foregoing discussion, we find the functional similarity of Apitco Limited lacking on entity level with the assessee company. As such, we order for its exclusion from the final set of comparables. Global Procurement Consultants Ltd. can be considered as comparable to the assessee company. We, therefore, order for the elimination of this company from the final list of comparables. NTPC Electric Supply Ltd.'s activities carried out by the assessee in facilitating purchase and sale of goods for its AEs, can by no standard, be compared with the nature of activity carried out by NTPC Electric Supply Ltd. We, therefore, order for the exclusion of this company from the list of comparables. Askme Info Hubds Ltd. hardly bears any similarity with the assessee company. We, therefore, reject the assessee’s contention for including this company in the list of comparables. Crisil Research & Information Services Ltd only reason given for its exclusion is the nonavailability of data for the relevant financial year. The ld. AR fairly admitted that it is not possible to deduce operating profit margin of this company for the financial year ending 31.3.2007 on the basis of information as is available in public domain. As such, we hold that the authorities were justified in excluding this company from the list of comparables on this score alone. Addition towards the expenditure incurred on account of leasehold improvements by treating the same as capital in nature - Held that:- It is evident from the description of the items on which the above referred expenditure has been incurred that it is a case of renovation of premises immediately after taking it on lease. As such, there can be no question of replacement. We cannot help if the Revenue has accepted the part deletion of disallowance by the ld. CIT(A). Be that as it may we are concerned only with the items of disallowance raked up in the appeal before us and hold that the ld. CIT(A) has taken unimpeachable view in treating the instant amount as capital expenditure. Claim of depreciation - Held that:- In order to bring any amount within the ambit of Explanation 1 to section 32, it is paramount that the expenditure incurred by the assessee on the premises in the capacity of non-owner should firstly be in the nature of capital expenditure and then it should fall within any or both the clauses as discussed above. If these conditions get satisfied, as is the case under consideration, then the amount incurred for such works falls for consideration under Explanation 1 to section 32. In other words, the amount so incurred would be capitalized entitling the assessee to depreciation as per the eligible rate. In view of the foregoing discussion, we uphold the impugned order on this issue subject to grant of depreciation.
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