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TMI Blog2013 (8) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.10.2005, the petitioner filed its return of income for the Assessment Year 2005-06 declaring a loss of Rs.1,65,43,08,282/- under the normal provisions of the Act and book profit under Section 115JB of the Act at a loss of Rs.40,97,92,770/-. The petitioner claimed deduction under Section 10B of Rs.29,08,16,451 in respect of the profit derived from the unit at A-164, Sector 80, Noida. No such deduction was claimed in respect of the unit at 66, Udyog Vihar, Greater Noida. 5. Pursuant to the filing of the return, the Assessing Officer issued various questionnaires on 31.10.2007, 01.10.2008 and 14.11.2008 seeking details/ explanations from the assessee. The questionnaires among other details sought explanation from the assessee qua the claim under Section 10A/10B of the Act as well as claim of deduction of deferred revenue expenditure for technical know-how fee. The petitioner/assessee responded to the questionnaires and submitted the requisite information/explanation. 6. The assessment of the petitioner was completed under Section 143(3) of the Act and the claim of the petitioner under Section 10B and deduction of deferred revenue expenditure for technical know-how fee were accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1,80,05,185/- & Rs.6,41,36,441/-, being expenditure on technical knowhow pertaining to financial years 2001- 02 and 2002-03. Out of the above, Rs.19,29,127/- & Rs.25,72,170/- were debited to P&L a/c in F.Y. 2001-02 and 2002-03 itself as Miscellaneous Expenditure written off. Out of the remaining Misc. expenditure of Rs.7,76,40,029/-, Rs.5,20,83,202/- was capitalized and Rs.2,55,56,827/- was written off during financial year 2003-04. Hence, no balance remained out of the above expenditure to be written off. Thus, the deduction of Rs.1,36,90,211/- was inadmissible and should have been disallowed. This mistake resulted in underassessment of income of Rs.1,36,90,221/- involving tax effect of Rs.72,63,911. The failure on the part of the assessee to disclose true and correct particulars of its income. Thus, I have reason to believe that income of assessee to the extent of Rs.1,46,18,527/- has escaped assessment by way of not declaring true and correct income. Thus, there is failure on the part of the assessee to fully and truly disclose true particulars of its income and the same is required to be reassessed and taxed which requires reopening of assessment by initiation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing the material on record and to change the opinion formed earlier. 14. The original assessment order passed by the Assessing Officer was under Section 143(3) of the Act. The reasons to believe recorded prior to the issuance of notice dated 04.05.2011, pertain to the following: - (i) Deduction under Section 10B of the Act; (ii) Deduction on account of deferred revenue expenditure being expenditure on technical know-how. 15. With respect to the deductions under Section 10B, the record reveals that the petitioner alongwith the return of income had enclosed the profit and loss account of both the units as well as the computation of deduction under Section 10B in respect of both the units. In the notes filed to the computation of income, the petitioner had specifically disclosed that no deduction was being claimed in respect of the unit at Greater Noida on account of loss in the said unit and had stated as under :- "1. Claim of benefit u/s 10B of the Income tax Act, 1961 ('the Act') The assessee company is engaged in the business of manufacturing of compact disks, magnetic disks and other optical storage media devices, and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons to believe recorded in respect of the deferred revenue expenditure, it is pertinent to note that the petitioner in Note No.2 attached with the return of income explained as under:- "3. Deferred Revenue Expenditure Written Off The balance in Miscellaneous expenditure written off as per annual accounts of March 31, 20013 was Rs.77,640,029 (sum of Rs.16,076,058 and Rs.61,563,971, being expenditure incurred on technical know-how i.e. Rs.18,005,185 and Rs.64,136,141 less Rs.1,929,127 and Rs.2,572,170 debited in profit and loss account in FY 2001-02 and FY 2002-03 respectively). Out of the above, Rs.52,083,202, being technical know-how has been capitalized in the books of account by adjusting the opening balance and remaining Rs.25,556,827 has been written off during the FY 2003-04. However, as the Company would deserve the benefit from technical knowhow for years to come, by relying on the Supreme Court judgment rendered in Madras Industrial Investment Corporation Ltd. Vs. CIT (225 ITR 802), the Company has deferred the cost of acquisition of technical know-how for a period of six years while computing taxable income. Accordingly, a deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2004-05, a similar issue with regard to the claim of deduction under Section 10B was raised by issuance of a notice under Section 148 by the Deputy Commissioner of Income Tax. The petitioner had filed a writ petition - W.P.(C) 7677/2011, which was allowed vide judgment dated 06.12.2012 and the notice and the proceedings consequent thereto were quashed. The Court while allowing the petition held as under: - "17. In the present case, the original return of the assessee was subjected to scrutiny assessment, under Section 143 (3). The assessee was apparently closely questioned on various aspects, including its claim for treatment of the three units, under Sections 10-A/10B of the Act. In response to a query raised by Respondent No.1, the Petitioner by letter dated 21.02.2005 furnished information regarding the units eligible for deduction u/s 10A/10B. In the reply the Petitioner listed all three units as units eligible for claiming deduction. The issue of deduction under Sections 10A/10B was specifically examined by the Assessing Officer during the original assessment. Furthermore, Form 56F/56G was also submitted along-with the return of income. In the forms the Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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