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TMI Blog2017 (9) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... must fail both on the ground of no failure on the part of the assessee to disclose truly and fully all material facts and also on the ground of attempt on part of the Assessing Officer to reexamine the claim which was originally scrutinized and therefore on the principle of change of opinion. - Decided in favour of assessee. - Special Civil Application No. 11877 of 2017 - - - Dated:- 28-8-2017 - MR. AKIL KURESHI AND MR. BIREN VAISHNAV, JJ. For The Petitioner : MR. R. K. Patel, Advocate with MR. Darshan R Patel, Advocate For The Respondent : Mrs Mauna M Bhatt, Advocate ORAL JUDGMENT ( PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Petitioner has challenged notice dated 11.03.2017 issued by the respondent Assessing Officer to reopen the petitioner's assessment for the assessment year 2010-11. 2. Brief facts are as under. 3. Petitioner is a company registered under the Companies Act and is engaged in the business of manufacturing pharmaceutical drugs and other healthcare related businesses. For the assessment year 2010-11, the petitioner had filed the return of income on 28.09.2010 declaring 'Nil' income. Return was taken in scrutiny by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss auxiliary marketing services like consignment, sales agent and after sale services of the product of the firm M/s.Zydus Healthcare Sikkim for which the assessee company is entitled to get remuneration 12.5% of the total turnover. For payment of remuneration to the assessee company, it is noticed that the Partnership Firm entered an agreement/Addendum dated 1/4/2007 with assessee company for marketing its products and providing all business auxiliary marketing services like consignment and sales agent and aftersales services for which the assessee company would be entitled to get remuneration @ 12.5% of the total turnover of the Firm, vide Memorandum agreement dated 15/3/2008. As stated above, M/s.Zydus Healthcare enjoys deduction u/s 80IC of the Act thereby whatever the profit earned during the year is exempt from taxation. As such, any expenditure disallowed in the computation of income does not make any difference for the firm as regards the taxation of the firm is concerned. Therefore, the addendum brought on 15.3.2008 was only an afterthought to claim deduction u/s 28(v) of the Act in the hands of the assessee company. The payment by the firm to the assessee company wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined during the original assessment proceedings. It was therefore impermissible for the Assessing Officer to reopen the assessment. 7. On the other hand learned counsel Shri Bhatt for the department opposed the petition contending that at this stage, the Court would not interfere and allow the Assessing Officer to complete the assessment. 8. We are dealing with the case where the return filed by the petitioner was taken in scrutiny and the Assessing Officer had passed a scrutiny assessment order. The impugned notice has been issued beyond a period of four years from the end of relevant assessment year. In that view of the matter, the questions of change of opinion as well as the failure on part of the assessee to disclose truly and fully all material facts necessary for assessment would assume significance. In this context, we have examined the materials on record. 9. The sole objection of the Assessing Officer in the reasons recorded for reopening the assessment is with respect to a sum of ₹ 130 crores received by the assessee company by way of remuneration as a partner of one Zydus Healthcare, Sikkim. The assessee claimed that the said income was exempt in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 As regards your query as to how the income under the head 'Remuneration from Partnership Firm' of ₹ 130 Crores is exempt in the hands of the assessee company, we wish to submit as under: The assessee company has claimed the amount of remuneration from partnership firm of ₹ 130 Crores as not chargeable to tax, since the same has been added to the total income as disallowable u/s 40(b) in the Firm's case (refer Statement of Total Income filed separately, above), as envisaged under the Proviso to Sec.28(v) of the Act. In this regard, kindly refer to copy of the Addendum to the Partnership Deed Enclosed herewith, marked as Annexure4. We are also enclosing herewith, a copy of the 'Memorandum of understanding recording determination of partner's remuneration payable by M/S Zydus Healthcare to Cadila Healthcare Ltd. for F.Y. 2009-10', marked as Annexure 5. The identical claim was came to be allowed in the past scrutiny assessments for A.Y. 2008-09 and A.Y. 2009-10. 13. It was after such scrutiny that the Assessing Officer passed order of assessment in which no disallowances or the part thereof of the said sum of ₹ 130 crores ..... X X X X Extracts X X X X X X X X Extracts X X X X
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