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2018 (4) TMI 506 - AT - Income TaxReopening of assessment - TDS u/s 194J on services provided for roaming charges - assessee did not deduct tax at source on the sale - eligibility of reasons to believe - Held that - During the original assessment proceedings, the AO had made inquiries about roaming charges, that the assessee had detailed submissions in that regard, that being satisfied with the explanation of the assessee, he passed an order u/s. 143(3) of the Act, that during the original assessment he allowed the roaming charges and did not invoke the provisions of section 40(a)(ia)of the Act, that in the notice issued u/s. 148 of the Act, the basis of reopening was applicability of section 40(a)(ia)of the Act with regard to roaming charges. There was no new material before the AO for issuing the notice u/s. 148. He had changed his opinion about application of the provisions of section 40(a)(ia). Reassessing the income of the assessee on such change of opinion is not permissible under the Act. The issue of roaming charges was deliberated upon during the original assessment, so, without bringing something new on record the AO should not have issued the reassessment notice. - Decided in favour of assessee.
Issues Involved:
1. Reassessment proceedings and the applicability of Section 40(a)(ia) of the Income Tax Act. 2. Deduction of tax at source on roaming charges under Section 194J and Section 195 of the Income Tax Act. 3. Legality of reopening assessment based on change of opinion. Detailed Analysis: 1. Reassessment Proceedings and Applicability of Section 40(a)(ia): The Assessing Officer (AO) initiated reassessment proceedings under Section 147/148 of the Income Tax Act, asserting that the assessee did not deduct tax at source on roaming charges, thereby disallowing the expenses under Section 40(a)(ia). The AO determined the income of the assessee at ?96.41 crores, highlighting that the payments for roaming charges were in the nature of revenue sharing and required tax deduction at source under Section 194J. 2. Deduction of Tax at Source on Roaming Charges: The AO contended that both national and international roaming charges required tax deduction at source. For international roaming charges, the AO referenced Section 195, stating that the provisions were broader and the assessee should have obtained an order under Section 195(2) if it believed no tax was deductible. The AO cited ongoing litigation in the Supreme Court regarding Bharti Cellular Ltd., emphasizing that the matter of human intervention in international roaming was unresolved. The AO relied on the Skycell case from the Madras High Court, asserting that roaming charges constituted fees for technical services under Section 194J. 3. Legality of Reopening Assessment Based on Change of Opinion: The First Appellate Authority (FAA) found that during the original assessment proceedings, the AO had already scrutinized the details of roaming charges and allowed them as deductions under Section 37. The FAA noted that the AO had formed an opinion during the original assessment and there was no new material to justify reopening the case. The FAA referenced several cases, including Kelvinator of India Ltd., emphasizing that a mere change of opinion does not warrant reassessment under Section 147. The FAA concluded that the AO's action was based on the same material available during the original assessment, thus constituting a change of opinion, which is impermissible under the Act. Judgment: The Tribunal upheld the FAA's decision, affirming that the reassessment was not justified as it was based on a mere change of opinion without any new tangible material. The Tribunal referenced various judicial precedents, including Mohanlal Choradiya, Kedarnath, and Sahjanand Medical Technologies Pvt. Ltd., to support the view that reassessment should not be initiated without new information. The Tribunal concluded that the AO had no jurisdiction to initiate reassessment proceedings in the absence of fresh material. Consequently, the appeal filed by the AO was dismissed, and the Cross Objection (CO) of the assessee was allowed for statistical purposes. Order Pronounced: The order was pronounced in the open court on 04th April 2018, dismissing the AO's appeal and allowing the assessee's CO for statistical purposes.
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