TMI Blog2012 (4) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... A wrong/incorrect opinion cannot be corrected in 147/148 proceedings but if the decision is erroneous and prejudicial to the interest of the Revenue, it can be corrected in proceedings under Section 263 of the Act - writ petition is allowed and the re-assessment notice is quashed. - W.P.(C) 7931/2010 - - - Dated:- 31-1-2012 - MR. JUSTICE SANJIV KHANNA, MR. JUSTICE R.V. EASWAR, JJ. For Appellant: Mr.R.M.Mehta and Ms.Simran Mehta, Advocates. For Respondents: Mr.Kamal Sawhney, Sr.Standing Counsel. SANJIV KHANNA, J: (ORAL) Artech Infosystems (P) Ltd. has filed the present petition challenging re-assessment proceedings u/s 147 and 148 of the Income Tax Act (for short Act) initiated for the Assessment Year 2003-04 vide notice dated 22.03.2010. The petitioner has also impugned the order dated 18.11.2010 passed by the Assessing Officer disposing of and dismissing the objections filed by the petitioner to the reassessment proceedings in terms of the order passed by the Supreme Court in the GKN Driveshafts (India) Ltd. Vs. CIT (2003) 259 ITR 19 (SC). 2. The reasons to belief recorded by the Assessing Officer dated 19.03.2010 read as under:- The Return of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are payable in respect of services utilized in a business or profession carried on by such person outside India or for the purpose of making or earning any income from any source outside India; or (c) a person who is a non-resident, where the fees are payable in respect of services utilized in a business or profession carried on by such person in India or for the purpose of making or earning any income from any source in India As per clause (b) above, these services are utilized in the business and profession outside India and hence not chargeable under this Act. It is submitted that these Payment are for reimbursement of expenditures incurred by Artect LLC on behalf of the assessee company and hence paid on actual. 5. It is clear from the aforesaid query and the answer that during the course of the original assessment proceedings, the Assessing Officer had gone into the question whether or not Section 9(1)(vii) of the Act was applicable to payment made by the petitioner to Artex Information Systems LLC. The Assessing Officer did not invoke Section 9(1)(vii) and was satisfied with the reply furnished by the petitioner/assessee. In the present case admittedly the re-assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court in the said decision has observed as under:- On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the assessing officer to make a back assessment, but in Section 147 of the Act (with effect from 1-4-1989), they are given a go-by and only one condition has remained viz. that where the assessing officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1-4-1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words reason to believe failing which, we are afraid, Section 147 would give arbitrary powers to the assessing officer to reopen assessments on the basis of mere change of opinion , which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The assessing officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfillme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel for the petitioner has also drawn our attention to the order dated 18.11.2010 passed by the Assessing Officer rejecting objections. The Assessing Officer in this order has held as under:- And further in the case of CIT Vs. P.V.S. Beedies P. Ltd. (SC) 237 ITR 13 it was held by Hon‟ble Supreme Court that position of Law pointed by Internal Audit Party-reopening on that basis is valid. Therefore, the contention of the assessee that reopening is based on change of opinion has no force and not sustainable. 9. The petitioner has rightly submitted that the Assessing Officer has misread the judgment of Supreme Court in CIT Vs. P.V.S. Beedies P. Ltd. (SC) (1999) 237 ITR 13. In the said case it has been held that opinion of the audit party on a point of law cannot be regarded as information under Section 147(b) and cannot lead to valid initiation of the assessment proceedings. A factual mistake or a fact missed stands on a different footing. In the present case in the order dated 18.11.2010, it has not been alleged that the audit party had pointed out any factual aspect, that was missed and not taken into account by the Assessing Officer. 10. Learned counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this immovable Stock, it was decided to use some of these products in house for the home consumption and hence these products were capitalized under the grouping of Intangible Assets. Detail of the Software Capitalized and the Software written off are enclosed for your ready reference. The Cost of Acquisition for these Software was taken at the purchase cost of the Software. As desired by your honor, we are also enclosing the details of the Invoice and particulars of the Party from whom these Software were purchased. We are also enclosing the License Nos. for utilization of these Software. The Depreciation calculated on these Intangible Assessments have been added back in the computation and the Depreciation as application on Software i.e. on Computers are claimed u/s 32 of the Income Tax Act. Computation Sheet as attached with the Form 3CD is enclosed for your ready reference. Out of the above said stock, assessee company had written off some of the non movable Software valuing of Rs.88568/-, lying in its stock for last many years. These software were imported during the Financial year 1997-98 and were lying non movable since then. As there was no demand for these software i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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