TMI Blog2011 (12) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... e issues involved in these petitions, they are taken up for final hearing today. 3. In both these petitions similar issues are involved and factual background is also similar. For the purpose of this order, therefore, we may note the facts as stated in Special Civil Application No.16074 of 2011. 4. The petitioner assessee is a Private Limited Company and is regularly assessed under the Income Tax Act, 1961. For the assessment year 2006-07, the petitioner filed its return of income on 26.12.2006 declaring total income at Rs.1,00,86,370/-. This return of the petitioner assessee was taken into scrutiny by the Assessing Officer. After notices and hearings, the Assessing Officer framed scrutiny assessment under Section 143(3) of the Act on 18.6.2008 and assessed the income of the assessee at Rs.1,08,59,370/-. 5. Against the order of the Assessing Officer to the extent the petitioner was aggrieved, he preferred appeal before the Commissioner (Appeals), who partially allowed the appeal by his order dated 2.3.2010. 6. To the extent the petitioner's appeal was not allowed by the Commissioner (Appeals), the assessee approached the Tribunal. The Tribunal, however, dismissed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax has escaped assessment for A.Y.2006-07 and accordingly it is the fit case for reopening the assessment u/s. 147 for the A.Y.2006-07." 8. The petitioner raised objection to the reopening of the assessment under his letter dated 14.6.2011. Such objections, however, were rejected by the Assessing Officer by his letter dated 30.9.2011. At that stage, the petitioner has approached this Court challenging the notice for reopening of assessment on various grounds. 9. Counsel for the petitioner submitted that only ground on which the Assessing Officer sought to reopen the assessment was that in view of the judgment of Karnataka High Court since the assessee was required to deduct TDS on the payment made to the foreign company for purchase of raw-materials, which the petitioner had not done, entire amount was required to be disallowed and added back to the total income. Counsel submitted that on the date when such reasons were recorded and on the basis of which notice was issued, decision of Karnataka High Court in the case of Commissioner of Income-Tax and another vs. Samsung Electronics Co. Ltd. (supra) was already reversed by the Apex Court vide its decision in the case of GE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount to permitting the Assessing Officer to change his opinion. 13. However, as held by the Apex Court in the case of Commissioner of Income-Tax vs. Kelvinator of India Ltd. reported in [2010]320 ITR 561(SC), even after the amendment in Section 147 of the Act with effect from 1.4.1989, the basic requirement for reopening the assessment that the Assessing Officer has to have reason to believe that the income chargeable to tax has escaped assessment, would continue to apply. In that view of the matter, we would have to ascertain whether from the reasons recorded by the Assessing Officer for reopening the assessments, there is any such belief emerging. 14. We have already noted that the Assessing Officer had recorded that looking to the provisions contained in Section 40a(i) of the Act and the decision of the Karnataka High Court in the case of Commissioner of Income-Tax and another vs. Samsung Electronics Co.Ltd (supra), the assessee was required to deduct tax at source on the payments made by it to the foreign supplier for the purchase of goods. On the very date when the Assessing Officer recorded such reasons, the decision of the Karnataka High Court in the case of Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax and another vs. Samsung Electronics Co.Ltd.(supra) had come to the conclusion that on any payment being in the nature of a payment resulting in some possible income in the hands of the non-resident recipients, the obligation imposed on the resident payers in terms of section 195(1) of the Act sprang into action, the moment there was to be a payment to a non-resident. 20. On the other hand, the Apex Court in the case of GE India Technology Centre P.Ltd. vs. Commissioner of Income-Tax and another (supra) held that " A person paying interest or any other sum to a non-resident is not liable to deduct tax if such sum is not chargeable tot ax under the Income-tax Act. For instance, where there is no obligation on the part of the payer and no right to receive the sum by the recipient and the payment does not arise out of any contract or obligation between the payer and the recipient but is made voluntarily, such payments cannot be regarded as income under the Income-tax Act. It may be noted that section 195 contemplates not merely amounts, the whole of which are pure income payments, it also covers composite payments which have an element of income embedded or incorporated in them. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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