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TMI Blog2012 (10) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court in the cases of the CIT(A) ought to have dismissed the appeal. 3. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored." 2. In all the above grounds of appeal, the Revenue has challenged the order of the CIT(A) holding the re-assessment proceedings as invalid. 3. The brief facts of the case are that the assessee is engaged in the business of manufacture of Diesel Engines. For assessment year 2002-03, the assessee filed return of income on 30.10.2002 at an income of Rs. 35,29,22,361/- which was revised on 20.3.2003 at an income of Rs. 35,18,34,020/-. The assessment u/s 143(3) was completed on 31.1.2005. subsequently, notice u/s 148 was issued on 20.3.2009 and in the re-assessment completed u/s 143(3) r.w.s 147 dated 11.12.2009, the assessment was made at an income of Rs. 35,94,45,355/-. In the re-assessment, the Assessing Officer disallowed the expenditure towards technical assistance fee as capital in nature. 4. Aggrieved by the said order of the Assessing Officer, the assessee filed appeal before the CIT(A) and challenged the re-opening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 28-09-2004 & 09-12-2004 furnished the details as required by the Assessing officer and the Assessing officer after considering the reply completed the assessment u/s. 143(3) dated 31.01.2005 without making any disallowance. 7. Now the Assessing officer has reopened the assessment by issue of notice u/ s.148 on 12-06-2009 to disallow the technical assistance fee paid to AVL List GMBH as capital in nature. All the facts were available with the Assessing officer at the time of completing the scrutiny assessment. Therefore reopening of assessment on the same set of facts which were available on record at the time of original assessment is only a mere change of opinion and also barred by limitation. Under proviso to sec.147 an assessment completed u/s.143 (3) cannot be reopened beyond 4 years' unless there is failure on the part of The assessee to disclose fully and truly all the material facts. In the present case all the materials were disclosed at the time of original assessment hence reopening of assessment is bad in law." 8. The CIT(A), after considering the submissions of the assessee, has held as under: "4.2. I have carefully considered the facts of the case and the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me and not on change of opinion. Also the AO has no power to review and has the power to only re-assess. In view of the above authoritative precedents, I am of the considered opinion that the reassessment proceedings were not valid. Accordingly, the ground of appeal is allowed. The appellant succeeds on this ground. 4.3 I find no reasons to deviate from the finding given by me in the earlier year in the appellant's own case, which has since been confirmed by the Hon'ble ITAT in I.T.A.No.857/2010 dated 19.8.2010. Accordingly, this ground of appeal is allowed." 9. The DR vehemently argued and supported the action of the Assessing Officer in re-opening the assessment. 10. On the other hand, the A.R of the assessee submitted that on similar ground, re-opening of assessment was made in assessment year 2001-02. The CIT(A), in assessment year 2001-02, has held the reopening of the assessment as invalid. The Revenue appealed against the said order of the CIT(A) before the Tribunal and the Tribunal, vide order dated 19.8.2010 in I.T.A.No. 857/Mds/2010 confirmed the order of the CIT(A). It was the submission of the A.R of the assessee that payment of technical fee was made to the very sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the reasons recorded by the Assessing Officer as quoted by the CIT(A) in his order that similar issue was considered by the Assessing Officer in re-assessment proceedings for assessment year 2001-02. In assessment year 2001-02, the CIT(A) held the reassessment proceedings to be invalid which was confirmed in appeal by the Tribunal. We also observe that the Tribunal in assessment year 2001-02, has held as under: "3. Short facts apropos are that the assessee had filed original return for the impugned assessment year declaring income of Rs. 35,64,40,434/- which was later revised through a revised return to Rs. 35,64,17,704/-. Assessment was completed u/s 143(3) of the Act on 25.3.2004. Thereafter, notice was issued on 28.3.2008 u/s 148 of the Act for reopening the assessment and the reason given was as under: "It is found that the assessee has made a claim of Rs.2,62,30,965/- as expenditure on "product development expenses". Out of these expenses a sum of Rs.1,82,75,250/- has been paid by this assessee to M/s.AVL towards "Technical assistance fee" for the development of new SJ Series Engine in research development department. As per the agreement with AVL vide article 4 of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was developing basic engineering details for a new engine which was forwarded to Austria for comments of AVL and based on such comments, improvements suggested were carried out. Thereafter, R & D department developed prototype engine and carried out testing again through AVL, Austria. Crux of its submission was that all such details were submitted to the Assessing Officer and therefore, reopening was merely on a change of opinion. Reliance was placed on the decision of the Hon'ble Apex Court in the case of CIT Vs. Kelvinator of India Ltd 320 ITR 561 and CIT Vs. Cholamandalam Investments and Finance Company Ltd of Hon'ble Jurisdictional High Court 309 ITR 310. Ld. CIT(A), appreciating the contentions of the assessee held that there was no failure on the part of the assessee to furnish full and complete particulars during the course of original assessment proceedings and hence reopening done was invalid. 5. Now before us, the ld. D.R. strongly supported the order of the Assessing Officer. 6. Per contra, the ld. A.R. submitted that the ld. CIT(A) had rightly relied on the decision of the Hon'ble Apex Court in the case of Kelvinator of India Ltd [supra] and held the reassessment pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equipped with necessary testing and design facilities for carrying out this activity. For design, we have Pro E software to create 3D models of our engines and components. 20 drawings are made for manufacturing. In testing, we have facilities to check combustion parameters for optimizing the performance to meet the above said objectives." Annexure to the above reply, enclosed by assessee gave breakup of the product development expenses in a very detailed manner. Assessee had also given present status of its R & D programme with regard to the development of the Engine and also brought to the attention of the Assessing Officer recognition given by Ministry of Science and Technology on 3.6.2003 for its research & development unit. In the balance sheet attached to the returned income, assessee had clearly given break up of the R & D expenses. Thus, without doubt, assessee was asked the details of R & D expenses and it had furnished complete details including the break up. Original assessment was completed only after considering such replies and queries. If that be so, reasons mentioned by Assessing Officer for reopening, reproduced at para three above, can only be considered as a cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing products and test them at our end. We send engines after establishing satisfactory performance at our end to ARAI, (Automobile Research Association of India) to measure the emission constituents. We carry out at ARAI development test to assess the present status of the product, type approval test to meet legislative requirements and conformity of production test ARAI is an approved certifying lab. To meet the competition and marked requirements, we develop newer products. For this activity, we avail external assistance during design and testing. Based on the above activities, we now have products meeting Bharat stage II(Euro IT) emission norms for vehicular engines. In the same way, our" tractor engines meet the current Indian regulation Term II. For export of tractors, we have emissionised product meeting US tier II norms. In the genset segment, we have products which meet current CPCB norms. The engines offered for industrial application meets the norms applicable for this segment. These activities are carried out in a separate setup in our company. We are equipped with necessary testing and design facilities for carrying out this activity. For design, we have Pro E softwa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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