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2015 (5) TMI 189 - HC - Income TaxReopening of assessment - beyond the period of 4 years - “Software License Fees” paid to the foreign companies was in nature of “Royalty” and thus, “Capital Expenditure” and therefore, it attracts section 195 of the Income Tax Act and therefore payment made without withholding of tax at source - also the assessee had not fulfilled the conditions for eligibility of deduction u/s 10B & the deduction was not in order - Held that:- It is required to be noted that in the original assessment, full particulars with respect to “Software License Fees” by the assessee to the foreign companies was disclosed. Not only that the assessee claimed the same as revenue expenditure. The notice was issued under section 143(3) of the Act and the Assessing Officer also vide communication / notice dated 28/7/2011 called upon the assessee to furnish necessary documents which include the complete details of “Software License Fees”. The assessee was also directed to furnish relevant documentary evidences to establish and prove that “Software License Fees” is in nature of revenue. The assessee submitted complete details of “Software License Fees” and justified its claim that the “Software License Fees” is in the nature of revenue expenditure and not capital expenditure. Only thereafter the Assessing Officer while framing the assessment, treated the payment of “Software License Fees” made to the Foreign Companies as revenue expenditure and allowed the deductions claimed and also accepted the claim of the assessee of deduction under section 10(B) of the Income Tax Act. It cannot be said that the assessee did not disclose fully and truly all material facts necessary for the assessment with respect to Software License Fees paid to foreign companies and also with respect to deduction claimed under sec.10(B) of the Act, and therefore, the income chargeable to tax has been escaped due to the failure on the part of the assessee to disclose fully and truly all material facts. Under the circumstances, the condition precedent for invoking powers under section 147 of the Income Tax Act to initiate reassessment proceedings beyond the period of 4 years are not at all satisfied. See Niko Resources Ltd. Versus Assistant Director of Income Tax,(2014 (9) TMI 892 - GUJARAT HIGH COURT) as well as Gujarat Lease Financing Limited (2013 (10) TMI 101 - GUJARAT HIGH COURT) - impugned notice u/s 148 is hereby quashed - Decided in favour of assessee.
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