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TMI Blog2010 (9) TMI 937X X X X Extracts X X X X X X X X Extracts X X X X ..... ble on inter corporate deposits. As per the learned authorised representative, there was no infirmity in the order of the Assessing Officer in so far as the deduction for payment of know-how fees as well as accrual of interest income on deposits, the Assessing Officer has applied his mind and thereafter allowed the same, thus the order of the Assessing Officer was neither erroneous nor prejudicial to the interests of the Revenue and the Commissioner of Incometax was not justified in setting aside the same under section 263 on these two issues for reconsideration afresh. On the other hand, it was contended by the learned Commissioner of Income-tax-Departmental representative, Shri D. N. Kar, that the assessee-company entered into an "intell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fined herein below) in the territory (as defined herein below) on the terms and conditions contained in this agreement. G. Vilter at the request of the Frick India and in consideration of Frick India giving such covenants as are hereinafter contained, has agreed by grant to Frick India the licence and right to use the trade mark "Vilter" on the products and parts in the territory upon and subject to the terms, conditions and stipulations hereinafter appearing. H. As an inducement to Vilter to enter this agreement and for other covenants undertaken by Frick India in connection herewith, Frick India has agreed that it will not compete with Vilter as provided herein. I. Vilter desires to purchase from Frick India, and Frick India is willing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follow the "principle of consistency" and also did not consider the relevant provisions contained in section 32(1)(ii) of the Income-tax Act read with Explanation 3(b) and Explanation 4 to section 32 of the same Act. Accordingly, it was contended that the order passed by the Assessing Officer was erroneous and prejudicial to the interests of the Revenue. The contention of the learned authorised representative was that during the course of assessment proceedings, the Assessing Officer has raised queries and issued questionnaire regarding alleged payments and the assessee has replied to the same, therefore, it cannot be said that the Assessing Officer has not applied his mind. However, ongoing through the record, we found that while allowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntal representative, there was no discussion at all on the allowability or otherwise of the deduction claimed by the assessee in the body of the assessment order and mere issue of questionnaire will not serve the purpose of making enquiries when the same has not been done. The learned authorised representative heavily relied on the order of the hon'ble Delhi High Court in the case of CIT v. Sunbeam Auto Ltd. [2009] TIOL-552-HC-DEL-IT wherein it was held that merely because the Commissioner of Income-tax was of different opinion in the matter, the powers under section 263 cannot be invoked. In reply to the same, the learned Departmental representative submitted that the decision in the case of Sunbeam Auto Ltd. (supra) was on peculiar facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... become erroneous in so far as prejudicial to the interests of the Revenue. We have considered the rival contentions and carefully gone through the orders of the authorities below and also deliberated on the case law cited at the Bar by the learned authorised representative and the learned Departmental representative in the context of the factual matrix of the case. From the record, we found that the assessee-company has entered into a technical know-how, intellectual property rights agreement with the U. S. company. The licence fee of 460,500 U. S. $ was payable. In the computation of income, the assessee has claimed deduction of Rs. 67 lakhs and added back an amount of Rs. 32.32 lakhs. In the view of the Commissioner of Income-tax, the al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee under departure to the view taken by the Department in the earlier years. Similarly, for the assessment year 2004-05, addition made on account of interest receivable on intercorporate deposit, was also not brought to tax during the year even though the amount remained outstanding. The hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 has held that an incorrect assumption of facts and an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders without application of mind. In the instant case before us, there was a composite agreement titled as "intellectual property licence and non-compete agreement" vide which several valua ..... X X X X Extracts X X X X X X X X Extracts X X X X
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