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TMI Blog1982 (5) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... cal person and in that view was not justified in quashing the assessment. 2. That on the facts and in the circumstances of the case the learned Commissioner of Income-tax (Appeals) erred in holding that the Income-tax Officer had erroneously applied the provisions of section 147 without giving his finding on the jurisdiction of the Income-tax Officer and in quashing the assessment." 2. The respondent-assessee is a resident limited company and the method of accounting is mercantile. The relevant accounting period is the year ending 30-9-1973. 3. The assessment originally framed was reopened by initiating reassessment proceedings under section 147(b) of the Income-tax Act, 1961 ('the Act'). The learned ITO, Shri T.V. Verghese, considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the part of the assessee to disprove any material facts necessary for assessment. It was also contended before the learned Commissioner (Appeals) that the learned ITO erroneously treated the technical fees paid to the UK company as payment under section 40(c), because payments made to corporate bodies were not covered by the provisions of the aforesaid section, and that 'person' appearing in section 40(c)(i) referred to 'individual' only and not to corporate bodies. Objections also appear to have been taken that information from audit party did not constitute any information within the meaning of section 147(b) and furthermore, the original assessment order had already merged with the earlier order of the learned Commissioner (Appeals) dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of section 40(c) were rightly applied by the learned ITO and that the word 'person' appearing in section 40(c) has got to be understood in terms of section 2(31), in accordance to which a 'person' includes an artificial juridical person also. He specially invited our attention to sub-clause (vii) of section 2(31). On the basis of this contention, he submitted that it is not correct that section 40(c) applies only to the natural person. Reference was also made to section 2(32). 7. Shri Jana further contended that in the facts and circumstances of the assessee's case, the learned ITO was justified in initiating the reopening proceedings under section 147(b) and that the reopening was not on the basis of the audit report as wrongly m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l person only. Sub-clauses (31) and (32) of section 2 are no doubt illustrative as to what is understood by the word 'person' in the Act. But the terminology of section 40(c) where the word 'relation' appears, the person in our view automatically means for the purpose of section 40(c), a natural person. For taking such a view of the matter, the clarification conveyed on behalf of the Government of India in Letter No. D. O. F. 236/344 of 1978 A PAC II dated 9-2-1979, wherein it is conveyed that the provisions of section 40(c) applied only to a natural person, is relevant. For such a view, we get further support from the view taken by their Lordships of the Karnataka High Court in the case of South Kanara Central Co-operative Wholesale Stor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived information whereas, in the case before us, the material already existing was reassessed or say re-examined. Two situations cannot, therefore, be equated. The ratio in the case of A. Raman Co. also helps the revenue in no way, because of the peculiar circumstances, due to change of opinion by the learned ITO (sic). 12. The learned ITO was neither justified to apply the provisions of section 40(c) to an artificial juridical person nor to initiate reopening proceedings under section 147(b), merely by changing the opinion or attempting to take different view of the matter. The learned Commissioner (Appeals) rightly vacated the learned ITO's findings and, thus, the impugned order admits of no interference and the same is, therefore, c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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