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Hcl Technologies Limited Versus Deputy Commissioner Of Income Tax & Anr

2015 (7) TMI 690 - DELHI HIGH COURT

Reopening of assessment - disallowance of Software Licence Fee in part - Held that:- In the facts of the present case, we find that the petitioner had clearly claimed Software Licence Fee of ₹ 31.69 crores as revenue expenditure. That had been disallowed in part and an amount of ₹ 25.36 crores was capitalized and depreciation was allowed at the rate of 60%. The assessment was done under Section 143 (3) read with Section 144C (13) of the said Act. The draft assessment order had made t .....

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d made a full and true disclosure of the material facts and, in any event, there is no allegation in the purported reasons that the petitioner did not make a full and true disclosure of the material facts at the time of the original assessment. That being the position, following the decision in Haryana Acrylic Manufacturing Co. (2008 (11) TMI 2 - DELHI HIGH COURT ) and several other decisions of this Court in the same vein, we find that the invocation of the re-assessment proceedings is not sust .....

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to as the said Act ), which was issued on 28.03.2013 in respect of the assessment year 2006-07. The petition is also directed against the order dated 21.11.2013, whereby the objections raised by the petitioner were disposed of by the Assessing Officer. 2. The original assessment was completed under Section 143 (3) read with Section 144C(13) of the said Act on 28.10.2010. The point in issue is with regard to Software Licence Fee. According to the petitioner it had claimed the same as revenue exp .....

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7, the notice under Section 148 was issued on 28.03.2013. When the petitioner sought the reasons for invocation of the provisions of Section 147 of the said Act, the same was supplied to the petitioner. The relevant portion of the reasons is as under:- 4. During the assessment proceedings your company has incurred expenses for Software License fee to the tune of ₹ 31.69 crores, an amount of ₹ 6.33 crores was in the nature of software license fee paid for the software which has been u .....

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ny incurred an expenditure of ₹ 31.69 crores towards Software License fee which covers under intangible assets and hence only 25% of the said expenditure is allowable as depreciation of intangible assets. Section 32 of the Income tax Act, 1961 w.e.f. 01.04.1998 provides that know-how, patents, copyright, trademark, licenses, franchisee or any other business or commercial rights of similar nature are intangible assets and depreciation at the rate of 25% is allowable on these intangible asse .....

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% allowed earlier. 4. The petitioner filed its objections on 15.11.2013, which were rejected by the Assessing Officer on 21.11.2013. Thereafter, the petitioner filed the present writ petition. 5. We have heard the learned counsel for the parties. From the reasons extracted above, it is evident that they do not indicate any failure on the part of the petitioner to disclose material particulars which are necessary for the assessment. In fact, there is no such allegation at all. We may point out th .....

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ssments beyond the four year period indicated above. The escapement of income from assessment must also be occasioned by the failure on the part of the assessee to disclose material facts, fully and truly. This is a necessary condition for overcoming the bar set up by the proviso to Section 147. If this condition is not satisfied, the bar would operate and no action under Section 147 could be taken. We have already mentioned above that the reasons supplied to the petitioner does not contain any .....

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t of the assessee to disclose fully and truly all material facts necessary for his assessment, any action taken by the Assessing officer under Section 147 beyond the four year period would be wholly without jurisdiction. Reiterating our view-point, we hold that the notice dated 29.03.2004 under Section 148 based on the recorded reasons as supplied to the petitioner as well as the consequent order dated 02.03.2005 are without jurisdiction as no action under Section 147 could be taken beyond the f .....

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