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TMI Blog2024 (12) TMI 1083X X X X Extracts X X X X X X X X Extracts X X X X ..... (ld. AO) was dismissed. Therefore, assessee is aggrieved and has preferred this appeal before us. 3. The assessee has raised the following grounds:- "1. General Ground 1.1. The order passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as CIT(A). NFAC) under section 250 of the Act and the order passed by the Deputy Commissioner of Income Tax, Circle 2(1)(1), Bangalore (hereinafter referred to as learned AO) under section 147 rws 144B of the Act are bad in law and liable to be quashed. 2. Grounds relating to notice issued under section 148 and proceedings under section 147 2.1. The learned Assessing officer has erred in not appreciating that an assessment under section 143(3) has been made for the relevant assessment year. The learned assessing officer has erred in reassessing the income for the assessment year after the limitation period of four years from the end of the assessment year. as provided in the first proviso to the erstwhile section 147. 2.2. The learned assessing officer has erred by not appreciating the fact that the disallowance of payments to foreign vendors for non-deduction of TDS. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ign vendors for AMC and maintenance charges_ taxable as Fees for technical services. Thus, the CIT(A), NFAC has erred in not passing a speaking order. 3.2. The CIT(A) has erred in stating that no supporting documents have been provided by the Appellant in support of its claims, without considering the data submitted under the 147 proceedings and proceedings before the CIT(A), NFAC. 3.3. The CIT(A) has erred in passing a mechanical order without considering the submissions of the Appellant and without application of mind. 3.4. On facts and circumstances of the case and law applicable, the order under section 250 of the Act is against the principles of natural justice and is invalid, bad in law and liable to be quashed. 4. Grounds relating to treating AMC and maintenance charges as taxable 4.1. The learned assessing officer and the CIT(A). NFAC have erred in treating the payments for AMC and Maintenance charges of Rs. 49.17,872 as fees for technical services under section 9(1)(vii) of the Act. 4.2. The learned assessing officer and the CIT(A), NFAC have erred in not appreciating that certain payments classified as AMC and maintenance charges were in the nature of purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance made under section 40(a)(i) of amounting to Rs. 49,17,872 should be deleted." 4. The brief facts of the case show that assessee is carrying on technical testing and analysis, drug discovery and research business in its earlier name of Advinus Therapeutics Ltd. It filed return of income on 29.11.2023 at a loss of Rs. 30,68,86,825. This return was picked up for scrutiny and resulted into an assessment order u/s. 143(3) of the Act determining a total loss at Rs. 8,16,20,329. 5. Subsequently the case of assessee was reopened u/s. 147 of the Act by issue of notice u/s. 148 on 31.3.2021. The main reason for reopening of the assessment is that the International Taxation Officer forwarded information that assessee has made payment of Rs. 49,17,872 during the AY 2013-14 to a non-resident service provider vendor on account of annual maintenance contract (AMC) and maintenance charges without making tax deduction at source. As these payments are in the nature of fees for technical services, provisions of section 40(a)(i) is applicable in this case. Therefore, on corelation of these details with records of assessee, the ld. AO formed a reason to believe that an amount of Rs. 49, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was that whatever addition, subsequent to the original assessment order was on account of non-deduction of tax at source on payment made to resident, and now AO desires to reopen the case of the assessee with respect to payment made to the non-resident. He referred to the decision of the Hon'ble Madras High Court in 140 taxmann.com 394 and submitted that one cannot be allowed to look at the fact of the same argument, if assessment is covered by VSV Act disclosure. He further referred to the decision of the Hon'ble Gujarat High Court in the case of 154 taxmann.com 240 and 156 taxmann.com 264. 10. He submitted that the facts of AY 2014-15 are also similar, therefore his argument was that reopening of assessment for both the years is bad in law on this ground. 11. He further referred to the reasons recorded for reopening placed at page 358 of the PB, which is a notice u/s. 148 of the Act. Further at page 392 of PB the reasons for reopening were placed. He read the reasons recorded dated 26.8.2021 and submitted that the information as received from ITO, International Taxation, Ward 1(1), Bangalore, based on which the AO has reopened the assessment. Therefore, it is a borrowed opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance on payment made to non-resident. Therefore, the issue which has been settled in appeal in the impugned assessment year was on altogether different issue. The VSV Act has settled the dispute of a particular tax on a particular issue, it did not cover any other issue, may be for the same assessment year. Therefore, the argument of the assessee that reopening could not have made when the appeal for AYs 2013-14 & 2014-15 are settled under the VSV Act, 2020, cannot be accepted. He further referred to the decision cited by the ld. AR of Hon'ble Madras High Court in the case of Gopalakrishnan Rajkumar v. PCIT (2022) 445 ITR 577 (Mad) stating, that decision has been rendered with respect to section 263 of the Act and not u/s. 147 of the Act and therefore does not apply. 15. He further referred to the decision of the Hon'ble Gujarat High Court in the case of Amitkumar Chandulal Rajani v. PCIT [2023] 154 taxmann.com 240 (Gujarat) which was also u/s. 263 of the Act and similar is the case in 156 taxmann.com 267. Therefore, he submitted that there is no infirmity for reopening of the assessment. 16. With respect to change of opinion, it was submitted that only when the order u/s. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase. 1. Findings of the AO: It is seen from the order u/s. 143(3) dated 24.03.2016 that no addition has been made on this issue. Therefore 1 have reason to believe that income of Rs. 49,17,872/- has escaped assessment for the assessment year 2013-14. The provisions of section 147 are applicable to the facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment. 1. Basis of forming reason to believe and details of escapement of income: The International Taxation officer has forwarded the information that the assessee has made payments of Rs. 49,17,872/- during the assessment year 2013-14 to non-resident service providers/vendors on account of AMC & Maintenance charges without making TDS. Since these payments are in the nature of fee for technical services, section 40(a)(i) is applicable in this case. In a light of the information received from International Taxation officer and correlation of the same with records of M/s Eurofins Advinus Ltd. ( Formerly known as Advinus Therapeutics Ltd), for A.Y.-2013-14, the undersigned has reason to believe that an amount of Rs. 49,17,872 /- paid to non-reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons so recorded, therefore absence of such necessary jurisdictional facts mentioned in reasons, such reopening of the assessment cannot be upheld. The Hon'ble Karnataka High Court in the case of CIT v. Canara Bank, 155 taxmann.com 289 has categorically held so in para 16 of that order. Such is the view expressed by Hon'ble Bombay High Court also. 23. Merely because the AO has mentioned that non-disallowance of payment to non-resident without deduction of tax at source is a wilful act of assessee in order to reduce its taxable income is also an allegation that assessee has failed to disclose fully and truly all material facts, we do not find any reason to compare these findings of the AO for allegation of failure on the part of assessee for disclosure. Therefore, on this solitary ground, we quash the reassessment order passed by the ld. AO. 24. An argument is raised by the learned authorised representative that when the dispute is settled for a particular assessment year involving same point in VSV 2020, the learned assessing officer could not have reopened the assessment on the same issue. Firstly, you like to state that in this case originally additions were made for non-ded ..... X X X X Extracts X X X X X X X X Extracts X X X X
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