TMI Blog2023 (4) TMI 1307X X X X Extracts X X X X X X X X Extracts X X X X ..... ch were rightly treated as revenue. Thus after a period of 4 years, only on account of change of opinion, re-assessment proceedings cannot be initiated. In Kitchen Express Overseas Ltd.'s case [ 2017 (12) TMI 1127 - GUJARAT HIGH COURT] it has also been held that any expenditure incurred on purchase of software, software developments and services to facilitate existing infrastructure is to be taken as revenue and not capital. Thus writ petition is allowed and initiation of re-assessment proceedings are set aside on both the counts i.e. delay and merits. Decided in favour of assessee. - Hon'ble Ms. Justice Ritu Bahri And Hon'ble Mrs. Justice Manisha Batra For the Petitioner : Mr. Arijit and Mr. Abhivadya Sood, Advocates For the Respondent : Ms. Pridhi Jaswinder Sandhu, Junior Standing Counsel JUDGMENT RITU BAHRI, J. CM-7276-CWP-2022 1. Application is allowed and Annexures P-10 to P-30 are taken on record. CWP-22306-2019 2. The petitioner is seeking writ of certiorari for quashing notice dated 30.03.2019 (Annexure P-1) issued under Section 148 of the Income Tax Act, 1961 and order dated 10.07.2019 (Annexure P-2) disposing of the objections passed by the respondents in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii to disclose fully and truly all material facts necessary for his assessment for that purpose. 6. Learned counsel for the petitioner submits that reopening of the assessment under Section 143(3) can only be done after the above said two conditions are fulfilled. 7. Learned counsel for the petitioner has argued that the scrutiny proceedings were finalized vide order dated 05.03.2015 (Annexure P-5) and a period of 4 years expired on 05.03.2019 and notice for re-assessment was issued on 30.03.2019 (Annexure P-1) i.e. beyond a period of 4 years. He has further argued that in the present case, there is no income which escaped assessment and no income escaped on the part of the failure of the assessee. Hence, proceedings initiated after 4 years are liable to be quashed. He has referred to the Division Bench judgment passed by this Court in CWP No. 6765 of 2013 titled as State Bank of Patiala vs. Commissioner of Income- tax , decided on April 22, 2015. 8. Pursuant to notice of this petition, reply dated 17.02.2020 was filed by the respondent. The stand taken by the respondent in the said reply was that vide order dated 05.03.2015 (Annexure P-5), the assessment order under Section 143(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as placed on record a judgment passed by the Supreme Court in Principal Commissioner of Income-tax-2 vs. L T Ltd. [2020] 113 taxmann.com 48 (SC) (Annexure P-10) on the proposition that re-assessment proceedings initiated after 4 years from the end of the relevant assessment year only on the basis of change of opinion, are liable to be set aside. He has further referred to a judgment passed by High Court of Gujarat in Micro Inks (P.) Ltd. vs. Assistant Commissioner of Income-tax [2017] 79 taxmann.com 153 (Gujarat) (Annexure P-11). In that case, the re-assessment proceedings were initiated beyond a period of 4 years and the assessee debited an amount of Rs. 2.36 crores under head 'Interest Finance charges' on account of loan. The Assessing Officer accepted claim of assessee during scrutiny assessment and treated the said expenditure as business expenditure. Subsequently, the case was re-opened on the ground that assessee had incurred aforesaid expenditure to establish a subsidiary in USA and, therefore, only 1/5th expenditure i.e. Rs. 47.23 lacs was required to be allowed. This change of opinion could not be made a ground to initiate proceedings after a period of 4 years and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and support services providing essential backup to the assessee and this expenditure has to be taken as a revenue. These services did not give any fresh or new benefit in the nature of a software to be used by the assessee in the course of business but were more in the technical support and maintenance of the existing software and hardware. 15. Recently, the Hon'ble Supreme Court in the case of New Delhi Television Ltd. vs. Deputy Commissioner of Income Tax [2020] 116 taxmann.com 151 (SC) (Annexure P-16) was examining a case wherein at the time of making original assessment proceedings, the assessee had disclosed everything with regard to stand guarantee for transaction by NNPLC and it also disclosed factum of issuance of convertible bonds and their redemption. There was no failure on the part of the assessee to disclose all these facts. Notice issued after a period of 4 years for reassessment was liable to be quashed and set aside. In para Nos. 33 and 34, the Hon'ble Supreme Court observed as under:- 33. In our view the assessee disclosed all the primary facts necessary for assessment of its case to the assessing officer. What the revenue urges is that the assessee did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutiny proceedings were already finalized vide order dated 05.03.2015 (Annexure P-5). On facts, the assessee had purchased computers and software for Rs. 14,63,750/- upto 30.09.2011 and after giving benefit of depreciation @ 60% (i.e. Rs. 8,78,250/-), the balance amount of Rs. 5,85,500/- was to be capitalized. Similarly, expenditure of Rs. 29,56,000/- was incurred on account of purchase of computers and software from the period 01.10.2011 to 31.03.2012 and after allowing depreciation @ 30% (i.e. Rs. 8,86,800/-), the balance amount of Rs. 20,69,200/- was to be capitalized. This information of purchase was with the Assessing Officer at the time of passing of initial assessment order on 05.03.2015 (Annexure P-5). The petitioner company is engaged in the business of advertising and marketing communications and while making the assessment vide order dated 05.03.2015 (Annexure P-5), the return was accepted and all the above said expenditures were admissible as revenue expenditure. After more than 4 years, the only reason for initiating reassessment proceedings vide notice dated 30.03.2019 (Annexure P-1) is that only 30% to 60% depreciation could be given and rest of the amount is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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