TaxTMI 
TaxTMI 
2012 (4) TMI 239
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....d order, we have, with the assistance of the learned counsel for the parties, examined the contentions raised. Learned counsel for the respondent has filed a paper book in this Court which is taken on record. 4. For the assessment year 2000-01, the respondent/assessee had filed a return declaring income of Rs.12,99,85,610/- on 29.11.2000. This return was processed on 14.05.2001 and the returned income was accepted. Subsequently, notice u/s 143(2), dated 27.11.2001, was issued and Assessing Officer passed an assessment order dated 31.01.2003. The assessment order is brief and we have referred to the contents thereof in the subsequent paragraphs of this order. 5. For the assessment year 2001-02, the respondent had filed their return of income on 28.10.2001, disclosing income of Rs.17,63,93,104/-. The aforesaid income includes capital gains of Rs.11,76,471/-. The return was processed u/s 143(1) on 23.05.2002 on the returned income. Thereafter, the return was taken up for scrutiny by issue of notice u/s 143(2) dated 11.10.2002. Assessment order u/s 143(3) was passed on 20.02.2004. The income was assessed at Rs.17,52,16,710/- including capital gains. The assessment order is brief ....
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....ly all material facts necessary for its assessment for that year. The income chargeable to tax has escaped assessment within the meaning of Secrion 147 of the I.T. Act, 1961 because of the wrong claim of royalty of Rs. 7437022/- as revenue expenditure." "Reasons recorded for re-opening assessment of M/s Manjal Showa Ltd. A.Y. 2001-02 u/s 147 of the I.T. Act, 1961. 1. The assessee filed its return of income declaring total income of Rs. 17,63,93,184/- on 28.10.2001. The assessment in this case was completed u/s 143(3) on 20.2.2004 at Rs. 17,52,16,710/-. 2. The assessee had debited an amount of Rs. 3,32,45,117/- in its P&L a/c as royalty. This royalty was paid to a foreign company M/s Showa Corporation of Japan in lieu of technical knowhow/assistance from them. The assessee has debited it as a revenue expenditure though it gives rise to benefit/advantage which is enduring in nature. 3. the assessee company had entered into an agreement with the foreign company of Japan M.s Showa Corporation to receive technical assistance for the manufacture of shock absorbers and right to sell products. As per the different sections of the Technical Collaboration Contract from 11.3.1997 to ....
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....aragraph 2 of the reasons recorded for the assessment year 2000-01 incorrectly records that the return of income was processed u/s 143(1) on 31.01.2003. As notice above, a regular assessment order u/s 143(3) was passed on 31.01.2003. 8. For the assessment year 2000-01, the tribunal has set aside the order on two ground- (i) change of opinion, and (ii) there was no failure or omission on the part of the respondent assessee to fully and truly disclose material facts. 9. In the assessment order u/s 143(3) dated 31.01.2003, for the assessment year 2000-01, the Assessing Officer had recorded as under:- "During the course of assessment proceedings various details such as details of deprecation claimed, expenditure incurred in foreign currency, details of loans and advances given and taken, confirmations from sundry creditors exceeding Rs.50 lacs, expenses of flex fluctuation, copies of TDS certificates on royalty and technical fee payments repairs and maintenance, insurance payments etc. were called for and after examination placed on file. With these remarks, total income of the assessee is computed as under:- 10. The total royalty amount paid during the year in quest....
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....any). In terms of Article 7 of the said agreement the foreign company has to provide us with all technical information assistance and services necessary for the manufacture of the product subject to the payment of the consideration pursuant to article 19 of the agreement. Now the consideration for technical assistance as per article 19 is "Royalty" which the assessee company is paying to the foreign company for the product manufactured and assembled. On the face of it, it is a revenue expenditure related to the production and has been claimed and allowed as such by the department right from the beginning. It may be added that the deduction of royalty is allowed by the department subject to the provision of section 40(a)(i)." 13. By another letter dated 11.02.2004 the assessee had submitted a copy of technical and financial collaboration agreement. It is certain that the Assessing Officer in the assessment year 2001-02 had specifically gone into the question of payment of royalty. A query was raised and was answered with the explanation given by the assessee. A copy of the agreement was furnished. 14. It is noticeable that the respondent/assessee has been making payment of roy....