TMI Blog2015 (9) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdictional High Court in the case of Munjal Showa Ltd (2012 (4) TMI 239 - DELHI HIGH COURT ), the ld. AO cannot be permitted to change his opinion without any new facts before him. We find that the ld. CIT(A) has analyzed all the material which was submitted by the assessee before the ld. AO in response to queries raised during assessment proceedings u/s 143(3) of the Act and thereafter has given categorical finding on the issue of change of opinion by the Assessing Officer. Therefore there is no perversity in the order of the ld. CIT (A). It may be noted that on merit also the issue has been decided in favour of the assessee by the jurisdiction High Court in AY 2008-09. No error in the order of the ld. CIT(A) and therefore no interference is required in finding of the ld. CIT(A) quashing the reassessment proceeding. - Decided against revenue. - ITA No. 4451/Del./2012 - - - Dated:- 23-9-2015 - Sh. H. S. Sidhu, JM And Sh. O. P. Kant, AM For the Appellant : Sh. Sujit Kumar, SR. DR For the Respondent : Sh. Vikrant Suri, C.A. ORDER Per O. P. Kant, A. M. This appeal of the Revenue is directed against the order dated 29th May, 2012 of learned Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment. In view of this, I have reason to believe that an amount of ₹ 1,79,70,621/- lacs has escaped assessment within the meaning of section 147 of the IT Act, 1961. 3. In the year under consideration, the assessee company paid royalty of ₹ 2,39,60,828 to Sumitomo Mitsui Construction Co. Ltd (in short SMCC ) for rendering technical services to the assessee. The ld. AO finally reassessed the total income of the assessee at ₹ 17,89,14,500/- under section 147 of the Act on 30.12.2011. In the reassessment order, the ld. AO held that the royalty expenses of ₹ 2,39,60,828/- paid to SMCC was capital in nature as against the expense claimed by the assessee as revenue and after allowing depreciation @ 25% of ₹ 2,39,60,828/- i.e. ₹ 59,90,207/-, he added the balance amount of ₹ 1,79,70,621/- to the income of the assessee. 4. Aggrieved, the assessee filed appeal before the learned Commissioner of Income-Tax (Appeals) [in short ld CIT(A) ] and challenged the reassessment action of the AO as well as the findings of the AO in treating the royalty expenses as capital in nature. The ld. CIT(A) after considering the submission of the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r did not apply his mind on the issue of royalty and therefore no opinion was formed by him on the issue, so the issue of change of opinion does not arise. 7. The ld. Authorized Representative (AR) on the other hand, vehemently argued that all the facts regarding royalty expenses were filed before the ld. AO and after considering the submission of the assessee, no addition was made in the order u/s 143(3) of the Act. He further submitted that while reopening the assessment, no new facts or material has been brought on record by the ld. AO, which can form a reason to believe that the income of the appellant has escaped assessment therefore the reasons recorded by the Assessing Officer was a mere change of opinion only. He, further, relied on the various judgments and decisions already submitted before the ld. CIT(A), which are mentioned at Pages 6 to 13 of the order of the ld CIT(A). Further, the ld. AR drawn our attention to the decision of the coordinate bench of Income Tax Appellate Tribunal (ITAT), in ITA No.5260/Del/2012, for the assessment year 2008-09 in the case of the assessee itself, wherein the bench has held that the payment made on account of royalty and fee for tech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 fulfillment of certain preconditions and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of change of opinion as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, the Assessing Officer has power to reopen, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words reason to believe but also inserted the word opinion in section 147 of the Act. However, on receipt of representations from the companies against omission of the words reason to believe , Parliament reintroduced the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stry of Industry etc. Thus, at the time of scrutiny assessment the ld AO deemed to have applied his mind and he did not choose to make any addition on the issue. In the reason recorded the ld AO has not mentioned as to what is the material or information which has come to his possession or to the notice , on the basis of which he is making his belief that the royalty expenses should be treated as capital expenditure. Therefore respectfully following the judgment of the Hon ble Supreme Court in the case of Kelvinator (Supra) and decision of jurisdictional High Court in the case of Munjal Showa Ltd (supra), the ld. AO cannot be permitted to change his opinion without any new facts before him. We find that the ld. CIT(A) has analyzed all the material which was submitted by the assessee before the ld. AO in response to queries raised during assessment proceedings u/s 143(3) of the Act and thereafter has given categorical finding on the issue of change of opinion by the Assessing Officer. Therefore there is no perversity in the order of the ld. CIT (A). It may be noted that on merit also the issue has been decided in favour of the assessee by the jurisdiction High Court in AY 2008-09. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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