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TMI Blog2018 (2) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... and by what decision he had taken. This could be seen from the information secured by the petitioner under the Right to Information Act. Though this pertains to the earlier assessment years, find that the response given by the assessing officer to the Director General of Audit, vide proceedings dated 05.12.2013, is elaborate and he had stated on what basis the depreciation shall be liable. However, for reasons best known the assessments have been reopened that to after there was a change of officer. The decision in M/s.Larsen Tubro Ltd. (2017 (3) TMI 1064 - SUPREME COURT OF INDIA), would apply with full force to the case on hand, as it is manifestly clear that the assessing officer had to issue the impugned reassessment notice on the ground of direction issued by the audit party. Thus, this Court being fully satisfied that the impugned reopening of the assessment is contrary to law, the question of directing the petitioner to avail alternate remedy of appeal before the Commissioner of Income Tax does not arise, especially when the case is one of change of opinion - Decided in favour of assessee. - Writ Petition No.11371 of 2016 and WMP No.9819 of 2016 - - - Dated:- 24-1-2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner was inadvertently omitted to be claimed while filing the return of income. Subsequently, submissions were made on various dates along with written submissions, which were filed before the assessing officer to justify their claim for entitlement of depreciation on vendor and dealer network and goodwill. The assessment was completed under Section 143 (3) of the Act by order dated 31.03.2014 determining the tax payable at Nil. Subsequently, an intimation was issued for rectification of certain errors and accordingly, Order of Rectification under Section 154 of the Act was passed on 29.05.2014, by which the petitioner was granted a refund. Subsequently, another rectification order was passed on 11.08.2014, granting an additional refund. While so, the petitioner received a notice under Section 148 of the Act dated 27.03.2015, wherein the respondent alleged that he had reason to believe that there was escapement of income and called upon the petitioner to file a return of income in this regard. The petitioner vide representation dated 05.05.2015, sought for reasons based on which, reopening proceedings have been initiated. The petitioner also filed a return in pursuance of no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (2003) 259 ITR 19, assessment orders were directly passed, which were challenged by the petitioner by filing Writ Petition Nos.3345 3355 of 2015, which were dismissed by a common order dated 04.08.2015, observing that the petitioner has to file an appeal as against the assessment orders and challenging the said order, the petitioner preferred Writ Appeal Nos.1023 1024 of 2015 and the Hon'ble Division Bench has granted an order of interim stay. 5.It is submitted that when the scrutiny assessment was completed under Section 143(3) of the Act resulting in an assessment order dated 31.03.2014, the assessing officer had already issued notices for reopening the assessments for the assessment years 2008-09 and 2009-10 vide notice dated 15.12.2014, and though such reopening proceedings were pending, for the assessment year 2010-11, the assessing officer considered the matter and allowed the claim for depreciation on goodwill and dealer vendor and network has been specifically discussed and after referring to the decisions of the Hon'ble Supreme Court in the case of CIT v. Smifs Securities Limited reported in [2012] 348 ITR 302 (SC) and in the case of Areva T and D India Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by this Court on the ground that the appeals are pending before the Hon'ble Division Bench in W.A.Nos.1203 1204 of 2015 in respect of the assessment orders passed for the assessment years 2008-09 and 2009-10 and therefore, the writ petition should await the decision of the Hon'ble Division Bench. 10.Further, it is submitted that the question of granting depreciation does not arise, as there is no asset. When there is no such intangible asset, it cannot be taken into consideration that there can be no assessment, there can be no written down value and depreciation cannot be granted in the vacuum. The assessing officer in the order of assessment for the year 2008-09 dated 31.12.2014, has held that there is no asset and the question of granting depreciation does not arise and the petitioner was not successful in challenging the same before the Writ Court and the Division Bench has only granted the stay of the order and that does not mean that the assessment order dated 31.12.2014, for the assessment years 2008-09 and 2009-10 stood effaced. 11.Further, the learned Senior Standing Counsel submitted that it is not a case of change of opinion and the assessing officer ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered to. Apart from that, there appears to have been contentions raised on other legal issues. There cannot be a dispute to the legal proposition that each assessment year is an independent year of the other. In fact this legal position has been conceded by the respondent in page 3 of the counter affidavit, wherein he has stated that the issue was not contested in the earlier years would not by itself mean that the issue should never again be contested for any other year, as each year is an independent year and therefore, the same cannot be applied generally. 17.Thus, the respondent has understood this legal aspect correctly and if applied to the facts of the case, the validity of the impugned reopening proceedings can be considered independently de hors the fact that the challenge to the assessment orders for the assessment years 2008-09 and 2009-10 is pending before the Hon'ble Division Bench. Therefore, this Court proceeds to consider the correctness of the impugned proceedings. The reason for reopening is with regard to admissibility of the claim for depreciation on dealer and vendor network. Whether this aspect was considered by the assessing officer in the scrutiny ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dor and dealer network should not be disallowed as the said assets do not qualify as intangible assets. The petitioner submitted a detailed response to the said notice vide their reply dated 28.02.2014, apart from referring to their business module; the terms and conditions of the manner of acquisition of the CCP business; the relevant clause of the business transfer agreement; factors considered by the company for determining the valuation of the dealer network; valuation of the dealer network; valuation of the vendor network; rationale for payment of consideration for dealer and vendor network; valuation of goodwill; factors considered and the rationale for valuation of goodwill; acquisition of material contracts; acquisition of leasehold properties; acquisition of skilled employees; acquisition of various process; independence of the CCP business segment from that of the car sales business segment, etc in the dealer network; establishment of ownership and control of the company over the assets acquired under the BTA; tangible benefits to the company on acquisition of the vendor and dealer network and goodwill. Thereafter, the petitioner proceeded to refer to the relevant provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act and were accordingly eligible for depreciation under the said Section. The operative portion of the order reads as follows: 13. In the present case, applying the principle of ejusdem generis, which provides that where there are general words following particular and specific words, the meaning of the latter words shall be confined to things of the same kind, as specified for interpreting the expression business or commercial rights of similar nature specified in Section 32(1)(ii) of the Act, it is seen that such rights need not answer the description of know-how, patents, trademarks, licenses or franchises but must be of similar nature as the specified assets. On a perusal of the meaning of the categories of specific intangible assets referred in Section 32(1)(ii) of the Act preceding the term business or commercial rights of similar nature , it is seen that the aforesaid intangible assets are not of the same kind and are clearly distinct from one another. The fact that after the specified intangible assets the words business or commercial rights of similar nature have been additionally used, clearly demonstrates that the Legislature did not intend to provide for depre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment was completed after considering the claim for depreciation after seeking for clarification from the petitioner and thereafter, the assessment was completed. Thus, the reasons assigned by the respondent to reopen the assessment is nothing but a clear case of change of opinion. It is pertinent to note that when reopening proceedings were initiated pursuant to the audit report of the CAG, the assessing officer had the conviction to stand by what decision he had taken. This could be seen from the information secured by the petitioner under the Right to Information Act. Though this pertains to the earlier assessment years, I find that the response given by the assessing officer to the Director General of Audit, vide proceedings dated 05.12.2013, is elaborate and he had stated on what basis the depreciation shall be liable. However, for reasons best known the assessments have been reopened that to after there was a change of officer. In this regard it is beneficial to take note of the decision in Indian Eastern Newspaper Society (supra), wherein the Hon'ble Supreme Court referring to an audit report of the internal audit party of the Income Tax Department held as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the audit party, it is clear that the Assessing Officer was of the opinion that as the goods had not been transferred to appellant-Company but had been consumed, so it does not come under the purview of taxation. In other words, the Assessing Officer was not satisfied on the basis of information given by the audit party that any of the turnover of the appellant-Company had escaped assessment so as to invoke Section 19 of the State Act. From the above, it also appears that the assessing officer had to issue notice on the ground of direction issued by the audit party and not on his personal satisfaction which is not permissible under law. 26.The decision in M/s.Larsen Tubro Ltd. (supra), would apply with full force to the case on hand, as it is manifestly clear that the assessing officer had to issue the impugned reassessment notice on the ground of direction issued by the audit party. 27.Thus, this Court being fully satisfied that the impugned reopening of the assessment is contrary to law, the question of directing the petitioner to avail alternate remedy of appeal before the Commissioner of Income Tax does not arise, especially when the case is one of change of opini ..... X X X X Extracts X X X X X X X X Extracts X X X X
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