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TMI Blog2006 (11) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase the business of managing private equity funds and venture capital funds and providing financial services for a lumpsum consideration of Rs. 14.15 crores. Under the said agreement, it purchased various intangible assets of IL and FS such as intellectual property, including but not limited to know-how, copyrights, computer software, technical data, franchises, etc. Later on the consideration payable was reduced to Rs. 11.50 crores by a subsequent agreement. 2. The petitioner filed a return of its income for the assessment year 2003-04 wherein it claimed depreciation of Rs. 3,05,77,001. The petitioner later on received an intimation dated February 28, 2004, under section 143(1)(a) of the Income-tax Act, 1961 ("the said Act" for short) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this case has been completed under section 143(3) on March 2, 2005, determining income at Rs. 5,00,72,570. The company has purchased asset management rights costing Rs. 11.31 crores from IL&FS Ltd., a company covered under section 40A(2)(b) and treated this as intangible assets and claimed depreciation at 25 per cent. being Rs. 2.83 crores for the year which has been wrongly allowed. By purchasing this right, the company has purchased a future right to receive income. Though it is an asset, but this intangible asset will not qualify for depreciation. In view of this, I have reason to believe that income of Rs. 2.83 crores chargeable to tax has escaped assessment for the assessment year 2003-04. The case is put up for kind approval of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n granted by the Assessing Officer and a regular assessment order was passed under section 143(3). Thereafter, when the audit objections were raised, in fact, the first respondent had pointed out to the auditor that there was no need to have a reassessment. The letter written by first respondent to the principal director of audit is dated September 23, 2005. It is specifically referred to in paragraph 7 of the rejoinder and that the petitioner came to know about it after taking inspection. We were shown that letter from the file of the respondents. Mr. Mistri, therefore, submits that firstly under section 147 of the Income-tax Act, it is necessary that the Assessing Officer must have his reason to believe that the income has escaped assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the depreciation and now obviously on the audit objection, he is reopening the assessment, though he has himself justified non-reopening thereof. 10. Mr. Sharma, learned counsel appearing for the respondents, on the other hand, submitted that this is a case of escaping of the income and that of excessive depreciation allowance being granted. This decision of the Assessing Officer is protected under clause (c)(iv) of Explanation 2 to section 147 of the Income-tax Act. Secondly, he submitted that under Explanation 4 to section 32(1) of the Income-tax Act, the expression "know-how" means any industrial information or technique likely to assist in the manufacture or processing of goods and it will not include the kind of intangible assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the petitioner. But the fact remains that as far as this assessment year 2003-04 is concerned, the stand taken by the petitioner was accepted by the respondents on the merits and even after disagreeing with the audit objection, as a second thought on the objections from the auditors, he has reopened the assessment. In the reasons to reopen as well as in the decision on the objections, he has nowhere stated as to how the income has escaped assessment. In our view, reopening of the assessment without any basis and merely a change of opinion is not permissible while exercising the powers under section 147 read with section 148 of the Income-tax Act. 13. For the aforesaid reasons, we have no option but to allow this petition. The pet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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