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2017 (8) TMI 1695 - HC - Income TaxReopening of assessment u/s 147 - "reason to believe" - Disallowance of deduction u/s 80HHC - whether there was any failure on the part of the petitioner-assessee to disclose fully and truly all material facts necessary for the assessment? - HELD THAT:- The basic requirement of section 80HHC is earning in foreign exchange and retention of profits for export business. Profits are embedded in the "income" earned. Earning of income depends on sale of goods and services. Today the difference between the two is getting blurred with globalization and cross-border transaction. Today with technological advancement one has to change our thinking regarding concepts like goods, merchandise and articles. In the case of B. Suresh [2009 (3) TMI 4 - SUPREME COURT] the assessee had bought rights of various decoders and had recorded movies on beta-cam tapes which were transferred as telecasting rights to Star TV for five years (it has a limited life). Hence such "rights" would certainly fall in the category of articles of trade and commerce, hence, merchandise. Transaction in question was covered under section 80HHC, it was inappropriate to hold that merely because section 80HHF was not on the statute book during the assessment years in question, the assessee was not entitled to claim deduction without any hindrance under section 80HHC in spite of compliance of the ingredients thereunder. Reopening of assessment - Taking into consideration the main aspect that the earlier order has not been challenged and the basis for Section 148 was not sound, it ought to have been quashed in view of the decision reported in the case of CIT Vs. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT] one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open - The Assessing Officer has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then,in the garb of re-opening the assessment, review would take place - to reopen an assessment tangible material should be there. Meaning of the expression, `reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from Section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended Section 147 to reintroduce the expression `has reason to believe' in place of the words `for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new Section 147, however, remain the same. - Decided in favour of assessee.
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