TMI Blog2018 (8) TMI 1619X X X X Extracts X X X X X X X X Extracts X X X X ..... AO in the regular proceedings u/s. 143(3), we are of the opinion that the reopening of assessment is not based on any tangible material but only on the change of opinion on the existing material, for which the AO has no power to do so. The principles laid down by the Hon'ble Supreme Court [2010 (1) TMI 11 - SUPREME COURT OF INDIA] clearly applies to the facts of the case. Therefore, we modify the order of the CIT(A) and allow the grounds of assessee. In a way this issue is also academic since Ld. CIT(A) allowed the assessee contentions on merit. Depreciation on technical know-how and DMFs - Held that:- Assessee's claim of depreciation becomes eligible as it is an intangible asset on which assessee has claimed depreciation on WDV. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of ₹ 2,85,428/- on account of short income offered vis-a-vis TDS receipts and made a draft assessment order u/s 143(3) r.w.s 92CA of the Act dated 22- 12-2011. Assessee thereafter filed objections before the Dispute Resolution Panel (DRP). The DRP issued directions to the TPO/ AO for guidance in completing the assessment. A final assessment order was passed u/s 143(3) r.w.s 92CA r.w.s. 144C of the Act dated 30-11-2012 incorporating the directions of DRP and assessed total taxable income at ₹ 27,84,72,559/-. Assessee filed an appeal on that order which proceedings are separate. 2.1. Subsequently, the AO issued a notice u/s. 148 of the Act dated 28-03-2013. On being requested for furnishing the reasons, AO stated that the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r No. 549 dated 31-10-1989 and Hon'ble Supreme Court's land mark decision in the case of CIT V Kelvinator of India Ltd (2010) (320 ITR 561), where it was held that, Reassessment proceedings cannot be based on change of opinion and it cannot be a substitute for Reason to believe u/s. 147 of the Act . 2.4. Assessee claimed depreciation of ₹ 17,27,96,203/- on Technical Know-how and Drug Master Files (DMF) @ 25% acquired from Mylan on the WDV of ₹ 69,11,84,813/- as on 01-04-2007. The AO did not agree with the tax-payer's submissions and disallowed the depreciation in reassessment proceedings. He applied the analogy relating to AY. 2006-07 i.e adopting the value of DMFs and Technical know-how as Nil in the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in case of Spectra Scrips and Shares Pvt. Ltd., Vs. CIT, 354 ITR 35(AP). In the aforesaid view of the matter, the assumption of jurisdiction u/s 263 of the Act in the present case is neither proper nor justified. Accordingly, we set aside the impugned order of ld. CIT and restore the order passed by AO. Hence, respectfully following the Hon'ble ITAT decision, the decision of the Assessing Officer with regard to reopening of the assessment is confirmed and the ground of appeal is dismissed . 4. In the appeal of assessee, it was the contention that the reopening of assessment after completion of scrutiny on the issues which were verified by the AO is nothing but change of opinion and the counsel for assessee relied on the principl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 6. Coming to the grounds of Revenue, Revenue is aggrieved on allowing depreciation on technical know-how and DMFs by the Ld.CIT(A). The order of the CIT(A) is elaborate on the issue and held as under: 5.3 I have carefully considered the facts of the case and the assessment order. The AO has disallowed the depreciation of ₹ 17,27,96,203/- claimed by the appellant on intangible assets with a reason that by following assessment order for the AY. 2006-07 passed u/s 143(3) rws 263 wherein provisions of Explanation 3 of Section 43(1) of the I.T.Act, 1961 and adopted the value of DMFs and Techical know-how as Nil in the hands of the assessee company stating that M/s Matrix Laboratories Ltd., is merely imparting/sharing its special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milar disallowance made by the AO on account of assessee's claim for depreciation on intangible assets vide paragraph No.3 which reads as under: 3. At the outset both the Counsels agreed that the issues are covered. As far as the issue of depreciation contested in assessee's appeal is concerned, the ITAT vide its order in ITA No. 840/Hyd/2012 for A.Y. 2006-07 dated 16-01-2015 has not upheld the proceedings u/s 263. Consequently, assessee's claim of depreciation becomes eligible as it is an intangible asset on which assessee has claimed depreciation on WDV. In view of this, we direct the A 0 to allow the depreciation as claimed as it is only a consequential claim to the claims in earlier years . 8.1 The issue involved ..... X X X X Extracts X X X X X X X X Extracts X X X X
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