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TMI Blog2015 (8) TMI 1217X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequent to the framing of the assessment order on 27.03.2006 so as to arrive at a conclusion that there was escapement of income from tax. For the reasons aforestated, we are of the considered view that the Tribunal was fully justified in arriving at a conclusion that the re-opening of assessment was by change of opinion and the issue regarding eligibility of the income derived from rendering technical services abroad to be eligible for deduction under Section 10A or not had already been considered by the assessing Officer in the assessment concluded under Section 143(3) of the Act on 27.03.2006. - Decided in favour of assessee. - ITA Nos. 65/2014, C/W 66/2014 - - - Dated:- 14-8-2015 - Vineet Saran And Aravind Kumar, JJ. For the Appellant : Sri K V Aravind, Adv. For the Respondents : Sri T Suryanarayana For M/s King And Partridge, Associates, Adv. JUDGMENT Revenue has preferred these appeals calling in question the order passed by the Income Tax Appellate Tribunal, C Bench, Bangalore in ITA Nos. 283/BANG/2012 and 267/Bang/2012 dated 30.09.2013 whereunder the Tribunal, while examining the validity of re-opening of the assessment, has set aside the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from technical services from the eligible profits and consequently, the deduction under Section 10A came to be re-concluded. The said reassessment order was challenged by the assessee before the CIT (A) questioning the validity of the reopening on the ground that it would amount to change of opinion. Though appellate Commissioner confirmed the validity of re-opening of assessment under Section 148 of the Act, partial relief was granted to the assessee on merits by order dated 28.11.2011. Hence, assessee as well as revenue filed separate appeals before the Tribunal against the order of CIT(A). The assessee challenged the confirmation of validity of re-opening of assessment. The revenue challenged the partial relief granted by the appellate Commissioner to the assessee. The Tribunal annulled the re-assessment proceedings and held it is not valid in law. In view of the same, the Tribunal did not examine other issues raised by the assessee and consequently, the appeal filed by the revenue also came to be dismissed. Hence, the revenue has filed these two appeals. 5. It is the contention of Sri K.V.Aravind, learned Advocate for the revenue that Tribunal erred in holding that assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax Another vs. Sasken Communication Technologies Ltd. 7. Per contra, Sri Suryanarayana, learned Advocate would support the order passed by the Tribunal and contends that the assessing Officer at the first instance had examined the issue of excluding certain sum from the export turnover on the ground it was expenditure incurred in foreign exchange for providing technical services outside India and in the reasons recorded for re-opening the assessment, he has taken the view that aforesaid amount cannot be considered as income derived from export of articles or things or computer software at all. He would submit that by issuing the notice for reassessment, the assessing Officer intends to reexamine the deduction claimed by the assessee under Section 10A which itself amounts to change of opinion and even if there was a failure on the part of the assessing Officer with regard to computation of export turnover, the only course of action left to the revenue was to take recourse under Section 263 of the Act. Hence, he prays for dismissal of the appeals. In support of his submissions, he has relied upon the following judgments: (i) (2002) 256 ITR 1 Commissioner of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reign currency in respect of technical service rendered outside India at ₹ 34,5145,781 has been reduced from the export turnover as per clause (iv) of the Expl. 2 to Section 10A. Actually profits from providing technical services abroad should be excluded while computing deduction u/s 10A. In the instant case the expenditure for providing technical services at 11.71% of the total expenditure and the profits from providing technical services is to be estimated at 11.71% of the total profits, which is eligible for deduction u/s 10A. Consequent short levy of tax and surcharge works out to ₹ 1,76,39,326/-. Therefore, I have reasons to believe that income chargeable to tax has escaped assessment for the Ay 2003-04 . As per Section 147 of the Act, if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year he may, subject to provisions of Section 148 to 153, assess or reassess such income. 10. In the instant case, the Tribunal, while accepting the plea of the assessee that merely on change of opinion, the concluded assessment was being reopened, noticed that the Assessing Officer had already gone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the provisions contained in Section 147 of the Act, as it stood up to 31.03.1999, it is evident that to confer jurisdiction under Section 147(a) of the Act, twin conditions were required to be satisfied namely, (1) the assessing officer must have reason to believe that income chargeable to tax has escaped assessment; and (2) he must also have a reason to believe that such escapement occurred by reason of either (a) omission or failure on the part of the assessee to make a return of his income under Section 139 or (b) omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year. Both conditions are cumulative and in the given circumstances of the case, if these two conditions are not fulfilled, then necessarily notice issued by the assessing Officer would be wholly without jurisdiction. 13. The effect of amendment to Section 147 came to be examined by the Hon ble Apex Court in CIT vs KELVINATOR OF INDIA LIMITED reported in (2010) 320 ITR 561 and observed as under: 4. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ASSISTANT COMMISSIONER OF INCOME TAX vs RAJESH JHAVERI reported in (2007) 291 ITR 500 (SC) and held that the said expression cannot be read to mean that the assessing Officer should have finally ascertain the fact by legal evidence or conclusion of the fact of escapement of income from tax. It came to be held as under: 16. Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word reason in the phrase reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. Ltd. v. ITO (1991) 98 CTR (SC) 161: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case at hand is covered by the main provision and not the proviso. 15. Thus, it boils down to the fact that escapement of income from tax for whatever reason would suffice for the assessing Officer to initiate reassessment proceedings by issuance of notice under Section 147 of the Act. 16. Keeping the above dicta in mind, when the facts on hand are re-examined, it would indicate that while completing the assessment under Section 143(3) of the Act, the assessing Officer has gone into the question of excluding the sum of ₹ 38,51,45,781/- from the export turnover on the ground that it was expenditure incurred in foreign exchange for providing technical services outside India. However, for re-opening the assessment the assessing Officer has intended to take a view that aforesaid sum cannot be considered as income derived from export of articles or things or computer software at all. It would not be out of place to mention that while concluding the assessment proceedings under Section 143(3) and during the course of assessment proceedings, the assessing Officer had called for clarifications from the assessee and in reply to the notice issued under Section 143(2)(ii) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the five STP Units in the same ratio of the Export Sales. Both these amounts are reduced from the export turnover in accordance with the definition of ETO given in sec.10A. 18. Thus, it can be seen from the original assessment records that the claim of the assessee under Section 10A of the Act was thoroughly scrutinized, the assessing Officer had examined the claim of expenditure incurred in foreign currency for providing technical services by allocating the sum of ₹ 38,51,45,781/- between the five STP units in the ratio of the export sales. In fact, the assessing Officer had raised certain queries during assessment proceedings and detailed reply given by the assessee, which is extracted herein above, would leave no doubt in our mind that the said issue was thoroughly addressed to by the assessing Officer, considered and the plea of the assessee came to be accepted. In that view of the matter, it cannot be construed that there was either non disclosure by the assessee or the assessing Officer had obtained material subsequent to the framing of the assessment order on 27.03.2006 so as to arrive at a conclusion that there was escapement of income from tax. 19. For the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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