Issue of whether the petitioner fell within the category of a ‘scientific research association’ or in the category of ‘other institution’ partly doing scientific research should be considered by the central government afresh in the manner indicated above and in accordance with law. To enable this, we are setting-aside the notification dated 12.04.2007 and direct the central government to decide this question afresh within three months. The central government will examine the observations above as also the requirements of Rule 5D of the Income Tax Rules, 1962. The writ petition is disposed of accordingly.
In this case Tribunal was wrong in holding that if one profit level indicator of a comparable, out of a set of comparables, is lower than the profit level indicator of the taxpayer, then the transaction reported by the taxpayer is at an arm’s length price. The proviso to section 92C(2) is explicit that where more than one price is determined by most appropriate method, the arm’s length price shall be taken to be the arithmetical mean of such prices. To this extent the appeal is allowed. However, as pointed out above, if this principle is applied to the comparables suggested by the assessee (which have not been rejected by the Transfer Pricing Officer), the arm’s length price suggested by the assessee would yet be acceptable in law. There shall be no orders as to costs.
The petitioner prays that the notification should be quashed in so far as it seeks to subject the activities of a business chit fund companies to service tax to the extent of 70% of the consideration received for the services. The contention of the petitioner is that there is no question of exempting a part of the consideration received for the services in chit fund business when the law provides that such services are not taxable at all in the first place.
The law seems to be well settled that unless and until there is some other evidence to indicate that extra consideration had flowed in the transaction of purchase of property, the report of the DVO cannot form the basis of any addition on the part of the revenue. In the present case there is no evidence other than the report of the DVO and, therefore, the same cannot be relied upon for making an addition. In these circumstances, the question which has been framed is decided in favour of the assessee and against the revenue. The appeal is dismissed.
In so far as the impugned order is concerned, there is nothing stated in the operative part which would seem to indicate that the CIC has come to the conclusion which it has, is based on the fact that, the economic interest of the country, will get effected. The CIC, in the operative part has merely recorded what has been conveyed to it vis-a-vis the procedure for selection of cases for scrutiny.
Merely because a financial loss would be suffered by the appellant qua the arbitration Awards which had been passed against him would not entitle him to come under the exception seeking a refusal of the restoration of the company. The position of the company vis-à-vis this stand is that a healthy company who was admittedly operational at the time when its name was struck off would be deprived of its right to function as a going concern and in the bargain would not be permitted to recover its dues which amounts have accrued to it under the Awards of the Arbitral Tribunal.
In the present case, there were undoubtedly three separate contracts entered into between the parties. One was for the supply of cables and the other two for supply of accessories, i.e., Jumpers, Connectors and Surge Arrestors. Both the parties have been dealing with each other for over seven years. The Petitioner itself being the manufacturer of cables and accessories knew that for the purpose of the business of the Respondent the mere supply of cables without the accessories could not be sufficient. The Respondent was in turn supplying cables and accessories to the telecom service providers including Tata Tele Services Limited (‘TTL’). The mere supply of cables to TTL would not have constituted a complete delivery of goods. The peak period in the telecom industry for the supply of cables was the first three months of the year. Therefore, the failure on the part of the Petitioner to supply the accessories would adversely affect the corresponding obligations of the Respondent to its customers.
It was observed by the CLB that if the Appellants failed to cooperate with NHEL for the determination of the value of the occupied premises, including land, plant and machinery and do not accept the fair value of the assets determined, the petition shall be deemed to have been dismissed. The impugned order thus makes it impossible for the Appellants to even question the valuation. Having succeeded in demonstrating oppression by the Respondents, the Appellants cannot be compelled to accept an arbitrary and unilateral determination of the fair value by the Respondents not based on any sound financial and accounting principles. The remedy provided by the CLB has thus been rendered illusory.
Supreme Court in the case of P. R. Prabhakar v. CIT [2006] 284 ITR 548 where the order of the Special Bench cited (supra) stands approved. It was clarified that the amendment made to clause (baa) of the Explanation below Section 80HHC which defines “profits of the business” in such a manner as to exclude receipts like interest, commission etc. which did not have an element of turnover, was introduced prospectively by the Finance (No.2) Act, 1991 w.e.f. the assessment year 1992-93 and the amendment did not operate retrospectively.
There is another aspect of the matter. The purport of unearned increase is to, in addition to the premium charged by the appellant DDA at the time of granting the lease, entitle the appellant DDA to share 50% of the increase in value of the leasehold rights from the date when the lease was given and till the date of transfer. The transfer of the leasehold rights in the present case, as aforesaid, is under the aegis of this Court. There is no doubt as to the consideration for the said transfer. It is not in dispute that the matter has throughout been pending in this Court on the issue of unearned increase. We are of the opinion that it would be highly unjust and unfair to ask the respondent M/s Aeroshine who though has purchased the leasehold rights at the rates of the year 1983-85, to pay unearned increase to the appellant DDA of the year 2004 or of today.
