TaxTMI 
TaxTMI 
2010 (8) TMI 784
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....ring income of Rs. 35,64,40,434 which was later revised through a revised return to Rs. 35,64,17,704. The assessment was completed under section 143(3) of the Act on March 25, 2004. Thereafter, notice was issued on March 28, 2008 under section 148 of the Act for reopening the assessment and the reason given was as under: "It is found that the assessee has made a claim of Rs. 2,62,30,965 as expenditure on 'product development expenses'. Out of these expenses a sum of Rs. 1,82,75,250 has been paid by this assessee to M/s. AVL towards 'technical assistance fee' for the development of new SJ series engine in research development department. As per the agreement with AVL vide article 4 of this agreement it is found that the assessee shall in due course shall have worldwide right to use the end results of the projects entered with M/s. AVL utilising which it shall produce and sell the new engines. Thus it is found that the assessee has made the above expenditure which is capital in nature and therefore cannot be allowed as revenue expenditure. Thus, the assessee has not disclosed the facts fully and truly before the Assessing Officer. Hence, the income has escaped the assessment to th....
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....ission was that all such details were submitted to the Assessing Officer and therefore, reopening was merely on a change of opinion. Reliance was placed on the decision of the hon'ble apex court in the case of CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) and CIT v. Cholamandalam Investments and Finance Co. Ltd. of the hon'ble jurisdictional High Court in [2009] 309 ITR 110 (Mad). The learned Commissioner of Income-tax (Appeals), appreciating the contentions of the assessee held that there was no failure on the part of the assessee to furnish full and complete particulars during the course of the original assessment proceedings and hence reopening done was invalid. Now before us, the learned Departmental representative strongly supported the order of the Assessing Officer. Per contra, the learned authorised representative submitted that the learned Commissioner of Income-tax (Appeals) had rightly relied on the decision of the hon'ble apex court in the case of Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) and held the reassessment proceedings to be invalid. We have heard the rival submissions and perused the orders. During the course of the original assessment ....
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....design facilities for carrying out this activity. For design, we have Pro E software to create 3D models of our engines and components. 20 drawings are made for manufacturing. In testing, we have facilities to check combustion parameters for optimising the performance to meet the abovesaid objectives." Annexure to the above reply, enclosed by the assessee gave a break-up of the product development expenses in a very detailed manner. The assessee had also given the present status of its research and development programme with regard to the development of the engine and also brought to the attention of the Assessing Officer the recognition given by the Ministry of Science and Technology on June 3, 2003 for its research and development unit. In the balance-sheet attached to the returned income, the assessee had clearly given a break-up of the research and development expenses. Thus, without doubt, the assessee was asked the details of the research and development expenses and it had furnished complete details including the break-up. The original assessment was completed only after considering such replies and queries. If that be so, the reasons mentioned by the Assessing Officer fo....
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....61 per cent. of the sales, the actual warranty claims in the previous year relevant to the assessment year 200304 were 0.83 per cent. of the sales, the actual warranty claims in the previous year relevant to the assessment year 2004-05 were 0.30 per cent. of the sales and the actual warranty claims in the previous year relevant to the assessment year 2005-06 were 0.60 per cent. of the sales. According to the assessee, based on the actual expenditure for the assessment years 2004-05 and 2005-06 it had arrived at the average of 0.27 per cent. of the sales as possible warranty expenditure and provided accordingly, for the relevant previous year. Hence, as per the assessee, it was done in a realistic manner. The learned Commissioner of Income-tax (Appeals) appreciating the contentions and also noticing that the decision in the case of Rotork Controls India Ltd. [2007] 293 ITR 311 (Mad) of the hon'ble jurisdictional High Court was reversed by the hon'ble apex court in Rotork Controls India P.Ltd. [2009] 314 ITR 62 (SC), held that the provision for warranty was allowable. Now before us, the learned Departmental representative assailing the order of the learned Commissioner of Income-t....