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2016 (7) TMI 1333 - AT - Income TaxReopening of assessment - reason to believe - Held that:- The re-assessment proceedings have rightly been initiated after forming opinion that some income chargeable to tax as escaped assessment u/s.147 of the Act, after amendment to sec.147 of the Act with effect from 01.04.1989, wide power has been given to the AO, even to reopen the cases where the assessee has fully disclosed material facts. The only condition for reassessment is that the AO should have reasoned to believe that income chargeable to tax had escapement. Such belief can be reached in any manner and is not quantified by pre-condition of full and true disclosure of material facts by the assessee as contemplated in the pre-amended section 147(a) of the Act. Reopening in this case is done on defined reasons of non dection of tds TDS u/s 195 - allowance of Bandwidth Connectivity charges for non deduction of TDS from the said payment - Held that:- The payment is nothing but a ‘royalty’ as defined under clause (i) of Explanation 2 to section 9(1)(vi) read with Explanation 6 to section 9(1)(vi) of the Income Tax Act. As such, the provisions of the section 195 is applicable and since the assessee has not deducted TDS and the payment is disallowed u/s.40(a)(i) of the Act is justified. See Verizon Communications Singapore Pte Ltd. [2013 (11) TMI 1058 - MADRAS HIGH COURT]. This ground raised by the assessee is dismissed. Disallowance of fees for technical services made u/s.40(a)(i) - Held that:- The assessee is liable to deduct TDS u/s.195 of the Act and the assessee failed to deduct the TDS and the same is disallowed u/s.40(a)(i) of the Act. Hence, this ground raised by the assessee is rejected. Disallowance of Repairs and Maintenance - revenue or capital - Held that:- This issue came up for consideration before this Tribunal in the case of M/s. K.R.Bakes Pvt. Ltd. [2015 (5) TMI 1035 - ITAT CHENNAI ] wherein held in order to find out the nature of expenditure, it is necessary to find out the nature of construction put up, the purpose of construction/renovation and the use to which the construction put up and also if it is a case of repair, replacement, addition or improvement has to be gone into. It is only on the aforesaid material, keeping in mind the principles enunciated in the judgments by the Supreme Court and keeping in mind section 37 and section 32 of the Act, that one has to determine whether the expenditure is revenue expenditure or capital expenditure. What would apply to civil work equally applies to electrical work or interior decoration. The assessee had not stated the nature of civil works constructed, the nature of interior decoration made to the leasehold premises and also the nature of electrical work undertaken. In the absence of that material and without proper application of mind, the assessing authority proceeded on the footing that the expenditure constituted capital expenditure. In view of the above, we remit the issue in dispute to AO to consider whether the expenditure is revenue or capital in nature and decide afresh.
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