2006 (11) TMI 181

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.... & FS" for short), by which it agreed to purchase the business of managing private equity funds and venture capital funds and providing financial services for a lumpsum consideration of Rs. 14.15 crores. Under the said agreement, it purchased various intangible assets of IL and FS such as intellectual property, including but not limited to know-how, copyrights, computer software, technical data, franchises, etc. Later on the consideration payable was reduced to Rs. 11.50 crores by a subsequent agreement. 2. The petitioner filed a return of its income for the assessment year 2003-04 wherein it claimed depreciation of Rs. 3,05,77,001. The petitioner later on received an intimation dated February 28, 2004, under section 143(1)(a) of the Inc....

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....These reasons are as follows : "The assessment in this case has been completed under section 143(3) on March 2, 2005, determining income at Rs. 5,00,72,570. The company has purchased asset management rights costing Rs. 11.31 crores from IL&FS Ltd., a company covered under section 40A(2)(b) and treated this as intangible assets and claimed depreciation at 25 per cent. being Rs. 2.83 crores for the year which has been wrongly allowed. By purchasing this right, the company has purchased a future right to receive income. Though it is an asset, but this intangible asset will not qualify for depreciation. In view of this, I have reason to believe that income of Rs. 2.83 crores chargeable to tax has escaped assessment for the assessment y....

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....r section 32(1)(ii) of the Income-tax Act. That depreciation has been granted by the Assessing Officer and a regular assessment order was passed under section 143(3). Thereafter, when the audit objections were raised, in fact, the first respondent had pointed out to the auditor that there was no need to have a reassessment. The letter written by first respondent to the principal director of audit is dated September 23, 2005. It is specifically referred to in paragraph 7 of the rejoinder and that the petitioner came to know about it after taking inspection. We were shown that letter from the file of the respondents. Mr. Mistri, therefore, submits that firstly under section 147 of the Income-tax Act, it is necessary that the Assessing Officer....

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....e furnished to him. Thereafter, he had passed the assessment order allowing the depreciation and now obviously on the audit objection, he is reopening the assessment, though he has himself justified non-reopening thereof. 10. Mr. Sharma, learned counsel appearing for the respondents, on the other hand, submitted that this is a case of escaping of the income and that of excessive depreciation allowance being granted. This decision of the Assessing Officer is protected under clause (c)(iv) of Explanation 2 to section 147 of the Income-tax Act. Secondly, he submitted that under Explanation 4 to section 32(1) of the Income-tax Act, the expression "know-how" means any industrial information or technique likely to assist in the manufacture or ....