TMI Blog2017 (9) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the assessee to disclose fully and truly all material facts nor has brought anything on record to show that product development expenses under the law can never be treated as an asset or a capital expenditure on which depreciation is allowable. In absence of such finding, we are unable to hold that in terms of proviso to section 147, the Assessing Officer has no jurisdiction to reopen the case beyond the period of four years from the end of the relevant assessment years, where assessment has been finalized under section 143(3). Thus, the reopening of the assessment on the aforesaid “reasons” is clearly bad in law and accordingly, impugned assessment order is quashed. - Decided in favour of assessee. - ITA No. 2284/Del/2014, CO. No. 13/Del/2017 - - - Dated:- 30-8-2017 - Shri G.D. Agrawal, President And Shri Amit Shukla,Judicial Member Revenue by : Shri S.S. Rana, CIT DR Assessee by : Shri P.C. Yadav, Advocate ORDER Per : Amit Shukla, Judicial Member The aforesaid appeal and cross objection have been filed by the revenue as well as by the assessee against impugned order dated 20.01.2014, passed by the Ld. CIT(Appeals) XI, New Delhi for the quantum of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w and on facts in affirming the jurisdiction of the AO under section 147, ignoring that there was no tangible material with the AO for forming a belief that any income has escaped assessment on account of failure of assessee to disclose the material facts fully and truly. 5. The brief facts qua the validity of reopening of assessment proceedings u/s 147 as challenged by the assessee in its Cross Objections and Additional ground are that the return of income was filed u/s 139(1) declaring a loss of ₹ 37,30,07,965/-; as against the said returned income, assessment u/s 143(3) was completed vide order dated 15.12.2006, whereby income was computed at loss of ₹ 25,55,48,473/-. It appears from the record that on 6.6.2008 a notice u/s 154 was issued by Circle 9(1), New Delhi for carrying out rectification proceedings, wherein the Assessing Officer pointed out that the depreciation on product development has been wrongly allowed. In response to the same the assessee had filed its reply dated 28.4.2009 and thereafter no such order appears to have been passed, inter-alia indicating that rectification proceeding was dropped. Now after the expiry of more than 4 years (i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assessing Officer in the original assessment proceedings has accepted this claim of the assessee. Once the assessee has declared all material facts about the intangible assets and made a claim for depreciation on such asset, then the assessee can very well said to have discharged its onus of disclosing fully and truly all material facts and it is for the Assessing Officer to draw proper legal inference. The assessee is not required to tell the Assessing Officer as to what legal inference is to be drawn on the facts and material disclosed. In the reasons recorded , there is a very high degree of presumption by the Assessing Officer that the product development expenditure is necessary a capital expenditure without reference to any settled law that all such product development expenditure falls in the realm of capital expenditure having enduring benefit which does not fall within the realm of intangible asset or kind of asset on which depreciation can be allowed. At least nothing is borne out from the reasons recorded , which alone is the foundational fact and jurisdictional point and has to be examined once the jurisdiction to reopen the assessment u/s 147 is challenged. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has given all the particulars of product development expenses and also reconciliation of capitalization of fixed assets before the Assessing Officer during the course of the original assessment proceedings which included the product development expenditure also. This fact is clearly borne out from the letter dated 15.12.2006 filed before the Assessing Officer in response to the notice/query raised by the Assessing Officer. Apart from that, all the particulars and details of capitalization and claim of depreciation were also shown in the audited balance sheet filed along with the return of income. Once the assessee has made full and true disclosures of material fact, then the onus cast upon the assessee stands discharged and it is upon the Assessing Officer to draw proper legal and factual inference. As observed above, the Assessing Officer has neither ascribed any failure on the part of the assessee to disclose fully and truly all material facts nor has brought anything on record to show that product development expenses under the law can never be treated as an asset or a capital expenditure on which depreciation is allowable. In absence of such finding, we are unable to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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