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2015 (11) TMI 1279 - AT - Income TaxTransfer pricing adjustment - selection of comprables - Held that:- In acceptance of the 7 comparables selected by the assessee, arithmetic mean of 10.37% would place the assessee in a situation where the TP adjustment would become NIL. Since we find that the comparables worked out by the assessee are acceptable and the rejection of comparables made by the assessee from out of comparables selected by the TPO are justified, we direct the TPO to pass an order accordingly taking arithmetic mean of the assessee at 10.37%. The issue on TP adjustment with respect to software development services is set aside for statistical purposes. TP adjustment in respect of marketing support services - Held that:- We accept the comparables selected by the assessee inasmuch as only one comparable selected by the TPO viz., ICC International Agencies Ltd. was pointed out by the assessee as functionally dissimilar. The arithmetic mean of other three comparables viz., Access Global Solutions Ltd., Priya International Ltd. and Empire Industries Ltd. is at 14.54%. The assessee’s NCP margin being 10%, would be within the +/- 5% range. Hence, we are of the opinion that the claim of the assessee has to be allowed. We therefore direct the TPO/AO to redo the assessment accordingly. Disallowance of deduction claimed on advances written off - Held that:- We find that the premises has been taken on lease by the assessee and interior design works were carried out for the purpose of business to create ambience. The very fact that the premises was taken on lease for 9 years with a renewal clause would not itself make it a capital expenditure, when the fact remains that the assessee had prematurely stopped the designing work of the premises and terminated the contract with M/s. Space Matrix Design Consultants P. Ltd. It was brought to our notice that the premises was sealed by the Court pursuant to the order of the Delhi High Court as the premises was not in conformity with the applicable land use laws. It is a fact that the advances were written off as the assessee was not able to operate out of the premises and hence the same is allowable as a deduction u/s. 37 of the Act. The expenditure has been incurred for the purpose of the business and in the course of business and is clearly a revenue expenditure - Decided in favour of assessee.
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