TMI Blog2018 (6) TMI 1044X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in the case of CIT vs. Orient Craft Ltd. [2013 (1) TMI 177 - DELHI HIGH COURT] - Decided in favor of assessee. Validity of reopening of the assessments u/s 147 for AY 2005-06 - Held that:- The reasons recorded for reopening of the assessment, the AO has not mentioned the necessary ingredients for reopening of the assessment because AO has not mentioned in the reasons that he has reason to believe that income chargeable to tax as escaped assessment - thus the reopening of the assessment is invalid and bad in law - thus following reasons of decision for AY 2004-05, we set aside the order of the authorities below and quash the reopening of the assessment u/s 147/148 - Decided in favor of assessee. - ITA Nos:- 285/Del/2013 And 5278/Del/2011 - - - Dated:- 19-6-2018 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Assessee : Sh. Nageswar Rao (Adv.) And Sh. Puroshottam Anand (Adv.) For The Revenue : Sh. Satpal Gulati (CIT DR) ORDER PER: BHAVNESH SAINI, JM This order shall dispose of both the appeals filed by the assessee for Assessment Years 2004-05 2005-06, on same issue. 2. In both the appeals, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipt of ₹ 1,06,85,301/- from HHI Contracts; for provision of grouting services in nature of Technical Services. In its computation, the assessee computed the income at Nil stating that it had no PE in India was not required to pay tax in India as per Indo-UAE DTAA. The receipts in the nature, FTS taxable on Gross Basis @ 10% was never taken up by the A.O since the case was not scrutinized earlier. Further, it is also observed by the Hon ble High Court of Uttrakhand in the case of CIT M/s. Rolls Royce Pvt. Ltd. [2007-TII-03-HC-UKHAND-INTL] that fee for technical services cannot be taxed u/s 44BB of the Income-tax Act, 1961. The Hon ble High Court of Uttrakhand vide its order in Income Tax Appeal No. 239 of 2001 in the case of ONGC as agent of M/s Foramer France Dehradun, has held on 15-12-2005 that services which are technical in nature are not covered u/s 44BB(1) of IT Act. Further the Hon ble Finance Minister while introducing Finance Bill 2010 has clarified in the explanatory note to Finance Bill that Combined effect of the provisions of section 44BB, 44DA and 115 A is that if the income of a non-resident is in the nature of fee for technical services, it sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute that the assessee filed original return of income on 29.10.2004 declaring nil income and same was processed u/s 143(1) on 24.01.2005. The AO subsequently issued notice u/s 148 on 28/03/2011 and in response thereto, assessee submitted before AO that the return of income filed originally may be treated as having filed the return u/s 148 of the Act. 7.1 It is well settled law that validity of the reassessment proceedings shall be determined with reference to reasons recorded. The assessee declared all the particulars and details in the original return of income; the AO was satisfied with the same and accepted u/s 143(1) of the Act. The AO subsequently recorded the reason as above after perusal of the same return of income filed by the assessee. Thus, no tangible material was available with the AO, except details already mentioned in the original return of income. Therefore, there was no tangible material available with the AO to form requisite belief regarding escapement of income. 8. Hon ble Delhi High Court in the case of CIT vs. Orient Craft Ltd. (Supra) in para no. 13, 15 16 relied upon by Ld. Counsel for the assessee held as under:- 13. Having regard to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reached the belief that there was escapement of income on going through the return of income filed by the assessee after he accepted the return under Section 143(1) without scrutiny, and nothing more. This is nothing but a review of the earlier proceedings and an abuse of power by the Assessing Officer, both strongly deprecated by the Supreme Court in Kelvinator of India Ltd. {supra). The reasons recorded by the Assessing Officer in the present case do confirm our apprehension about the harm that a less strict interpretation of the words reason to believe vis-a-vis an intimation issued under section 143(1) can cause to the tax regime. There is no whisper in the reasons recorded, of any tangible material which came to the possession of the assessing officer subsequent to the Issue of the intimation. It reflects an arbitrary exercise of the power conferred under section 147. 16. For the above reasons, we answer the substantial question of law framed by us in the affirmative, in favour of the assessee and against the Revenue. The appeal of the Revenue is accordingly dismissed. There shall be no order as to costs. 8.1 The aforesaid decisions of the Delhi High Court have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee-firm ran hatcheries and poultry farms. For the assessment years 1992-93 and 1993-94, the assessments were completed determining the assessee s total income at ₹ 3,10,280/- and ₹ 4,74,970/- respectively. On appeals by the assessee, the Commissioner (Appeals) partly allowed the appeals and granted relief under section 80HH and 80-I of the Income-tax Act, 1961, by an Order dated March 1, 1999. Assessments giving effect to the orders were passed on May 31, 1999, allowing the assessee s claim of deduction under section 80HH, 80HHA and 80-I of the Act. However, n view of the Supreme Court decision in CIT vs. Venkateswara Hatcheries P. Ltd. [1999] 237 ITR 174 the Assessing Officer held that the assessee was not entitled to the deductions under section 80HH, 80HHS and 80-I of the Act and issued reopening notices under section 148. The assessee did not reply to the notices and the Assessing Officer completed the reassessments and held that the assessee was not entitled to relief under section 80HH, 80HHA and 80-I of the Act. On appeal, the Commissioner (Appeals) dismissed the appeals. On further appeal, the Tribunal allowed the appeals and held that the reopening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case the assessee filed the return of income on 31/10/2005 declaring the income as nil. Thereafter notice u/s 148 dated 31.03.2010 was issued the assessee. The return is processed u/s 143(1) of the IT Act. In this year, the AO recorded the reasons for reopening of the assessment, copy of it filed at Page No. 57 of Paper Book which reads as under:- 1. Name of Assessee M/s ULO Systems LLC 2. Address C/o SR Batliboi Co. Golf View, Corporate Towers B, Sector 42, Gurgaon, Haryana. 3. PA/GIR No. AAACU5048F 4. Status Company 5. Assessment Year 2005-06 6. Whether R/NR/NOR Non Resident REASONS FOR INITIATING PROCEEDINGS U/S 148 The assessee company is a non resident company. During the year under consideration the assessee has filed the return of Income at Rs. Nil on 31.10.2005. The assessee has filed return of income under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Name Amount 1. Hyundai Heavy Industries Co. Ltd. 1,65,271/- 2. Yojaka Marine Private Ltd. 3,510,864/- 3. Valentine Maritime (Mauritius) ltd. 4,11,404/- 4. Consortium of VMGL VML 72,946/- 5. Valentine Maritime Ltd. 32,40,868/- 6. Consortium of VMGL VML 15,77,307/- 10,07,691/- 7. Valentine Maritime (Mauritius) Ltd. 12,14,452/- 4,23,134/- 8. Valentine Maritime Ltd. 16,41,994/1,76,215/- While filing the return of income, the same has been filed at nil, whereas the assessee has carried out the business activity for its operation in India. Accordingly the revenues earned from its projects are required to be brought to tax in India. Sd/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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