2011 (8) TMI 1166 - AT - Income Tax

Summary

Issues involved: Validity of reassessment u/s.147 r.w.s.148 of the I.T. Act, 1961 and treatment of technical know-how fees as capital in nature.

Validity of reassessment u/s.147 r.w.s.148:
The original assessment u/s.143(3) was completed on 19.03.2004, and later reopened by a notice u/s.148 on 06.03.2006. The CIT(A) rejected the challenge to the validity of reassessment. The appellant argued that the notice u/s.148 lacked prior approval of the Jt.CIT and that the reassessment was based on a change of opinion without new material. The AO's reopening was based on technical know-how fees being capital in nature. The Tribunal found that the notice u/s.148 was validly issued by the D.C.I.T. and no prior approval was required. As the AO had considered all details during the original assessment, the reassessment based on a change of opinion without new material was deemed unsustainable.

Treatment of technical know-how fees:
The AO treated the technical know-how fees as capital in nature, disallowing them and allowing depreciation at 25%. The appellant contended that the reassessment was invalid due to lack of fresh material and change of opinion. The Tribunal noted that the AO had already considered all details during the original assessment u/s.143(3). Citing legal precedents, it held that reassessment cannot be solely based on a change of opinion. As no new information emerged post-original assessment, the reassessment was deemed unlawful. Consequently, the reassessment was declared null and void, and the appeal of the assessee was allowed.

*Order pronounced on 24th August, 2011.*