TaxTMI 
TaxTMI 
2017 (9) TMI 174
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....and is engaged in the business of manufacturing pharmaceutical drugs and other healthcare related businesses. For the assessment year 2010-11, the petitioner had filed the return of income on 28.09.2010 declaring 'Nil' income. Return was taken in scrutiny by the Assessing Officer, during which, several issues came up for consideration. Assessing Officer raised written queries under a communication dated 16.12.2013, to which, the petitioner had replied under a letter dated 06.01.2014. The Assessing Officer passed the order of assessment under section 143(3) of the Income Tax Act, 1961 ('the Act' for short) on 06.02.2015 making several adjustments and disallowances and computed the assessee's taxable income at Rs. 106.04 c....
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....lly, there was no provisions for payment of any remuneration to the partners in the partnership deed dated 1.3.2007. The said firm enjoys deduction of its income u/s 80IC of the Act. After the execution of the partnership deed, the assessee company entered into a MOU on 15.3.2008. According to the conditions of MOU, the assessee company markets the products and provides all business auxiliary marketing services like consignment, sales agent and after sale services of the product of the firm M/s.Zydus Healthcare Sikkim for which the assessee company is entitled to get remuneration 12.5% of the total turnover. For payment of remuneration to the assessee company, it is noticed that the Partnership Firm entered an agreement/Addendum dated 1/....
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....ning of the same is 'of or for a particular person'. 'Person' is an inclusive term under the Act and in the absence of any qualifying definition under the Act and the facts of the issue involved and since the issue has not been disclosed by the assessee the income/remuneration received from the Firm is required to be treated as 'Income of the assessee company from other sources' under section 56 of the IT Act since the assessee is not eligible for treating it as exempt Income. This has resulted in under assessment of income amounting to Rs. 130,00,00,000/which is chargeable to tax and has escaped assessment for the A. Y. 201011. Therefore, I have reason to believe that income amounting to Rs. 130,00,00,000/which i....
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....riod of four years from the end of relevant assessment year. In that view of the matter, the questions of change of opinion as well as the failure on part of the assessee to disclose truly and fully all material facts necessary for assessment would assume significance. In this context, we have examined the materials on record. 9. The sole objection of the Assessing Officer in the reasons recorded for reopening the assessment is with respect to a sum of Rs. 130 crores received by the assessee company by way of remuneration as a partner of one Zydus Healthcare, Sikkim. The assessee claimed that the said income was exempt in terms of section 28(v) of the Act. Such sum was paid to the assessee company by Zydus Healthcare, Sikkim, whose income ....
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....operations". 11. It was in the background of such disclosures by the assessee in the return of income during the scrutiny assessment, the Assessing Officer in his letter dated 16.12.2013 while raising multiple queries about several other issues, in this regard had called upon the assessee to explain the following: "3) In the statement of income you have claimed deduction of Rs. 130Crore as remuneration from partnership firm. Please give a note as to how the income under the head "Remuneration from Partnership Firm" of Rs. 130Crore, is exempt in the hands of the Company." 12. In reply to such query, the assessee in the communication dated 06.01.2014, provided following information: "3. Reply to Point No.3 of your letter dated 16/12/2....
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.... Assessing Officer had called upon the assessee to explain the said deduction as remuneration from partnership firm. He called upon the assessee to state how such income was exempt in the hands of the company. In reply to such question, the assessee had explained that such income was not chargeable to tax since the same was added to the total income of the firm and disallowed under section 40(b) of the Act, the assessee would therefore get the benefit of section 28(v) of the Act. The assessee also drew the attention of the Assessing Officer to the addendum to the partnership deed, in which, the provision for payment of remuneration to the partner at the prescribed percentage was made. The assessee also pointed out that identical question ha....