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2016 (4) TMI 634 - AT - Income TaxReopening of assessment - receipts earned by the assessee from provision of satellite transmission services are liable to tax in India as royalties for use of process as well as equipment falling within the ambit of section 9(1)(vi) of the Act and article 12 of the India-USA DTAA - Held that:- We concur with the ld. CIT (A) that there is no whisper / allegation that there was any failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment. The AO himself admits that while perusing the records of the relevant assessment year, he came across the date of execution of agreement with the PE and that he has not taken into consideration that fact while deciding the original assessment u/s 143(3) r.w.s. 263 of the Act, that means assessee had disclosed everything during the original assessment proceedings. Thus, there was no failure on the part of the assessee not to disclose fully and truly all material facts necessary for the original assessment. We take note of the fact that while passing the order u/s 263 r.w.s. 143(3) of the Act, the clauses of the agreement with the customer was examined in detail to hold that the revenues earned under the said agreement falls within the taxable ambit of royalty as defined under section 9(1)(vi) of the Act as well as Article 12 of the India USA DTAA. Therefore, such royalty income was subject to tax @ 15% and even though PE was also alleged and Article 7 read with section 44D was not invoked. This fact in itself makes it clear that it was well within the knowledge of the Ld. AO that the said agreement has been entered before 31.03.2003 for invoking section 44D of the Act. For this reason alone, initiation of reopening of assessment U/S 147 of the Act for this assessment year beyond four years is not found to be sustainable both in facts and law as the case falls within the first proviso to section 147 of the Act. - Decided in favour of assessee
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