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TMI Blog2011 (12) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act, 1961 (Act, for short) are as under:- "The return in this case for the AY 2003-04 was filed on 31.10.2003 declaring on income of Rs.22447176/- at MAT u/s 115JB which was processed u/s 143(1) of the I.T. Act. 1961on 22.03.2004. The case was selected for scrutiny and the asstt. was completed u/s 143(3) of the Act on 30.01.2006 on an income of Rs.22447176/- at MAT u/s 115JB. The perusal of asstt. records for the AY 2003-04 reveals that the assessee claimed and was allowed a deduction of Rs 15807848/- on a/c of non-compete fees as revenue expenditure. As the non-compete fees given an advantage of enduring benefit to the assessee it was required to be capitalized and added back to the income of the assessee. Section 37 of the Act provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamined with reference to the law relevant to assessment year 2003-04 before the original assessment order dated 30.01.2006 was passed. 6. The petitioner assessee has placed on record the letter dated 28.1.2006 written to the Assessing Officer in reply to the queries raised. The relevant portion of the letter dated 28.01.2006 reads:- "14. A sum of Rs. 1,98,500/- has been incurred as merger expenses. Complete details of merger expenses incurred by the company are enclosed herewith. It would be seen that the merger expenses have been mostly incurred on fees paid to the professionals and as such, the same is revenue expenditure and may please be allowed. 15. The Company had paid a sum of Rs.1,58,07,858/- in the Profit & Loss Account under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, during the course of arguments it was submitted that this letter dated 28.01.2006 though available in the Department's file, might have been subsequently introduced and placed on record. It was submitted that the questionnaire in response to which this letter was written, is not available on record and, therefore, the suspicion is not unfounded and has merit. 8. In order to satisfy ourselves whether the said allegation is correct, we have examined the original records. We find that an audit objection was raised that the Assessing Officer had wrongly allowed/treated the non-compete fee as revenue expenditure and that the same should have treated as capital expenditure. In response to the said audit objection, the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmercial right of similar nature or information or technique likely to assist in the manufacture of processing of goods or provision for services;" 9. We have not reproduced the entire contents of the reply of the Assessing Officer in response to the audit objection, as what has been reproduced above is sufficient. It is apparent from the aforesaid reply by the Assessing Officer that this issue was specifically considered and examined at the time of original assessment. It may also be noted that the letter dated 28.01.2006 is referred to in the assessment order, though in respect of another issue and not with regard to the issue in question. 10. On the question of change of opinion, the law is well settled. Decision of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be based on fulfillment of certain pre-conditions and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, the Assessing Officer has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no indication and it is not alleged that there was some material or information available on record when reasons to reopen were recorded, to show that the assessee had concealed or had not disclosed fully and truly all material facts. The material facts were on record and had been disclosed by the asssesee. The factual matrix above indicates that the Revenue verily believes that the Assessing Officer had drawn a wrong legal inference and a conclusion, which it is submitted is incorrect. In these circumstances, it has to be held that the re-assessment proceedings have not been validly initiated as the condition of the proviso to Section 147 is not satisfied. 13. Revenue had the option, but did not take recourse to Section 263 of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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