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TMI Blog2015 (5) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue. The assessee submitted complete details of “Software License Fees” and justified its claim that the “Software License Fees” is in the nature of revenue expenditure and not capital expenditure. Only thereafter the Assessing Officer while framing the assessment, treated the payment of “Software License Fees” made to the Foreign Companies as revenue expenditure and allowed the deductions claimed and also accepted the claim of the assessee of deduction under section 10(B) of the Income Tax Act. It cannot be said that the assessee did not disclose fully and truly all material facts necessary for the assessment with respect to Software License Fees paid to foreign companies and also with respect to deduction claimed under sec.10(B) of the Act, and therefore, the income chargeable to tax has been escaped due to the failure on the part of the assessee to disclose fully and truly all material facts. Under the circumstances, the condition precedent for invoking powers under section 147 of the Income Tax Act to initiate reassessment proceedings beyond the period of 4 years are not at all satisfied. See Niko Resources Ltd. Versus Assistant Director of Income Tax,(2014 (9) TMI 892 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.06. That it appears that on receipt of the reasons recorded for reassessment, the assessee raised various objections submitting that there was no omission or failure on the part of the assessee to disclose truly and fully all material facts and therefore, the initiation of the reassessment proceedings beyond four years, was not valid. The assessee also raised various objections on merits also. 2.07. That vide communication / letter dated 16/9/2014, the Assessing Officer disposed of the objections raised by the petitioner assessee against the reopening of the assessment. Hence, the petitioner has preferred present Special Civil Application under Article 226 of the Constitution of India challenging the impugned reassessment proceedings for the A.Y. 2008-2009. 3.00. Mr.B.S. Soparkar, learned advocate appearing on behalf of the petitioner - assessee has vehemently submitted that the ground for reopening of the assessment is completely misconceived and baseless. It is submitted that in the present case reassessment proceedings have been initiated after a period of four years. It is submitted that therefore, escapement of income must also be occasioned by a failure on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 27 taxmann.com 322 (Delhi). It is submitted that reopening of the assessment, on the basis of the decision of any Court after expiry of four years from the relevant assessment year, is not justified merely because court pronounced the law to be otherwise than on the date of filing of the return of income when the assessee made a claim for deduction. It is submitted that in the case of Pune unit, relief of deduction was granted to the petitioner Company since the A.Y. 2005-06 and therefore, the assessee was entitled to continuation of that relief for the subsequent years. 3.04. Mr.B.S. Soparkar, learned advocate appearing on behalf of the petitioner - assessee has further submitted that even in the case of KASEZ unit, the petitioner assessee had obtained relevant approval of the Development Commissioner and the same was submitted to the Assessing Officer during the assessment and hence the petitioner was entitled to deduction under section 10(B) of the Income Tax Act. It is submitted that therefore, initiation of reassessment proceedings on the reasons recorded is absolutely illegal and invalid. 3.05. Mr.B.S. Soparkar, learned advocate appearing on behalf of the petitioner - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id amount had escaped assessment. It is submitted that thereafter recording the reasons for reopening and after taking necessary administrative approval, notice under section 148 of the Income Tax Act has been lawfully issued. 4.05. Mr.M.R. Bhatt, learned counsel appearing on behalf of the revenue has further submitted that even with respect to deduction claimed under section 10(B) to the tune of ₹ 4,69,56,816/- , it was found that the assessee Company had not obtained approval of the Board as hundred per cent export oriented for deduction under section 10(B) of the Income Tax Act and despite the same, claimed deduction under section 10(B) of the Income Tax Act and therefore, the assessee did not disclose fully and truly all material facts necessary for the assessment which resulted into excess allowance and therefore, notice under section 148 of the Income Tax is legally issued. 4.06. Mr.M.R. Bhatt, learned counsel appearing on behalf of the revenue has further submitted that mere production of Balancesheet and P L Account Books will not amount to disclosure within the meaning of proviso to section 147 of the Income Tax Act. It is submitted that opinion can only be f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the respective parties at length. 5.01. At the outset, it is required to be noted that what is challenged in the present Special Civil Application by the petitioner - assessee is the reopening of the assessment for the A.Y. 2008-2009 and initiation of the reassessment proceedings for the A.Y. 2008-2009, in exercise of the powers under section 147 read with section 148 of the Income Tax Act. It is required to be noted that in the present case initiation of reassessment proceedings is beyond 4 years from the assessment year. Therefore, unless and until it is observed and found that the income has escaped assessment due to the failure on the part of the assessee to disclose truly and fully all material facts for the assessment, the Assessing Officer is not authorized to make reassessment even in the event of his having reasonable belief that any income chargeable to tax has escaped assessment for any assessment year. As per the first proviso to section 147, assessment can be reopened under section 147 after expiry of 4 years only if (1) assessee failed to make a return under section 139 or in response to the notice under section 142(1) or under section 148 and he faile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase for A.Y. 2008-09 an order u/s.201(1) 201(1A) r.w.s.195 of the Act dated :2/12/2011 was passed wherein remittance to the tune of ₹ 23,07,240/- to one M/s. Magma Design Automation Inc., USA was considered. This resulted into demand of ₹ 3,61,463/-, which is paid by the assessee company and even its appeal was dismissed by the C1T(A). 3. Further, to state that the deduction u/s 108 of the IT Act, 1961 is available to newly established hundred percent export-oriented undertakings subject to fulfillment of certain conditions mentioned in the said section. As per definition given under section 10-8, hundred per cent export-oriented undertaking means an undertaking which has been approved as a hundred per cent export-oriented undertaking by the Board appointed in this behalf by the Central Government in exercise of the powers conferred by section 14 of the Industries (Development and Regulation) Act, 1951 (65 of 1951), and the rules made under that Act . Thus the approval of the undertaking from the Board appointed in this behalf by the Central Government is the first and foremost condition for eligibility u/s 10B of the Act. 3.1. Verification of assessment recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de the complete details of Software License Fees . The assessee was also directed to furnish relevant documentary evidences to establish and prove that Software License Fees is in nature of revenue. The assessee submitted complete details of Software License Fees and justified its claim that the Software License Fees is in the nature of revenue expenditure and not capital expenditure. The assessee replied to the said query as under:- 5. Details of proportionate Disallowance u/s.10B:- Sir, please note that the amount of deduction claimed u/s 10B has been correctly worked out as per Section 10B(4). The profit of each undertaking is separately worked out and accordingly as per Section 10B(4), the deduction is claimed in proportion of Export turnover of undertaking vis-a-vis Total Turnover of Undertaking. The deduction is claimed as per Audit Report in Form 56G. 6. Explanation for Software License Fees Debited to P L A/c. And Capitalised : We enclose herewith explanation for the Software License Fees debited to Prifit and Loss Account as expense and software charges capitalised along with copy of relevant Ledger Account Annexure- D. Only thereafter the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 147 of the Act, assessment can be reopened under section I47 of the Act after expiry of 4 years only if (1) the assessee failed to make a return under section I39 of the Act or in response to notice issued under section 142(1) or under section 148 of the Act, he failed to disclose truly and fully all material facts necessary for the assessment. Once all primary facts are before the assessing authority, no further assistance is required by way of disclosure. All inferences of facts and legal inference need to be drawn by the Assessing Officer. It is not for any one to guide the Assessing Officer in respect of inference factual or legal , which requires to be drawn by him alone. 17. Once the case of the assessee is covered by the 1st proviso to section 147 of the Act, the reassessment proceedings beyond the period of 4 years from the end of the relevant assessment year would be without any jurisdiction and bad in law, if all material facts are furnished and there remained no omission or failure on the part of the assessee to disclose truly and fully all material facts. This Court, after extensively discussing law on the issue in case of Gujarat Lease Financing Ltd. (supra), ..... X X X X Extracts X X X X X X X X Extracts X X X X
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