TaxTMI 
TaxTMI 
2013 (1) TMI 160
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....oceedings were initiated within the period of four years from the end of the said assessment year, and therefore different considerations apply. W.P.(C) Nos.8483 & 8486/2010: The relevant dates are set out below: Asst. year 2002-03 Asst. year 2003-04 Original assessment made u/s. 143(3) 143(3) Date of the original assessment 31.03.2005 23.03.2006 Notice u/s.148 issued on 30.03.2009 30.03.2010 3. Under the first proviso to section 147, notice to reopen an assessment completed under section 143(3) may be issued beyond the period of four years from the end of the relevant assessment year only if income chargeable to tax has escaped assessment on account of the failure of the assessee to file returns of income or to furnish fully and truly all material facts relating to his assessment at the time of the original assessment. This is a jurisdictional pre-condition. 4. For the assessment year 2002-03, the reasons recorded u/s. 148(2) for reopening the assessment are as follows: "The assessment of M/s Xerox India Ltd. for the assessment year 2002-03 was completed under scrutiny in March 2005 determining an income of Rs.7836.96 lakhs. The assessed income was however ....
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....en in Schedule N; in the schedule, royalty of Rs.438.59 lakhs was shown as part of the expenses. It is not in dispute that the royalty was paid under a technical services agreement entered into on 22.03.1984 with Xerox Ltd. of England and was being allowed in all the assessments made from the assessment year 1984-85. It is stated in the counter-affidavit that no query was raised by the respondent in the course of the original assessment proceedings with regard to the royalty payment, that the petitioner did not submit the information or copies of the relevant documents showing the terms and nature of the benefit accruing from the royalty agreements in this assessment year, that each year is a separate year and the rule of res judicata is not applicable to income-tax proceedings, that the rule of consistency does not hold good on the facts of this case and that in these circumstances the reopening was valid. It is pointed out that the contents of the supplementary agreements 1 & 2 were not submitted by the petitioner during the original assessment proceedings. 7. In respect of the assessment year 2003-04 also, the royalty of Rs.359.59 lakhs was separately shown in the Schedule-O wh....
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..... 143(3) on 27.12.2006. Notice u/s. 148 was issued on 30.03.2009 which is within the period of four years from the end of the relevant assessment year (2004-05). The reasons recorded are: "The assessment of M/s. Xerox India Ltd. for the assessment year 2004-05 was completed under section 143(3) vide order dated 27.12.2006 determining an income of Rs.27,39,40,490/-. 2. The assessee company had claimed and was allowed an expenditure of Rs.3,79,50,791/- on account of royalty paid to a foreign company in foreign exchange in lieu of rendering technical assistance. Since this expenditure has provided the assessee a benefit of enduring nature, this expenditure ought to have been treated as capital expenditure." 12. The other reasons recorded relating to provision for securitisation, contingent liability, gratuity/superannuation etc. are not reproduced since the objections of the petitioner with respect to those issues were accepted by the respondent by order passed u/s.154 on 11.02.2010. 13. The contention of the petitioner is that the notice issued u/s. 148 is without jurisdiction on the basis of the Full Bench judgment of this court in CIT v. Kelvinator of India Ltd., (2002) 256 ITR....
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....eveloped by the petitioner in India and it was dependent on the technical inputs supplied by the parent company and thus there arose an enduring benefit to the petitioner, that the petitioner omitted to state that it derived such enduring benefit, that the petitioner failed to deduct tax from the royalty payments which attracted the provisions of section 40(a)(i) of the Act under which the royalty payments could have been disallowed, that since there was no query raised or any discussion made on the issue of allowability of the royalty in the original assessment proceedings no opinion was formed by the assessing officer and therefore the petitioner cannot allege that the reopening was prompted by a mere change of opinion. It is also averred that the assessing officer received information by way of revenue audit report from the DG Audit, Central Revenue, IP Estate, New Delhi vide letter dated 03.09.2007 accompanied by a "statement of facts" which was "thoroughly examined by the AO and only after he was fully satisfied and formed an opinion that income chargeable to tax had escaped assessment by way of Royalty payment that reasons were recorded and notice u/s 148 was issued on 30.03.....