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2017 (7) TMI 962 - HC - Income TaxReopening of assessment - Reason to believe - earning exempt income but not disallowing any expense under Section 14A of the Act - Held that:- As seen that the AY in question is AY 2003-04. During the AY dividend income was not exempt. As regards the other items of exempt income, the Assessee furnished a detailed computation in which it showed that the interest on tax-free bonds was fully furnished. There were queries raised by the AO in this regard which were answered. These were considered by the AO and thereafter the assessment was framed under Section 143 (3) of the Act. In the circumstances, the blanket statement by the AO that the Petitioner failed to disclose all material facts is not supported by any evidence on record. Deduction under Section 10A - Held that:- The AO’s reason for re-opening is that along with the certificate in Form 56F, which was the certificate of the CA, the working sheet of deduction was not enclosed. That was not a requirement of law. What Form 56F has to be accompanied with is specified under the Income Tax Rules itself. The mere fact that the working sheet may not have been enclosed does not amount to a failure by the Assessee to make a full and true disclosure of all material facts. Consequently, the Court is satisfied that the second reason for re-opening is also unsustainable in law. Deduction under Section 35D - reason given by the AO is that the Assessee did not make a similar deduction for the earlier two AYs i.e., 2001-02 and 2002-03 - Held that:- The mere fact that the Assessee may not have claimed such deduction for two of the five years it was entitled to, cannot deprive it of its legitimate claim for such deduction in the AY in question. In an answer to a query raised by the AO in this behalf, the Assessee has explained how in the revised return it included a claim for the said deduction which was inadvertently left out while filing the original return. This was permissible for the Assessee to do. Consequently, even this reason appears to be untenable in law. Payment made by the Assessee for software licence - Held that:- AO formed the opinion contrary to what was formed when the original assessment was framed that the deduction claimed was capital expenditure and not revenue expenditure. This was the very ground on which in Commissioner of Income Tax-II v. Maruti Suzuki India Ltd. (2012 (10) TMI 1145 - DELHI HIGH COURT) a re-opening of the assessment was sought to be made. This Court held that such a reason for re-opening was based on a mere change of opinion since all the necessary relevant facts were fully and truly disclosed when the initial assessment proceedings took place. Even here, there was no basis for the AO to form an opinion that the software license expenses were not revenue expenditure but capital expenditure. The question of there being any failure by the Assessee to make full and true disclosure of all material facts in this regard has not even been mentioned by the AO. Even this reason, therefore, is untenable in law. Claim for depreciation on computer peripherals - Held that:- This Court in Commissioner of Income Tax v. BSES Yamuna Power Ltd. (2010 (8) TMI 58 - DELHI HIGH COURT) upheld the claim of 60% depreciation on computer peripherals. In the compilation filed before the AO as well as in the tax audit report, the basis of such claim has been clearly set out by the Assessee. There is no indication by the AO in the reasons for re-opening about the failure, if any, by the Assessee to make a full and true disclosure of any material facts. This reason for re-opening also, therefore, is based not on any tangible material but on a mere change of opinion. Failure by the Assessee to furnish the details of payment exceeding ₹ 1 lakh in the course of the original assessment proceedings - Held that:- The Court finds that one of the queries raised by the AO in its communication to the Assessee in the course of the assessment proceedings completed under Section 143(3) of the Act was asking it to furnish details of purchases of more than ₹ 1 lakh accompanied by ledger extracts of such persons. In reply thereto, the Assessee pointed out that this involved voluminous records. The AO appears to have not pursued the matter thereafter. Therefore, there was no failure by the Assessee to make a true and full disclosure. Assessee appeal allowed.
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