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2017 (9) TMI 462 - AT - Income TaxReopening of assessment - Disallowance of depreciation on product development expenditure and technical know how fees - reason to believe - Held that:- We find that the assessee has given all the particulars of “product development expenses” and also reconciliation of capitalization of fixed assets before the Assessing Officer during the course of the original assessment proceedings which included the ‘product development’ expenditure also. This fact is clearly borne out from the letter dated 15.12.2006 filed before the Assessing Officer in response to the notice/query raised by the Assessing Officer. All the particulars and details of capitalization and claim of depreciation were also shown in the audited balance sheet filed along with the return of income. Once the assessee has made full and true disclosures of material fact, then the onus cast upon the assessee stands discharged and it is upon the Assessing Officer to draw proper legal and factual inference. Assessing Officer has neither ascribed any failure on the part of the assessee to disclose fully and truly all material facts nor has brought anything on record to show that product development expenses under the law can never be treated as an asset or a capital expenditure on which depreciation is allowable. In absence of such finding, we are unable to hold that in terms of proviso to section 147, the Assessing Officer has no jurisdiction to reopen the case beyond the period of four years from the end of the relevant assessment years, where assessment has been finalized under section 143(3). Thus, the reopening of the assessment on the aforesaid “reasons” is clearly bad in law and accordingly, impugned assessment order is quashed. - Decided in favour of assessee.
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