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.
The issue involved in the present case is relating to the determination of arm’s length price in relation to the international transactions involving payment of royalty by the assessee company to its associated enterprises. As provided in section 92C of the Act, such arms’s length price is to be determined by one of the methods prescribed, which is found to be the most appropriate method having regard to the nature of transaction or class of transaction or class of associated persons or functions performed by such persons or such other relevant factors as may be prescribed. The manner in which such most appropriate method is to be applied for determination of arm’s length price is prescribed in Rule 10B of Income-tax Rules, 1962.
Section 2(14) defines ‘capital asset’ as property of any kind held by an assessee. The term ‘property’ encompasses in its ambit bundle of rights. This includes every conceivable species of valuable rights and interests. The right to dispose off a thing in every legal way, to possess it and to use and to exclude everyone from interfering with it, comes within the ambit of property. The exclusive right of possessing, enjoying and disposing off a thing comes within the term of ‘property’. The assessee had perpetual right of possession of suite and was entitled to transfer the same by virtue of seventh covenant noted above. Therefore, long term advance booking by virtue of which assessee got right to possession was ‘capital asset’ within the definition of section 2(14) and, therefore, on transfer of the same long term capital gain accrued to the assessee and assessee was, accordingly, entitled for indexation of cost of acquisition.
The view of the Larger Bench that the assessee had to be directly engaged in developing, maintaining and operating the facility and that there had to be a complete development of the facility and not just a part of it is contrary to the law laid down in ABG Heavy Industries 322 ITR 323 (Bom). The High Court held that The assessee did not have to develop the entire project in order to qualify for a deduction under s. 80-IA. The Parliament did not legislate a condition impossible of compliance.
In the case of activities sought to be classified under site formation service our prima facie view is that this activity is classifiable as mining activity and liable to service tax only from 1-6-2007 and such tax is being paid. Demand of service tax under site formation service does not appear to be prima facie maintainable in this case where during the relevant period the definition did not cover the activity specifically and later a specific entry is introduced to cover the activity. So at this prima facie stage, we find that the appellants have made out a strong case for waiver of pre-deposit of dues arising from the impugned order for admission of appeal. We order so and there shall be waiver on collection of such dues during the pendency of the appeal.
The sum paid was also not in the nature of compensation because there was no obligation on M/s Gillette Company USA, under any contract to compensate the assessee. Under these facts we do not find infirmity in the decision of the first appellate authority in treating the amount of Rs. 108.49 crores out of an aggregate addition of Rs. 118.49 crores made by the AO as capital receipt and hence not chargeable to tax. In this regard we also find support from the decisions relied upon by the Ld. AR in the cases of Smartalk (P) Ltd. (supra) and General Electrodes & Equipment Ltd. (Supra) wherein under almost identical circumstances addition made has been deleted.
Moreover, in the subsequent year i.e 2008-09 & 2009-10 the cup method as adopted by the assessee for benchmarking its international transactions has not been disputed by the revenue. Further, when the relevant data are now available, as stated by the ld Sr counsel, then it is appropriate to determine the ALP by adopting the same method as it was accepted in the subsequent year.
