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TMI Blog2016 (6) TMI 1332X X X X Extracts X X X X X X X X Extracts X X X X ..... y expenses in respect of the technical know-how and goodwill. The AO was of the opinion that the sister concern of the assessee being run under the name and style of M/s Stoneage Industrial Diamond Products at Jaipur had provided the technical knowhow and goodwill to the assessee, but no expenditure in respect of the said technical knowhow, technology and goodwill had been booked by the assessee. The Assessing Officer also opined that the provisions of constructive res judicata as envisaged by the Hon'ble Supreme Court of India in the case popularly known as Radha Swami Satsang case were clearly attracted, as in the immediately preceding year also the assessee had agreed to such an addition. He, therefore, calculated 5% of the sales as notional expenditure for the use of technical know-how and 5% for the use of customer base and goodwill and thus, made an addition of Rs. 24,22,978/- which is the subject matter of present appeal. 3. The assessee challenged the addition before ld. CIT(Appeals) and submission of the assessee is reproduced in the appellate order in which assessee briefly explained that in the preceding assessment years, assessee was forced to agree to the similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngement between the assessee and his firm resulted in more than the normal profits to the assessee. He accordingly invoked the provisions of section 80IA (10) of the Act and made an addition to the taxable income of the assessee by calculating 10% of the turnover as expenditure on account of technical know-how, customer base and goodwill. The assessee duly agreed to the said addition subject to no penalty u/s 271{1)(c) of the Act. Similarly, in the A. Y. 2007-08 also, the A. O. noted the same trend and again made the similar addition which was agreed to by the assessee, again subject to no penalty u/s 271(1)(c) of the Act. In the year under appeal, the A.O. noted that there was no change in the facts of the case. In the given year also, the assessee had returned the net profit of 59.22% at Rs. 1,80,97,505/-, whereas his sister concern the firm M/s. Stoneage, had returned a net profit of only 10.46% at Rs. 9,49,628/-. Therefore, the A.O, proposed to make the similar addition to the assessee's income as was made in the preceding two assessment years. But this time the assesses opposed the said addition stating that the products manufactured by him are different from those manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices of qualified engineers also does not help his case, as technical manpower is always hired in order to run the business smoothly and efficiently. But this does not mean that the credit for the basic technical know-how developed by his partnership firm can be shifted to the staff hired by him. 4.3 As regards the appellant's argument that his business was different from the business of his sister concern, the same is found to be without any merit. It is noted that the assessee was also primarily engaged in the production of diamond wire. Besides, he manufactured wire saw beads. It is further noted that during the year under consideration, the major portion of his sales was on account of the sale of the diamond wire. The sales worth more than 1.55 crores were on account of the safe of diamond wire. The appellant has not been able to show the production' and sale of any item which was substantially different as regards its manufacturing process and the raw material used as compared to the production process and the raw material used by his sister concern. Thus, as per the details available on record, no difference was noticed in the business of the assessee and the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be at all appropriate to allow the position to be changed in a subsequent year, In the appellant's case, a finding of fact was given in the earlier years and the addition made on that account was allowed to be sustained by the appellant by way of acceptance of the A.O.'s order. As already mentioned, the appellant has not been able to show any change in the given facts in the instant year. Hence, even though res judicata does not apply to IT proceedings, the status QUO cannot be disturbed in the appellant's case on the given facts as per the judgment of the Hon'ble Supreme Court supra. In the absence of any change in the facts of the appellant's case, a view different than that taken in the earlier two assessment years, cannot possibly be taken. 4.6 In view of the discussion above, I am also of the considered opinion that the availability of technical know-how, goodwill and customer base to the appellant free of any cost has resulted in yielding abnormal profits to the appellant which stand in glaring contrast to the profits returned by his sister concern, M/s, Stoneage in the same line of business. The appellant certainly would have been under an obligatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in earlier years in which finding of fact on identical issue has reached finality because the assessee agreed for the additions. It is well settled law that rule of consistency apply to the Income Tax proceedings. No change in facts and circumstances have been proved, therefore, by following the rule of consistency, the addition have been correctly made by the Assessing Officer. I rely upon decision of Hon'ble Supreme Court in the case of Radha Soami Satsang Vs CIT 193 ITR 321, decision of Delhi High Court in the case of Escorts Ltd. 338 ITR 435, decision of Madhya Pradesh High Court in the case of Godavari Corporation Ltd. 156 ITR 835 and decision of Hon'ble Punjab & Haryana High Court in the case of Vikas Chemi Gum India 276 ITR 32. Hon'ble Delhi High Court in the case of A.R.J. Security Printers 264 ITR 276 held that, "For sake of consistency and finality of litigation, earlier decisions on the same question should not be reopened unless new facts come to the knowledge". 7. Apart from above, the ld. CIT(Appeals) discussed the issue in detail in the impugned order after verifying the facts from the record and noted that all the facts have been confronted to the ass ..... 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