TMI Blog2014 (2) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2012, issued by the Assistant Commissioner of Incometax, respondent No. 1. The petitioner, it is stated that, was/is engaged in the business of development of software and export. It is stated that it was a 100 per cent. export oriented unit as per the certificate of registration issued by the Directorate of Software Technology Park of India dated March 31, 1999. The reasons to believe, as recorded by the Assessing Officer before issuing the notice, read as under : "Reasons for reopening the case under section 147 of the Incometax Act in the case of M/s. Nuwave E Solutions Pvt. Ltd.-assessment year 2007-08 Return declaring an income of Rs. 1,45,48,453 was filed on October 30, 2007. Assessment, under section 143(3) of the Income-tax Act was made on December 31, 2010, at an income of Rs. 49,74,14,740. During the year the assessee has shown a total income of Rs. 1,45,48,453. It was seen that during the year the profit of the assessee excluding other income was Rs. 49,33,50,421. The same was claimed as exempt under section 10A. The assessee had shown the profit before tax of Rs. 49.14 crores on the total turnover Rs. 56.36 crores (software sales) giving the NP ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption under section 10A of Rs. 43.49 crores has been allowed to the assessee. Thus, the income to the extent of Rs. 43.49 crores has escaped assessment within the meaning of the proviso to section 147 of the Act. In view of the aforesaid facts, the case of the above named assessee is to be reassessed under section 147/148 of the Income-tax Act, 1961. Issue notice under section 148 of the Income-tax Act, 1961." The reading of the said reasons, elucidates that the petitioner had filed a return of income for the assessment year 2007-08 on March 30, 2007, declaring an income of Rs. 1,45,48,453. The said return was taken up for scrutiny and assessment order dated December 31, 2010, was passed. In the assessment order the Assessing Officer examined the transactions with the related party, namely, CAE Solutions Incorporated (USA). The petitioner had shown business profits of Rs. 43.49 crores which were claimed to be exempt under section 10A of the Act. The said claim was subsequently revised to Rs. 50.52 crores on account of foreign exchange fluctuation gain. The Assessing Officer in the original assessment order has recorded as under : "4.11 Looking to the very high ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any is under obligation not to transfer/ develop identical software for the corporate world in identical activity for three years. 4.13 The assessee has not filed any corroborative evidence such as agreement, etc., in support of its argument. Therefore, the submission of the assessee is not acceptable. 4.14 Even more the falsity of the assessee's submission is established by its disclosure given in schedule 12 regarding significant accounting policies. In paragraph 10 of schedule 12 it has been mentioned as under : Name of the related party Relationship Dr. Anil Gupta Key management personnel CAE Solution Inc. Enterprise with common key management personnel Transaction with related party Nature of Transaction Enterprises with common key management personnel 31-03-2007 31-03-2006 Sale of Software 12,86,24,629 30,66,59,178 Arbitration award 43,49,83,092 4.15 The above disclosure in the notes to account makes it apparent that if the arbitration award of Rs. 43.49 crores is excluded from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as under : (a) In the profit and loss account it was software sales (export) alone which was shown at the figure of Rs. 56,36,07,72. Had there been any arbitration award, it was to be shown in the profit and loss account as such. The very fact that only software sale (export) were shown in the profit and loss account goes to establish that there was typographical error in the notes to the accounts. (b) 'Arbitration award' being a typographical error is further proved and strengthened by the fact that the assessee had already filed softex forms with the STPI authorities enclosing the copies of all export invoices which was also filed before the Assessing Officer during the assessment proceeding. These documents which have been filed and accepted by the STPI clearly mention this amount as computer software. (c) It was mere typographical error is further evident from the Transfer Pricing Officer's order in which the value of export of software at Rs. 56,36,07,721 to associated enterprises has been accepted. (d) This was typographical error is further evident from the report under section 10A of the Act filed with the original income-tax return and revised income-tax return, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no mention thereof or allegation in the grounds recorded by the Assessing Officer. We may, at this stage, also notice the reply which was filed on behalf of the petitioner, vide letter dated February 12, 2013, objecting to the initiation of the reassessment proceedings. It was stated in the letter that purchase of stamp paper had nothing to do with the invoice dated March 30, 2007, for payment of Rs. 43.49 crores. It is stated that the payment against the impugned invoice was received by the assessee in advance in the month of January, 2007. Keeping in view the aforesaid clear position, we allow the present writ petition and quash the reassessment notice. We clarify that we have not examined the question of genuineness of the transaction or the merits of the original assessment order, the order passed by the Commissioner (Appeals) or the contentions of the Revenue before the Tribunal. We are informed that the notice under section 263 of the Act has been issued by the Commissioner of Income-tax. We clarify that we have not examined the validity or invalidity of the said notice. The writ petition is disposed of with no orders as to costs. - - TaxTMI - TMITax - Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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