AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 105
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.... challenging the decision of the learned Commissioner (Appeals) in deleting the addition of Rs. 8,88,11,535 made by the Assessing Officer on account of disallowance under section 40(a)(ia) of the Income Tax Act, 1961 (for short "the Act"), the assessee in its cross objection has raised the issue of validity of proceedings under section 147 of the Act. 3. Brief facts are, the assessee, a company, filed its return of income on 31st October 2007, declaring total income of Rs. 10,29,45,040. Assessment in assessee's case was originally completed under section 143(3) of the Act vide order dated 30th October 2009, determining the total income at Rs. 10,44,01,990. Subsequently, on the basis of information available on record, the Assessing Offic....
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....o disallowance under section 40(a)(ia) could be made. The Assessing Officer, however, did not find merit in the submissions of the assessee and ultimately held that RPPL having provided managerial services to the assessee and received the payment, the assessee was liable to deduct tax at source on such payment. Since the assessee has not deducted tax at source on such payment, the Assessing Officer disallowed the amount of Rs. 8,88,11,535 by invoking the provisions of section 40(a)(ia). Being aggrieved of the assessment order passed under section 143(3) r/w section 147, assessee preferred appeal before the learned Commissioner (Appeals) challenging the assessment order both on the validity of re-opening under section 147 as well as on the m....
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.... Commissioner (Appeals) held that no disallowance under section 40(a)(ia) can be made. Accordingly, he deleted the addition. 5. Learned Authorised Representative submitted, assessee is obliged under the Act to get its books of accounts audited. He submitted, along with the return of income, assessee had submitted the audit report as required under section 44AB and the audit report contained all necessary information in respect of assessee's business activities. He submitted, in the course of original assessment proceedings, the Assessing Officer after examining the audit report and all other relevant materials completed the assessment under section 143(3). Drawing the attention of the bench to the reasons recorded for re-opening the asse....
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....Departmental Representative referring to Explanation-1 to section 147 of the Act submitted, if a particular issue / fact appearing from assessee's books of account or their documents could not be examined by the Assessing Officer with due diligence, mere production of such document will not constitute disclosure of information by the assessee so as to term it as formation of opinion by the Assessing Officer. As far as the merits of the addition made is concerned, the learned Departmental Representative submitted, the very fact that the assessee has paid service charges to RPPL towards the services rendered by the said company indicates that payments made were towards managerial services, he, therefore, submitted the Assessing Officer having....
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....same has to be disallowed under section 40(a)(ia). Thus, it is clear from the reasons recorded that the Assessing Officer has no fresh tangible material available before him to re-open the assessment. Only on the basis of material available on record at the time of original assessment, the Assessing Officer has initiated proceedings under section 147. It has been argued by the Department that at the time of completing original assessment, the Assessing Officer has not examined the issue, hence, there is no formation of opinion by the Assessing Officer to constitute change of opinion. However, we are unable to agree with the said proposition. It is well accepted principle of law that tax audit report submitted by the assessee in terms of sec....
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.... could be seen, the payment of Rs. 8,88,11,535 to RPPL comprises of advertisement expenses of Rs. 8,79,32,213 and Rs. 8,79,322 as service charges. As far as the amount of Rs. 8,79,32,213 is concerned, the documentary evidences produced before the Departmental Authorities including the ledger account copies clearly demonstrate that RPPL has paid such amount to different advertisement companies on behalf of the assessee towards advertisement cost. It is also evident that while making such payment RPPL has deducted tax at source and remitted to the Government account. Thus, it is clearly evident that the payment of Rs. 8,79,32,213 by the assessee to RPPL is towards reimbursement of expenditure incurred on behalf of the assessee and not towards....