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TMI Blog2018 (9) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... e from computation in the original returns of income filed by the assessee for the Assessment Years 2004-05 to 2009-10. It is only because the SIEL affected TDS on such Royalty, FTS income, whose benefit was availed by the assessee in the revised returns that no further tax liability was incurred though income escaping assessment got taxed in fresh proceedings. This aspect of non-reporting of the receipt of income on account of royalty is a valid ground for the Ld. AO to propose the reopening of the assessment, and it cannot be said that there was no escapement of income merely because tax was deducted at source on such income. When it is open under Explanation 3 to section 147 for the AO to reassess the income on any issue which newly comes to his notice subsequent to the issuance of notice under section 148 of the Act, it cannot be said that mere wrong mentioning of the provision of law relating to the other issues in the reasons recorded would vitiate the proceedings. We, therefore, reject the contention of the assessee that the reopening proceedings are bad under law. - Decided against assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... vey proceedings, statements of Mr. Jung Soo Shin, President & CEO of the Indian company was recorded on 14.07.2010. It was observed that he is also head of South West Asia operations of the parent company. Thus he is representing not only Samsung India but also Samsung Korea in his capacity as South West Asia head. The countries covered India, Bangladesh, Sri Lanka, Nepal, Bhutan and Maldives. He is not paid anything extra to perform his duties in the capacity of South West Asia Head. In addition to statement of Mr. Jung Soo Shin, the statements of the following employees of Samsung India Electronics Ltd were recorded. (i) B D Park, Director Mobile Biz & IT Biz (ii) Sachin Baweja, Company Secretary (ii) C S Choi, Vice President, Corporate Marketing (iv) Y H Cho, Vice President, Sales, North Region (v) HK Seo, Vice President, CE Sales & Marketing (vi) J H Kyung, Director, CEO A close analysis of these statements further reveals that: (i) There is no evidence in the minutes of the board meetings showing any important policy decisions being taken by the board members in India. (ii) The Indian company has to regularly update the reasons for ageing stock to the parent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exceeds ₹ 1,00,000- As such the case is covered by provision of clause (c) of Explanation 2 of section 147 of the IT Act, 1961." 5. Appellant accepts that the "reasons to believe" correctly record that survey was conducted in the premises of the Indian subsidiary of the appellant company in June, 2010. The appellant also accepts that the Indian subsidiary had manufactured consumer products like washing machines, refrigerators, air-conditioners, televisions, mobile phones etc. under technical assistance from the appellant and on which fee for technical services was payable. Use of the brand name "Samsung" by the Indian subsidiary in trading and sales on which royalty was payable to the appellant is not denied. The Indian subsidiary had substantial turnover of more than ₹ 9,000 crores and royalty payable @ 2% of sales would approximately be ₹ 180 crores. Turnover as recorded is not disputed and challenged. Another aspect recorded in the "reasons to believe" had emerged from the statements of officers of the Indian subsidiary recorded during the survey operations and inquiries made thereafter. The statements had revealed that the India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of reassessment proceedings under Section 147/148 of the Act, in the present case, we would hold that the appellant has accepted that the "original returns" filed by "them" were incorrect for they had failed to disclose income earned by way of royalty and fee for technical service. This is material and relevant. 8. It is in this context and in terms of the above finding, we would observe that the judgment of the Delhi High Court in Ranbaxy Laboratories Ltd. Vs. Commissioner of Income Tax (2011) 336 ITR 136 would not be applicable as the appellant themselves, pursuant to notice for re-assessment, had declared additional income and accepted their failure to disclose earned income by way of royalty and fee for technical services. 9. The contention that "Tax at Source" had been deducted on royalty and fee for technical services would not matter, as the returns filed were wrong and required a correction and modification. Failure to disclose fully and truly all material facts, without debate is correct and established. Deduction of tax at source would not matter, as "the return of income" by "the branch office" was not filed in terms of the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he details relating to the income as per original return of income, income as per return filed under section 148, furnished by the assessee "Assessment Year Income as per original return of income (in INR) Income as per return filed under section 148 (in INR) Amount of addition made by AO (in INR) Assessed income (in INR) AY 2004-05 NIL 183,792,647 6,639,512 190,432,159 AY 2005-06 86,592 was offered to tax under "Other Income" 180,897,736 9,894,848 190,792,584 AY 2006-07 MAT paid on Book Profits (13,10,35,049) u/s 115JB 229,261,833 10,722,431 239,984,264 AY 2007-08 NIL (operations ceased to exist) 354,257,732 44,789,046 399,046,778 AY 2008-09 NIL (operations ceased to exist) 564,889,589 57,863,051 622,752,640 No return filed AY 2009-10 (Branch was closed) 727,560,470 80,918,894 808,479,364 AY 2011-12 1,480,742,857 N.A. 84,758,114 1,565,500,971 AY 2012-13 1,976,164,087 N.A. 111,836,425 2,088,000,512 AY 2014-15 6,210,353,870 N.A. 167,753,195 6,378,107,065 15. A perusal of the figures in the statement furnished in respect of the income as reported in the original return of income and the return furnished u/s 148 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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