TMI Blog2006 (6) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has filed the revised return disallowing the depreciation claimed himself and paid the taxes fully before 31-3-1998. This cannot be the subject-matter for reopening. The Hon'ble Apex Court in the case of Gemini Leather Stores where the decision of the Calcutta Discount Co. Ltd.[ 1971 (1) TMI 10 - SUPREME COURT] . Thus, it is seen from the records that the Assessing Officer has not given any failure on the part of the assessee to disclose the material facts whereas in the original assessment order all the details are discussed and after discussion and following the case laws, allowed the claim of the assessee, whether this tantamounts to change of opinion for reopening. For this, we will go to the case law of the Hon'ble Apex Court in the case of ITO v. Nawab Mir Barkat Ali Khan Bahadur[ 1974 (10) TMI 1 - SUPREME COURT] . Thus, respectfully following the case laws of the Hon'ble Apex Court, the Hon'ble jurisdictional High Court and other High Courts, we fairly feel that the reopening is not permissible on change of opinion as clearly evident from the reasons recorded by the Assessing Officer and the original assessment order passed by the Assessing Officer. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n expenditure but here the assessee received for surrendering technology and know-how on closure of business. Hence it is sold along with plant and machinery and land. Hence it is a capital receipt and long-term capital gains attracts. Therefore, the entire amount of Rs. 9,22,60,000 is added as capital gains. Even after adding this the assessee gets tax benefit under Section 54EA of the Act. 4. Subsequently this assessment was reopened by issuance of notice under Section 148 dt. 29th Nov., 1999. The assessee vide letter dt. 7th Feb., 2000 requested the AO to treat the originally filed return on 10th March, 1998 as return filed in response to this notice. The AO to complete the reassessment proceedings issued a notice under Section 143(2) of the Act dt. 1st Nov., 2001 posting the case for 16th Nov., 2001. Since there was no response to this notice, the AO issued a letter dt. 14th Dec. 2001 where non-compliance of notice under Section 143(2) dt. 1st Nov., 2001 was brought to the notice of the assessee and request was made for appearance on 20th Dec. 2001. In response to these notices, the AO proceeded to frame the assessment and the assessee participated in the reassessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Expln. (2) to Clause (vii) of Sub-section (1) of Section 9. (3) The lump sum consideration of Rs. 9,22,60,000 for transferring, assigning and surrendering technical know-how as income chargeable to tax as per Expln. (2) to Clause (vii) of Sub-section (1) of Section 9. This is treated as capital receipt by the assessee. (4) The assessee's claim of Rs. 16,50,000 as management fees on transaction with REPL Mumbai which has been accepted by the assessee as illegal and bogus in the revised return. The claim is not admissible. (5) The amount received on profit on sale of fixed assets of Rs. 34,23,075 and Rs. 24,00,13,000 on surrender of technical know-how and other tangible/intangible assets have been taken to reserve and surplus in the balance sheet without crediting P L a/c even though the regular method of accounting is mercantile system and the amount should have been credited to P L a/c as per their method of accounting. The above sums have not been into account for working out tax liability under Section 115JA. In view of above facts, I have reason to believe that income chargeable to tax has escaped assessment. So the assessment order passed on 31st March, 1998 for asst. y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessed; or such income has been assessed at too low a rate; or such income has been made the subject of excessive relief under this Act; or excessive loss or depreciation allowance of any other allowance under this Act has been computed, then the AO car reopen the assessment. He argued that, the relevant assessment year involved is 1997-98 and the assessment year ended on 31st March, 1998 and the reopening was done on 29th Nov., 1999. In view of this, he argued that the reopening is as per the provisions of the Act and accordingly he urged the Bench to confirm the order of the CIT(A) on this issue. 10. It is seen from the reasons recorded reproduced in the above para 7, the reasons are regarding (i) excessive claim of deduction under Section 80HHC on account of interest receipt, miscellaneous income and rent treated as business income, (ii) incorrect allowance of exemption under Section 54 for the lump sum transfer of technology, (iii) incorrect computation of working of the capital gains, (iv) incorrect computation of working of taxability under Section 115JA and (v) computation of receipt as non-compete fee. Further, in the report of the Comptroller Auditor General of India for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red. I am unable to agree with the submission made by the appellant in view of the decision in the case of Rakesh Agarwal v. CIT (225 ITR 497/6 - Delhi) and P.C Patel v. ACIT (236 ITR 833 - Guj.). Reliance can also be made on the following case laws: 13. It can be seen from the reassessment order passed by the AO that she has discussed that IT Act provided in Section 147 Explanation that the failure on the part of the AO to investigate the accounts produced with due diligence will not be considered as full and true disclosure by the assessee and it is to be understood even if the assessee had produced the books of account and the AO failed to detect the mistake, it will not necessarily debar the assessment from being reopened in order to bring to tax the escaped income. 14. We have gone through the relevant Expln. 1 to Section 147, which reads as under: Explanation 1.-Production before the AO of account books or other evidence from which material evidence could with due diligence have been discovered by the AO will not necessarily amount to disclosure within the meaning of the foregoing proviso. 15. It is seen that the AO has invoked Expln. 1 to Section 147. In this Expln. 1 to Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lates that before the AO is satisfied to act under Section 147, he must put in writing as to why in his opinion or why he holds the belief that income has escaped assessment. Where the AO holds the opinion that because of excessive loss or depreciation allowance the income has escaped assessment, the reasons recorded by the AO must disclose by what process of reasoning he holds such belief that excessive loss or depreciation allowance or any other deduction has been wrongly computed in the original assessment. Merely recording the reason that excessive loss or depreciation allowance or other deduction have been computed without disclosing the reasons by which the AO holds such belief does not confer jurisdiction to take action under Section 147 of the Act. No doubt there is wide scope for taking action under Section 147, but it does not confer jurisdiction on interpretation of a particular provision earlier adopted by the AO. The scope of Section 147 is not for reversing its earlier order suo motu irrespective of there being any material to come to a different conclusion apart from just having second thoughts about the inferences drawn earlier. This view has been supported by the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unter-affidavits is that excessive deduction had been allowed under Section 80HHC. The assessee has placed before the AO all statements, a perusal of which clearly shows that all the materials required for calculating the extent of benefits under Section 80HHC and the actual calculation has been placed before the officer. The mistake, If any, is solely due to the mistake made by the officer and is not a mistake that is attributable to any failure on the part of the assessee. This fact is not seriously disputed by the learned Counsel for the Revenue. The second reason given is that there has been excessive allowance under Section 32AB of the Act, and, therefore some part of the income chargeable to tax has escaped assessment. Here again the detailed working given to the AO, a copy of which has been placed before the Court, shows that the mistake, if any, is a mistake committed by the AO and is not a mistake that is attributable to the assessee's failure to place fully and truly the material facts. It is the third and last reason which was sought to be sustained by the learned Counsel for the Revenue as affording sufficient basis for the notice under Section 147. This relates to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is important. From a perusal of Clause 7.2 of the said circular it would appear that in no uncertain terms it was stated as to under what circumstances the amendments had been carried out, i.e., only with a view to allay fears that the omission of the expression reason to believe from Section 147 would give arbitrary powers to the AO to reopen past assessments on mere change of opinion. It is, therefore, evident that even according to the CBDT a mere change of opinion cannot form the basis for reopening a completed assessment. The submission of Mr. Jolly to the effect that the said circular cannot be construed in such a manner whereby the jurisdiction of the statutory authority would be taken away is not apposite for the purpose of this case. In Union of India's case, AIR SC 849 : (1996) 11 SCC 701, whereupon Mr. Jolly had placed strong reliance, the apex Court was dealing with administrative instructions whereby no right was conferred upon the respondents to have the house rent amount included in their emoluments for the purpose of computing overtime allowance. The apex Court held that otherwise also the Government's instructions have to be read in conformity with the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the AO to reopen the proceeding without anything further, the same would amount to giving a premium to an authority exercising quasi-judicial function to take benefit of its own wrong . 21. The Hon'ble Supreme Court in the case of CIT v. Foramer France [2003] 264 ITR 566 has affirmed the decision of the Hon'ble Allahabad High Court in Foramer v. CIT [2001] 247 ITR 436. The Allahabad High Court has dealt with the law applicable on change of opinion and held that there is no difference between the law prior to substitution and after substitution of Section 147 by Direct Tax Laws (Amendment) Act, 1987. The Hon'ble High Court laid down the principle as under In our opinion, we have to see the law prevailing on the date of issue of the notice under Section 148 i.e. 20th Nov., 1998. Admittedly, by that date, the new Section 147 has come into force and, hence, in our opinion, it is the new Section 147 which will apply to the facts of the present case. In the present case, there was admittedly no failure on the part of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment of the petitioner's own case, vide Dy. CIT v. ONGC as agent of Foramer France (2001) 71 TTJ (Del) 570 : (1999) 70 ITD 468 (Del) has considered the decision of the Tribunal in Boudier Christian's case. It is settled law that an appeal is a continuation of the original proceedings and hence when the Tribunal in the appeal relating to the petitioner has considered the decision of the Tribunal in Boudier Christian's case, the impugned notice under Section 147/148 would obviously be on the basis of a mere change of opinion by the IT authorities, which would not be valid as held by the Supreme Court in Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996; Gemini Leather Stores v. ITO [1975] 100 ITR 1 (SC) and Jindal Photo Films Ltd. v. Dy. CIT [1998] 234 ITR 170 (Delhi) etc. In the decision of the Tribunal in the assessee's own case, Dy. CIT v. ONGC (supra) it has been held that the income from the contract between the parties was business income and not for technical services. Although we are of the opinion that the law existing on the date of the impugned notice under Section 147/148 has to be seen, yet even in the alternative even if we assume th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation claimed himself and paid the taxes fully before 31st March, 1998. This cannot be the subject-matter for reopening. The Hon'ble apex Court in the case of Gemini Leather Stores v. ITO (supra) where the decision of the Calcutta Discount Co. v. ITO (supra) has been followed, has held as under: It appears that the ITO had written a detailed order in making his best judgment assessment. Having found out all about the drafts which were not mentioned in the assessee's books of account, the ITO gave the partners of the firm opportunity to explain the drafts. Referring to the statement of one of the partners, Shri Om Prakash, the ITO observed in his order: He has said that the drafts which were sent by him relating to M/s Gemini Leather Stores were entered in the books of the firm while other drafts which he has made would be of others whose name he does not remember. As he is unable to tell to whom other drafts sent by him relate in spite of specific opportunities given to him, the obvious inference is that moneys of the drafts are that of the firm with which he is connected. Referring to the circumstances in which these drafts had been sent or received, the ITO further obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscovered. After this discovery the ITO had in his possession all the primary facts, and it was for him to make necessary enquiries and draw proper inference as to whether the amounts invested in the purchase of the drafts could be treated as part of the total income of the assessee during the relevant year. This the ITO did not do. It. was plainly a case of oversight, and it cannot be said that the income chargeable to tax for the relevant assessment year had escaped assessment by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts. The ITO had all the material facts before him when he made the original assessment. He cannot now take recourse to Section 147(a) to remedy the error resulting from his own oversight. 23. Going by the reasons recorded in the present case, it is seen from the records that the AO has not given any failure on the part of the assessee to disclose the material facts whereas in the original assessment order all the details are discussed and after discussion and following the case laws, allowed the claim of the assessee, whether this tantamounts to change of opinion for reopening. For this, we will go t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not changed since the original assessments were made and it was open to the ITO to make that presumption at the time. If he should have but did not do so then, he cannot avail of Section 147 to correct that mistake. In any event, we are not called upon in this proceeding to record a finding on the question whether in fact the ladies were the respondent's legally wedded wives. We are concerned only with the question whether the condition precedent to the exercise of jurisdiction under Section 147 exists in this case; we have found that it does not. 24. The Hon'ble Supreme Court in the case of CIT v. Bhanji Lavji [1971] 79 ITR 582 held as under: In our judgment, the High Court was right in holding that the Tribunal misconceived the nature of the proceedings and the duty imposed upon the assessee by Section 34(1)(a). It is not for the assessee to satisfy the ITO that there was no concealment with regard to any question; it is for the ITO, if that issue is raised, to establish that the assessee had failed to disclose fully and truly certain facts material to the assessment of income which had escaped assessment. Failure to disclose how the delivery of ghee was given at Porban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egal inference from the facts disclosed but on that account he was not competent to commence reassessment proceedings under Section34(1)(a) for the two asst. yrs. 1947-48 and 1948-49. 25. In view of the above discussion and respectfully following the case laws of the Hon'ble apex Court, the Hon'ble jurisdictional High Court and other High Courts, we fairly feel that the reopening is not permissible on change of opinion as clearly evident from the reasons recorded by the AO and the original assessment order passed by the AO. In view of this, the reopening is held as bad in law. Accordingly, this issue of the cross-objection is decided in favour of the assessee and against the Revenue. 26. The second legal issue raised by the assessee in the cross-objection is that no notice under s 143(2) is served on the assessee within the stipulated period of 12 months from the end of the month in which the return in response to notice under Section 148 was filed. The learned Counsel of the assessee on this point relied on the case law of the jurisdictional High Court in the case of CIT v. M. Chellappan (2005) 198 CTR (Mad) 490, wherein the Hon'ble jurisdictional High Court has decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (supra), we are of the view that no substantial question of law arises for our consideration in these appeals. Accordingly, these appeals are dismissed. No costs. Consequently, connected T.C.M.P. Nos. 445 to 447 of 2004 are also dismissed. 27. On the other hand, the learned Departmental Representative clearly stated that there is change in law as regards the provisions of Section 148 of the Act by the Finance Act, 2006 with retrospective effect from 1st Oct., 1991 and with that change in law in the provisions of Section 148 of the Act, the requirement of notice is done away. However, the learned Departmental Representative clearly produced the assessment records and stated that notice under Section 143(2) for the relevant assessment year was issued vide notice dt. 1st Nov., 2001, which was served on the assessee on 1st Nov., 2001. The learned Departmental Representative produced the copy of the notice dt. 1st Nov., 2001 issued under Section 143(2) of the Act and there was a further letter from the AO dt. 14th Dec. 2001 wherein the reference to notice under Section 143(2) is mentioned, which reads as under: With reference to the above, it is observed that there has been no comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otes on Clauses to the Finance Bill, 2006, that this proviso was inserted to Sub-section (1) so as to provide that where a return has been furnished during the period from 1st Oct., 1991 to 30th September, 1995 in response to a notice served under Section 148 and subsequently a notice has been served under Sub-section (2) of Section 143 after the expiry of twelve months as provided in proviso to Sub-section (2) of Section 143 before the amendment of said sub-section by the Finance Act, 2002, but the said notice is served before the expiry of the time limit for making the assessment, reassessment or recomputation as specified in Sub-section (2) of Section 153 of the Act, such notices shall be deemed to be a valid notice. It is clear from the Explanation brought out by this amendment to clarify that nothing contained in the first proviso or the second proviso shall apply to any return which has been furnished on or after 1st October, 2005 in response to a notice served under this section. This means that these provisions will apply during the period from 1st Oct., 1991 to 30th Sept., 2005 and after 30th Sept., 2005, the proviso to Sub-section (2) of Section 143 and the proviso to Cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect retrospectively from 1st Oct., 1991. It is also proposed to insert an Explanation in Sub-section (1) so as to clarify that nothing contained in the first proviso or the second proviso shall apply to any return which has been furnished on or after 1st Oct., 2005 in response to a notice served under the said section. This amendment will take effect retrospectively from 1st Oct., 2005. 32. Further, the memorandum explaining the provisions in the Finance Bill, 2006 for amending Section 148 reads as under: The time-limit for issue of notice under Sub-section (2) of Section 143 for the purposes of making assessment or reassessment under Section 147. Under the existing provisions of Sub-section (1) of the Section 148 it has been provided that before making the assessment, reassessment or recomputation under Section 147, the AO shall serve a notice under Section 148, on the assessee, requiring him to furnish the return of his income and the provisions of the Act shall, apply as if the return furnished in response to the notice under the said section were a return required to be furnished under Section 139. It is proposed to insert a proviso to Sub-section (1) so as to provide that wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived by somebody on 1st Nov., 2001, but by whom it is not clear. Even the learned Departmental Representative could not answer this. It is more clear from the letter dt. 14th Dec. 2001 of the AO that there was no compliance to the notice under s 143(2) dt. 1st Nov., 2001 and hence one more opportunity was provided to appear on 20th Dec. 2001. The learned Departmental Representative produced a copy of the order sheet entry dt. 1st Nov., 2001 where it is written as under: There is no mention that notice under Section 143(2) was served on the assessee or not. On enquiry from the Bench, the learned Counsel of the assessee made a statement at Bar that it is the stand of the assessee from the very beginning that they have not received any notice under Section 143(2). Even the same was agitated in the letter dt. 19th Dec. 2001, which was received by the Department on 19th Dec. 2001 and the relevant text of the letter reads as under: We have received your letter dt. 14th Dec. 2001 today at 11 a.m. Without prejudice to our rights available under the law, we wish to submit that notice dt. 1st Nov., 2001 (mentioned in your above letter dt. 14th Dec. 2001) was never received by us and so th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Section 9(1)(vi). The AO found that it is a lump sum consideration received for the transfer of technical know-how and this know-how transferred to Bayer AG was in turn transferred by Bayer AG to the joint venture company formed by Bayer AG and the assessee company in India. She found that where all the rights are transferred, it would obviously debar transferee from any future use of the know-how in any manner whatsoever and the contention of the assessee was not accepted that the transfer entails characters of a restrictive covenant. The AO observed that such restriction would automatically arise in the cases where all the rights are transferred. The AO finally was of the opinion that the lump sum consideration received by the assessee is very much income chargeable to tax under section. Explanation 2 to Clause (vi) of Section 9(1) as royalty. 37. The CIT(A) has clearly held that the provisions of Section 9(1)(vi) does refer to the taxpayer who is non-resident and who is chargeable to tax in India in respect of income by way of royalty and this section does not apply to a resident taxpayer and so assessed by the AO. The CIT(A) has discussed the source rule for royalty as per Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us is 1997-98. As is seen from the agreement entered into between Indian Syntans Ltd. and Bayer Indian Systems Ltd., the relevant clauses in Article 2 regarding transferred property reads as under: Article 2 Transferred Property The assets to be transferred in accordance with Article 1 of this Agreement shall be 1. all tangible assets such as land, plant, buildings, machinery and equipment facilities regarding the transferred business (details of which shall be set forth on the list and subcontracts attached hereto as Exhibit A); and 2. all intangible assets to be assigned to the transferee (such as distribution and agency agreements, customer and supplier lists, trademarks and trade-names, concessions, licenses, permits, approvals, consents and proprietary rights, etc.) regarding the transferred business (details of which shall be set forth on the list attached hereto as Exhibit B). Further, as per Article 1, what is transferred is manufacture and process of know-how in terms of Article 1, the assessee shall sell, transfer and assign and surrender to Bayer Indian Syntans all chemicals and intermediaries in its possession or use and it is nothing but a case of transferring, assigni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure was revenue expenditure or capital expenditure. We are not concerned here with the case of an expenditure. Here, it is a case of a receipt. Though the amounts paid in the above case were by way of payment of part of the sale consideration, the Supreme Court came to the conclusion that the expenditure was of a revenue nature, because the payment was related to the annual profits and the payment was not related to or tied up in any way to a fixed sum agreed between the parties as part of the purchase price. We do not think anything said by the Supreme Court, in that case, would be of any help to the Revenue on the facts of the present case. In Hylam Ltd. v. CIT, which was also decided by this Court, the assessee entered into an agreement with an English company to use some patented process of manufacture. By that agreement, the English company granted to the assessee an exclusive non-assignable licence to manufacture laminates, in accordance with the processes covered by the patents. As a consideration for the grant, the assessee was to pay 5 per cent royalty on the net selling price of all laminated products made and sold in accordance with those patented processes. When the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed. 41. The next issue in the Revenue's appeal is whether the CIT(A) was right in holding that sum received by the assessee towards transfer of intangibles and non-compete fee was not assessable as goodwill. 42. After hearing the rival contentions, we have gone through the agreement Article 3 regarding non-competition fee. The relevant article reads as under: Article 3 Non-competition In India and worldwide the transferor hereby agrees and undertakes to completely refrain from manufacturing, marketing and selling products regarding the transferred business and as restrictive covenant the transferor warrants not: 1. to start afresh the business of manufacturing, marketing or selling products similar or identical to the transferred business; and 2. to involve, directly or indirectly, in any business venture which is identical or similar to or which is likely to be in competition with the business of manufacturing, marketing or selling products similar or identical to the transferred business, and 3. to enter in any arrangement with any other person, firm or body corporate for manufacturing, marketing or selling products similar or identical to the transferred business; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing reads as under: In the facts of the present case there are no' materials available on record from which it could be held that the intention of the multinational company and its subsidiaries was to run their business in India using the name, fame and reputation of the transferor. The agreement and the available materials, on the other hand point to the fact that the transferee company wanted to monopolize its business in India by eliminating competition and this agreement was designed to serve this purpose. It is a fact that from the mere reading of the agreement in entirety it would clearly indicate that all the trade names, the names given to various chemicals manufactured, customer lists, supplier list, licenses, permits, approvals, etc. had all been surrendered. Further as an important and integral part of the agreement, restrictive covenants were entered into completely tying the hands of the assessee from entering into competitive business whether as manufacturer, as processor or as marketer. In that process, all intangible assets associated with the business were surrendered. It is clear from the above facts and records of the case that the agreement did not speak of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n received for restrictive covenant can be taxed as income or capital is directly covered by the decision in CIT v. Saraswathi Publications. In that case, it was held that a receipt referable to the restrictive covenant was a capital receipt not liable to income-tax. The decision in CIT v. N. Palaniappa Gounder (1982) 31 CTR (Mad) 7 : (1983) 143 ITR 343 (Mad) , is an authority for the proposition that the compensation received by the outgoing partners or the old partners in respect of then share in the partnership cannot be taxed as revenue receipts nor can it be said that there was any element of capital gains arising merely because of the valuation of his share on the retirement of the assessee from the firm resulted in an excess over the book value of the net assets of the firm referable to his share. The above two decisions are directly applicable to the facts of this case and we confirm the finding of the Tribunal and accordingly, we answer the first five questions referred to above relating to the recipients in the affirmative and in favour of the assessee. 45. Going by the facts of the case and relying on the Hon'ble jurisdictional High Court decision cited supra, we fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence we need not interfere in the same and accordingly this issue is dismissed as infructuous. 49. The next issue in this appeal is whether the CIT(A) was right in holding that a sum of Rs. 24,00,13,000 and Rs. 34,23,075 taken directly to the capital reserve account in the balance sheet without crediting to the P L a/c, could not be taken into account for computing the book profit under Section 115JA of the Act. The AO has recomputed the book profit under Section 115JA only on the premise that the amount received towards transfer of technical know-how, tangible and intangible assets has been taken directly to the capital reserve account without crediting the same to the P L a/c. It is seen that the issue is squarely covered by the decision of the apex Court in the case of Apollo Tyres Ltd. v. CIT where it was held that once the P L a/c is certified by the statutory auditor and approved by the company in its general meeting and thereafter filed before the Registrar of Companies and accepted by the authorities, then the AO has no power to recompute the income under the Companies Act and the AO has only limited powers of making increases and deductions as provided in Explanation to S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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