9911796707
TMI Blog2011 (9) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... called upon to explain how the services rendered by the Petitioner while engaged in Domain name registrations and Web Hosting Services were covered within the meaning of the expression "web-site services" under a circular issued by the Central Board of Direct Taxes. The Petitioner responded by a letter dated 14 March 2005 clarifying the circumstances in which it provides web-site services within the meaning of a CBDT circular dated 26 September 2000. The circular was issued, inter alia, in exercise of powers conferred by clause (b) of item (i) of Explanation 2 of Section 10A. By the circular several information technology enabled products or services came to be specified. The specified services included 'Web-site Services'. 4. An order of assessment was passed for the Assessment Year 2002-03 under Section 143 (3). The Assessing Officer held that the Petitioner had not been able to establish that Domain name registration and Web Hosting Services fall within the meaning of 'Web-site Services' mentioned in the notification dated 26 September 2000. The claim of the Petitioner for deduction under Section 80HHE as well as under Section 10A was consequently disallowed. 5. For the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared a loss from business and it had not claimed any deduction under Section 10A. 9. By a notice dated 18 March 2011, the Assessing Officer has sought to reopen the assessment for the Assessment Year 2006-07. A similar notice has been issued on 18 March 2011 for Assessment Year 2007-08. The reasons on the basis of which the assessment is sought to be reopened were disclosed to the Petitioner by a letter dated 29 April 2011 of the Assessing Officer. Those reasons are as follows :- "On perusal of the records and details, it is seen the assessee is engaged in domain registration activity. Assessee functions as domain registrar, authorized by a non-profit corporation, ICANN (Internet Corporation for Assigned Names and Numbers). The activity of Domain Registry does not fall into the category of IT enabled services as IT enabled services, necessitates value addition to call it a IT enabled services. However, in the Domain Registry activity of assessee, no value addition is taking place at any point. Assessee, as Domain Registrar, only acts as a retail agent of a Domain Registry, which manages the Top Level Domain (TLD) both technically and administerly. Further, Domain Registratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eopen the case provided that there is tangible material to come to conclusion that there is escapement of income from assessment. In the instant case, during the assessment proceedings for A.Y. 2008-09, the issue of Domain registry is examined and found to be not eligible for exemption u/s 10A of the Act as discussed above. Accordingly, the exemption was disallowed for A.Y.2008-09". 10. Learned Counsel appearing on behalf of the Petitioner submitted that (i) The assessments for Assessment Years 2006-07 and 2007-08 are sought to be reopened on the basis of a mere change of opinion, something that is impermissible in view of the judgment of the Supreme Court in CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561/187 Taxman 312 (ii) The fact that the Assessing Officer had taken a different view for Assessment Year 2008-09 was not indicative of the fact that there was no change of opinion; (iii) As a matter of fact the assessments are sought to be reopened without any further or new facts or fresh materials; (iv) The Petitioner had been allowed a deduction under Section 10A after detailed consideration both by the Assessing Officer and in appeal by the Commissioner (Appeals) for Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tute 'software export' and he was of the view that the income generated from the sale of domain name registrations and web hosting would not qualify for deduction under Section 10A. The Assessing Officer followed the same view for the Assessment Year 2003-04. The Assessee carried the matter in appeal. The Commissioner (Appeals) held that the assessee was entitled to the benefit of the deduction since the service of domain name registration as well as web hosting constitutes an integral part of 'web-site services' within the meaning of the notification dated 26t September 2000 issued by the CBDT. The order of the Commissioner (Appeals) for Assessment Year 2002-03 was followed while allowing the appeal of the Assessee for Assessment Year 2003-04. The Revenue accepted the order for Assessment Year 2002-03 and no appeal was filed to the Tribunal. The Assessee thus availed of a deduction for the first year, namely, Assessment Year 2002-03. For Assessment Year 2003-04 there was an appeal of the Revenue before the Tribunal but significantly the grounds of appeal would indicate that there was no appeal on the entitlement of the Assessee to avail of a deduction under Section 10A. Consequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 2003-04. That view was reversed by Commissioner (Appeals). Hence for those years and for the succeeding years, the Assessee was granted a deduction under Section 10A. The reasons which have been furnished to the Assessee do not contain any new or tangible material or a reference to any new facts which have come on record which were not present to the mind of the Assessing Officer when the earlier assessments were finalised. The power of the Assessing Officer to reopen an assessment under Section 148 is even within a period of four years conditioned by the requirement that there must be reason to believe that income has escaped assessment. The Assessing Officer cannot in the guise of formulating a reason to believe exercise a jurisdiction to review an earlier determination. The power to reopen an assessment is not a power to review an assessment already made, but a power to reopen where there is reason to believe that income has escaped assessment. Consequently, unless the Assessing Officer has tangible material before him on the basis of which he comes to that conclusion, the reopening of an assessment cannot be permitted merely on the ground that there is a change in the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase and sale, the only value addition being the manual service of assessee. This view was reversed in appeal by the Commissioner (Appeals). The second consideration which has weighed with the Assessing Officer is that a decision taken in a particular year cannot bind the Assessing Officer for subsequent years. Now, it is true that each Assessment Year constitutes a separate unit in itself and the principles of res judicata as such are inapplicable. Equally, though the principles of res judicata do not strictly apply, as in the case of different Assessment Years, there is some value to be placed on the need for uniformity even in tax adjudication. Moreover, in the present case, the deduction is not a matter relating to independent Assessment Years in the strict sense of the term. Section 10A contemplates a deduction in respect of ten succeeding Assessment Years. A Division Bench of the Gujarat High Court, while considering the deduction under Section 80J held in Saurashtra Cement & Chemical Industries Ltd., v. CIT [1779] 2 Taxman 22/[1980] 123 ITR 669 as follows :- "No doubt, the relief of tax holiday under s. 80J can be withheld or discontinued provided the relief granted in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nrestricted power of review in the ands of the assessing authorities depending on their changing moods." We are in respectful agreement with that view of the Division Bench. 19. For these reasons, we are of the view that the Assessing Officer has sought to reopen the assessment for Assessment Years 2006-07 and 2007-08 purely on the basis of a change of opinion. There is justification in the grievance of the Assessee that by relying on the assessment order for Assessment Year 2008-09 the Revenue has put into place a contrived attempt to reopen the assessment for Assessment Year 2008-09. The issue as to whether the Assessee was entitled to a deduction under Section 10A did not fall for determination at all the Assessee not having made a claim for deduction under Section 10A in the first place during Assessment Year 2008-09. The Assessing Officer, proceeded to hold that if the assessee were to claim a deduction during that year, then such a deduction would have been unsustainable. These observations in the order for Assessment Year 2008-09 have now been pressed into service to sustain the reopening of assessment for Assessment Years 2006-07 and 2007-08. That clearly is impermissible ..... X X X X Extracts X X X X X X X X Extracts X X X X
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