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TMI Blog2011 (9) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... rned with the additions made, which were later on made subject matter of appellate proceedings. 3. After reassessment notice under Section 147/148 of the Act dated 18th April, 2007 was served, the petitioner filed the same return as was originally filed and requested the respondent No. 2 to furnish the reasons recorded for reopening of the assessment. 4. The reasons for re-opening read as under:- "On going through the assessment record, it is noticed that the assessee in its computation of income deducted Rs.42,73,617/- being amount written back credited to PandI. Account considered separately u/s 41. However, out of this sum, the assessee considered only Rs.32,29,341/- as income u/s 41. Thus, the excess decuction of Rs.10,44,276/- has escaped assessment. (ii) Also the assessee had debited Rs.1,21,48,167/- as royalty which included Rs.1,17,21,488/- paid to the joint venture foreign company since this expenses were incurred for enduring benefit of the business and is also covered under intangible asset, the same is needed to be capitalized as intangible assets and depreciation @ 25% is allowable. Hence, Rs.87,91,116/- has escaped assessment. " 5. The petitioner filed objections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een made, but- (i) Income chargeable to tax has been under-assessed; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed. Further, the contention raised that details of royalty paid, proof of challans of tax deducted were furnished during the assessment, the assessee had only provided procedural details like proof of TDS deducted and challan thereon. The substantive issue i.e. whether royalty is to be considered as revenue or capital expenditure was not discussed during the assessment proceedings. No such explanation is available on record. Also, the facts of the case laws quoted by the assessee are not similar to the reasons in this case. Hence, reasoning of the Assessing Officer that the income for the AY 2003-04 had escaped assessment is within the meaning of above explanation. Hence the objection raised by the asessee is not accepted and the same is rejected." 8. It is apparent from the reasons mentioned above that the Assessing Officer did not find any justification or ground to continue with the reassessment proceedings in view of the objection filed for reason No. 2, i.e. amount of profit chargeable under Section 41 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments available. What happened to the other papers is not stated and no answer is forthcoming from the Revenue. 12. With regard to royalty payment, the petitioner had stated in the objections that during the course of original assessment proceedings the petitioner had submitted a reply on the royalty paid. The respondent No. 2 in the order dated 15th October, 2007 has not adverted to or referred to any reply. It is stated that no such explanation was available on record. The factum that the original record, except for the papers mentioned in paragraph 11 above were missing is not adverted to. The petitioner has placed on record with this writ petition, as Annexure B, a note of royalty payment and it is stated that the said note was furnished during the course of the original assessment proceedings. Reference to the said note is made in paragraph 3(f) of the writ petition. In the counter affidavit/reply filed to the writ petition, the respondents have not specifically dealt with and denied the allegation that during the course of the original assessment proceedings the petitioner had filed the note on royalty paid and claimed that the payments were revenue expenditure. It may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inue. Renotify on 03.11.2008. CM No. 17313/2007 in WP (C) No. 8273/2007 Renotify on 03.11.2008" 14. Thereafter in the order dated 3rd November, 2008 it is mentioned that the petitioner, after conducting inspection of the records, had prepared the affidavit and filed the same. The respondents were again directed to permit inspection of the original assessment records to the petitioner so that the query raised as recorded in the order dated 22nd September, 2008 could be answered properly. Thereafter, on 11th February, 2009 the following order was passed:- "In the records that have been produced before us Ms Prem Lata Bansal accepts that the Revenue's letter dated 27.10.2004 is not available. The only inference that can be drawn is that the complete records have not been brought to Court. We direct that the entire record be produced on the next date of hearing." 15. In view of the aforesaid discussion, the core issue is a short one. The issue that needs examination is whether the question that royalty payable was in the nature of revenue expenditure, and not capital expenditure, was examined during the original assessment proceedings. In case the said aspect was discussed/conside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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