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2022 (3) TMI 676 - HC - Income TaxReopening of assessment u/s 147 - whether the non-compete fee should be treated as revenue expenditure or capital expenditure? - amount paid for non-compete fee rights while acquiring a business is a capital expenditure and, therefore, though a receipt of non-compete fee is treated as revenue expenditure, the payer cannot claim as revenue expenditure but claim only as a capital expenditure - HELD THAT:- The entire reason to re-open is the basis of the decision of [2010 (7) TMI 685 - ITAT, DELHI]. Almost four months later, the assessment proceedings have proceeded and by a letter dated 30th November, 2010, Petitioner has explained why the non-compete fee paid should be treated as revenue expenditure and not capital expenditure and has also relied on various decisions of High Courts to justify its stand. AO was satisfied with the explanation of Petitioner and decided to allow non-compete fee paid to be treated as revenue expenditure. Just because it has not been discussed in the Assessment Order, it does not mean that the issue was not a subject of consideration during assessment proceedings. As held by this Court in the case of Aroni Commercials Ltd. [2014 (2) TMI 659 - BOMBAY HIGH COURT] it is not necessary that an Assessment Order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. During assessment proceedings, once query is raised and the assessee has replied to it, it follows that the query raised raised was a subject of consideration of the Assessing Officer while completing the assessment. The very issue of how to treat the non-compete fee paid by assessee was a subject matter of consideration by the Assessing Officer during assessment proceedings leading to the Assessment Order dated 30th November, 2010. It would, therefore, follow that the re-opening of the assessment by the impugned notice dated 20th March, 2013 is merely on the basis of change of opinion by the Assessing Officer from that held earlier during course of assessment proceedings leading to the order dated 30th November, 2010. This change of opinion does not constitute the decision and/or reasons to believe that income chargeable to tax has escaped assessment - Decided in favour of assessee.
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