TMI Blog2018 (2) TMI 1996X X X X Extracts X X X X X X X X Extracts X X X X ..... merit in the contentions of the assessee that the assessing officer has reopened the assessments of both the years only on account of change of opinion. There is also merit in the contentions of the assessee that the assessing officer has changed his opinion on the basis of view taken by him while completing the assessment of the assessment year 2009-10. Accordingly we set aside the order passed by Ld CIT(A) on this issue and hold that the reopening of assessments of both the years are not in accordance with the law and accordingly quash the assessment orders passed for both the years under consideration. Since the assessing officer has not issued notices u/s 143(2) of the Act after filing of returns in both the assessment years, the assessment orders are liable to be quashed on this ground also. Management service fees received by the assessee as Royalty in AY 2009-10 - AO has reopened the assessments of both the years under consideration after passing of order for AY 2009-10 and accordingly assessed the management service fee received in both the years under consideration as Royalty. The assessment order passed for AY 2009-10 has been challenged by the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fees to taxation treating the same as royalty . By following the order passed for AY 2009-10, the Assessing Officer reopened the assessment of both the years under consideration by issuing notices u/s 148 of the Act. The notices for both the assessment years were issued on 30-03-2012 and served on 03-04-2012. In the reopened assessments, the AO brought the management services fees to taxation by treating the same as royalty . 4. Before the learned CIT(A), the assessee challenged the validity of reopening as well as assessment of management service fees received by it as royalty . The contentions of the assessee did not find favour with the learned CIT(A) and accordingly he confirmed the reopening of assessments of both the years and also confirmed the addition made in both the years. Aggrieved, the assessee has filed these appeals before us. 5. The Learned AR challenged the validity of reopening of assessment in both the years on various grounds. The Ld A.R submitted that the Ld CIT(A) has upheld the reopening by observing that Explanation-1 to sec. 147 shall apply to the facts of the present case. The Explanation-1 to sec. 147 states that mere production of account books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstead he has issued notice u/s. 143(2) in both the years along with notice issued u/s. 148 of the Act, which cannot be considered as proper issue of mandatory notice. 7. The Learned AR submitted that the Assessing Officer has reopened the assessment for A.Y. 2005-06 on the basis of incorrect facts. Submissions of learned AR in this regard are extracted below:- 3.1.1. Incorrect facts in reasons for re-opening: The AO in his reasons recorded (Page 27 of the Paperbook) had stated as follows: But on going the records, it has been observed that the service agreement submitted by the assesses along -with its submission dated 11.12.2008 was not updated agreement which dated back to 1st April, 1998 (the assessee during the course of the assessment proceedings for AY 2009-10 has submitted the agreement entered into as of 1st April, 2004). The assessee company had also entered into service agreement on 01.04.2001 which was also not submitted by them. He further observes that in AY 2009-10, the Assessing Officer has after going through the 1 April 2004 agreement held the income earned by the Appellant as Management Fees to be Royalty and taxable in India. In this connection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain agreements have not been considered or not considered properly. But the Ld A.R has demonstrated that the agreement dated 01st April, 1998 (referred to in AY 2005-06) relates to the agreement under which the assessee has availed services from VOIPL and paid money to it. Hence the agreement dated 01st April, 1998 is not relevant for the issue under consideration, i.e., receipt of management service fee from VOIPL. In AY 200708, the assessing officer has stated that the agreement was not been explored by the AO in the original assessment proceedings, which is nothing but taking a different view on the same matter. Though the assessing officer has attempted to give a reasoning to support his reasons for re-opening, we are of the view that the same would not be legally supporting the view of the AO. Hence, we are of the view that there is merit in the contentions of the assessee that the assessing officer has reopened the assessments of both the years only on account of change of opinion. There is also merit in the contentions of the assessee that the assessing officer has changed his opinion on the basis of view taken by him while completing the assessment of the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X
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