As rightly submitted by learned counsel for the assessee, the impugned order of the learned Commissioner of Income-tax (Appeals) is well reasoned and well discussed on this issue and the same is self explanatory as regards the reasons given by him for deleting the additional disallowance of Rs. 5,98,139 made by the Assessing Officer under section 14A. As held by him relying on the decision of the hon’ble Bombay High Court in the case of Godrej and Boyce Mfg. Co. Ltd. (supra), rule 8D applied by the Assessing Officer to work out the disallowance under section 14A was not applicable to the year under consideration.
Facts are not in dispute inasmuch as it is also not in dispute that the assessee has paid the amount of service tax of Rs. 41,97,663/- before the due date of filing of return, therefore, the ld. CIT(A) has rightly deleted the said disallowance. As regards other disallowance of service tax payable Rs. 48,10,998/- we find merit in the plea of the ld. counsel for the assessee that the issue is covered in favour of the assessee by the decision of the Tribunal in Pharma Search (supra) wherein the Tribunal after considering the decision of Chowringhee Sales Bureau (P.) Ltd. v. CIT [1977] 110 ITR 385 (Cal.), Real Image Media Technologies (P.) Ltd. (supra) and other decisions held as under:-
The language of this proviso to section 92C(2) makes it clear that selecting a price within the range of +-5% of such arithmetic mean if more than one price is determined by the most appropriate method. Therefore, the ALP shall be taken to be in the range of ± 5% of arithmetic mean of more than one price. Since in this case, one comparable is considered as ALP; therefore, the benefit under the said proviso would not be available.
It is seen that the assessee requested the other two companies to make the expenditure on their behalf by way of scientific research as it was not having sufficient funds at that time. This fact is not disputed by the Revenue or disproved by them. Therefore, the payment was made by the other two companies to the CMI. Even though they made the payment and obtained receipts in their name, the fact remains that they have not claimed any deduction nor shown those expenditure in their books of accounts .
Tribunal proceeded to decide certain issues on merits without giving full opportunity to the aggrieved party to make submissions thereon, the order did certainly suffer from an error apparent on the record. Tribunal, therefore, committed no error in exercising power of rectification. We may, however, clarify that by recalling the said order, the Tribunal cannot seem to have recalled its earlier conclusions.
If the claim of the Revenue that both the assessments were completed by the same officer one under s. 158BC and the other under s. 158BD is correct, then certainly the review has to be allowed as Manish Maheshwari’s case (supra) has no application. We, therefore, allow the review petition by recalling the judgment and by allowing the income-tax appeal by vacating the orders of the Tribunal with following direction to the Tribunal. If, on verification by the Tribunal it is noticed that assessments on both assessees one under s. 158BC and the other under s. 158BD are completed by the very same AO, Tribunal will treat the appeal as allowed by treating their orders as cancelled and by restoring the appeal before the Tribunal for them to take decision on merits after hearing both sides.
