TMI Blog2010 (8) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... diligence, have been discovered by the Assessing Officer would not amount to disclosure. The Revenue is also relying on the decision of the hon'ble Delhi High Court in the case of Consolidated Photo and Finvest Ltd. v. Asst. CIT [2006] 281 ITR 394 (Delhi). The short facts apropos are that the assessee had filed original return for the impugned assessment year declaring income of Rs. 35,64,40,434 which was later revised through a revised return to Rs. 35,64,17,704. The assessment was completed under section 143(3) of the Act on March 25, 2004. Thereafter, notice was issued on March 28, 2008 under section 148 of the Act for reopening the assessment and the reason given was as under: "It is found that the assessee has made a claim of Rs. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly mentioned research and development expenditure of Rs. 4,02,65,172 as revenue in nature and Rs. 8,33,520 as capital in nature. Further, according to the assessee, the Assessing Officer had, during the original assessment proceedings, vide his letter dated February 9, 2004 required various clarifications from the assessee in relation to the assessment, which, inter alia, included details in respect of product development expenses being part of its research and development claim. Specific reason was also sought by the Assessing Officer, why such claim should be allowed as revenue expenditure. According to the assessee, detailed reply was given by it to the Assessing Officer on February 17, 2004 and break-up also given for total expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee to furnish full and complete particulars during the course of the original assessment proceedings and hence reopening done was invalid. Now before us, the learned Departmental representative strongly supported the order of the Assessing Officer. Per contra, the learned authorised representative submitted that the learned Commissioner of Income-tax (Appeals) had rightly relied on the decision of the hon'ble apex court in the case of Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) and held the reassessment proceedings to be invalid. We have heard the rival submissions and perused the orders. During the course of the original assessment proceedings, the Assessing Officer had written a letter on February 9, 2004 to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirements and conformity of production test ARAI is an approved certifying lab. To meet the competition and marked requirements, we develop newer products. For this activity, we avail of external assistance during design and testing. Based on the above activities, we now have products meeting Bharat stage II (Euro IT) emission norms for vehicular engines. In the same way, our tractor engines meet the current Indian regulation term II. For export of tractors, we have emissionised product meeting US tier II norms. In the genset segment, we have products which meet current CPCB norms. The engines offered for industrial application meets the norms applicable for this segment. These activities are carried out in a separate set-up in ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e capital in nature without having any fresh material supporting such change of opinion. The hon'ble apex court in the case of Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) had held that even after substitution of section 147 by the Direct Tax Laws (Amendment) Act, 1987 with effect from April 1, 1989 "reason to believe was still required and not a "mere change of opinion". Further, here, undisputedly, the reopening proceedings were initiated after four years from the end of the relevant assessment year and therefore, the proviso to section 147 clearly applied. We are of the opinion that there was no failure on the part of the assessee to furnish all particulars for its assessment at the time of original assessment and the reassessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 200304 were 0.83 per cent. of the sales, the actual warranty claims in the previous year relevant to the assessment year 2004-05 were 0.30 per cent. of the sales and the actual warranty claims in the previous year relevant to the assessment year 2005-06 were 0.60 per cent. of the sales. According to the assessee, based on the actual expenditure for the assessment years 2004-05 and 2005-06 it had arrived at the average of 0.27 per cent. of the sales as possible warranty expenditure and provided accordingly, for the relevant previous year. Hence, as per the assessee, it was done in a realistic manner. The learned Commissioner of Income-tax (Appeals) appreciating the contentions and also noticing that the decision in the case of Rotork ..... X X X X Extracts X X X X X X X X Extracts X X X X
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