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TMI Blog2015 (9) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... t Rs. 16,09,43,870/-. The learned Assessing Officer (in short 'AO') assessed the total income at Rs. 17,13,70,780/- u/s 143(3) of the Income Tax Act, 1961 (in short 'Act') on 24.12.2008 after making certain additions. Thereafter, he issued a notice u/s 148 of the Act on 30-03-2011 for re-opening of the assessment stating that income of the assessee had escaped assessment. The ld. AO recorded following reasons for issue of notice u/s 148 of the Act: "The return of income was filed on 30/11/2006 declaring an income of Rs. 16,09,43,870/-. Subsequently, assessment in this case was completed u/s 143(3) on 24/12/2008 at an income of Rs. 17,13,70,780/-. It has now been noticed that in the A Y 2005-06 the assessee has disallowed a sum of Rs. 2,39,60,828/- being payment of royalty on sales made to foreign clients as the expenses charged to profits & loss account was inadmissible as deduction u/s 40(a) of the Act. In AY 2006-07, the assessee has claimed the said amount of Rs. 2,39,60,828/- as the TDS was paid on this amount in the FY relevant to the A Y 2006-07. As the payment of royalty was in the nature of capital and gives enduring benefit to the business of the assessee, the same is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opy of challans through which the TDS on royalty was deposited. Copy of approvals received from Ministry of Industry for royalty payment and technical collaboration agreement were also filed. Thus, the appellant, at the time of scrutiny assessment proceedings, had fully and truly disclosed all material facts and after scrutinizing the details furnished by the appellant, The AO making the regular assessment had formed an opinion that the appellant has correctly claimed these expenses. Further, no new facts or material had been brought on record which provides reasons to believe that the income of the appellant has escaped assessment. Also the AO without any new facts or material brought on record formed an opinion that this expenditure gave benefits of an enduring nature to the appellant and the same should be treated as capital expenditure in the nature of intangible asset. The details are at page 14 to 21 of this order. After perusal of the above facts and the facts stated in the assessment roder I am of the opinion that this is a case of change of opinion as the successor Assessing Officer has merely recorded a different opinion in relation to an issue to which the earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not disclosed the material facts in respect of royalty truly and fully in assessment. 9. In CIT vs. Kelvinator of India Ltd. 256 ITR 1 the Full Bench of the Hon'ble Delhi High Court was considering a case of reopening u/s 147 within 4 years from the end of the assessment year. It was held that section 147 of the Act does not postulate conferment of power upon the Assessing Officer to initiate reassessment proceedings upon a mere change of opinion. On appeal by the department to the Supreme Court, the Hon'ble Supreme court as reported in CIT V.s Kelvinator of India 320 ITR 561, dismissing the appeal, held as under: "6. 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 1st April, 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression ' has reason to believe' in place of the words ' for reasons to be recorded by him in writing, is of the opinion' . Other provisions of the new section 147, however, remain the same." 7. For the afore-stated reasons, we see no merit in these civil appeals filed by the Department ; hence, dismissed with no order as to costs." 10. Further in the case of CIT Vs. Munjal Showa Ltd in ITA No.149/2011 and ITA No.150/2011, the jurisdictional High court relying on the judgment of the Hon'ble Supreme Court in the case of CIT Vs Kelvinator of India ( supra) has held as under:- "15. In view of the aforesaid discussion, we are clearly of the view that the present case falls in the category of change of opinion as at the time of original proceedings the Assessing Officer examined and gone into the question of royalty. Even if there was any legal error or illegality the same cannot be rectified and be made the subject matter of reassessment proceedings u/s. 147/148 of the Act. .........................." 11. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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