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2015 (10) TMI 2380 - HC - Income TaxReopening of assessment - royalty payments received by the assessee from its Indian subsidiary (Oracle Indian Private Limited – OIPL) - INDIA USA DTAA - allegation of AO that since the assessee has a Permanent Establishment (PE) in India and that the receipts by the assessee from licensing of the duplicate software has been treated as "royalty" the "force of attraction rule" would be attracted and that the income in the nature of royalty should also be attributed to the Permanent Establishment by virtue of the said rule - whether as per Section 44D no expenses would be allowable and the receipts are to be taxed as royalty under section 115A @20% in place of 15% as was done and accepted in the assessment order - Held that:- In the present case, in the circumstances narrated above, it is evident that the when the Assessing Officer was examining the entire issue of royalty and its taxability the Assessing Officer must have examined Article 12 of the DTAA in its entirety, which also contained the exception mentioned in clause (6) thereof. When a regular assessment is completed in terms of Section 143(3), a presumption can be raised that such an order has been passed upon a proper application of mind. See CIT vs. Kelvinator of India Ltd [2002 (4) TMI 37 - DELHI High Court] . Therefore, in our view, what the Assessing Officer is now seeking to do amounts to a clear change of opinion and that is not permissible. The escapement of income by itself is not sufficient for reopening the assessment in a case covered by the proviso to section 147 of the said Act, unless and until there was failure on the part of the assessee to disclose fully and truly all the material facts necessary for assessment. It was also made clear that unless and until the recorded reasons specifically indicated as to which material fact or facts was/were not disclosed by the petitioner in the course of the original assessment under section 143(3), there could not be any reopening of assessment. See Swarovski India Pvt. Ltd. Vs. Deputy Commissioner of Income Tax (2014 (9) TMI 4 - DELHI HIGH COURT) - Decided in favour of assessee.
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