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2014 (11) TMI 346 - AT - Income TaxTransfer pricing adjustment – Selection of comparables – Brescon Corporate Advisors Ltd – Segmental data not provided - Held that:- The company is engaged in carrying on merchant banking and investment activities along with providing project advisory services - A look at the Annual accounts of Brescon Corporate Advisors Ltd. indicates that it has two streams of income, namely, ‘Fee based financial services’ and ‘Other income’ - The assessee’s activity is to tender advice to the Manager about the avenues for making investment in real estate, and, if the Manger agrees to go ahead with such investment opportunity, then, to get involved in the process of finalization of the deal and then provide support services, including maintenance of books of account etc., on the clicking of the deal – there is no rationality in including this company in the list of comparables since no segmental data of the advisory services by this company is available, which component is very small vis-a-vis the entity level operations - Availability of separate data could have possibly made it comparable with the assessee – thus, the company is directed to be excluded from the list of comparables. Khandawala Securities Ltd. – Held that:- There is no data of net income of this component on segment level, except for its gross revenue - it includes equity capital markets transaction execution, mergers and acquisitions advisory, capital raising advisory and transaction execution relating to structured finance, real estate and infrastructure - Thus, out of total of 46% of the gross revenues of this company lying under the overall ‘Corporate advisory services division‘, it is manifest that only some of the activities undertaken by it bear some similarity to those carried on by the assessee - The fact that apart from entity level, no details of this overall segment of ‘Corporate Advisory Services’ are available, further cements the viewpoint – the company is directed to be excluded from the list of comparables. Sumedha Fiscal Services Ltd. – Held that:- The segmental data is available but such segment with the caption ‘Consultancy services’ also encompasses loan syndication, merchant banking, restructuring and other related advisory services apart from consultancy services - The composition of consultancy services simpliciter in this overall segment, which is akin to that of the assessee is not ascertainable - Since the advisory services are not separately identifiable from this broader segment of consultancy services, the overall consultancy segment of the company cannot be considered as comparable – thus, the matter is to be remitted back to the TPO for determination of ALP of the international transaction by considering the remaining four companies as comparable - Decided in favour of assessee. Disallowance u/s 14A r.w. Rule 8D – Held that:- The assessee earned exempt income and did not offer any disallowance u/s 14A - The AO recorded proper satisfaction that the provisions of section 14A were attracted as the assessee had incurred some expenditure for making investment, which was not offered for disallowance – in Maxopp Investment Ltd. Vs. CIT [2011 (11) TMI 267 - Delhi High Court] it has been held that the provisions of section 14A are attracted in such situations - As the assessment year under consideration is 2008-09, the prescription of rule 8D would apply - the AO was fully justified in making disallowance under clause (iii) of rule 8D at 0.5% of the average value of investments – Decided against assessee.
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