TaxTMI 
TaxTMI 
2019 (1) TMI 1146
X X X X Extracts X X X X
X X X X Extracts X X X X
....sire to increase its sales by providing a dedicated area for its products and having counters such as "Try and Decide" exclusively for their paints. 4. For the subject assessment year, the petitioner filed its return of income on 24th November, 2011 declaring a total income of Rs. 972.95 crores. In its return of income, the petitioner claimed expenses incurred on "Colour Idea Stores" as a part of its advertisement and sales promotion expenses. Thereafter, the Assessing Officer took up the petitioner's return of income for scrutiny assessment and sought details of break up of the advertisement and sales promotion expenses and passed an order dated 18th March, 2015 under Section 143(3) of the Act assessing the income at Rs. 1058.42 crores. 5. On 28th March, 2018, the impugned notice was issued seeking to reopen the assessment for Assessment Year 2011­12. The reasons in support of the impugned notice reads as under :­ "In this case, the assessee filed original return of income of A.Y. 2011­12 on 24.11.2011 declaring total income at Rs. 972,95,45,281/­ under normal provision of Income Tax Act, 1961 (the "Act") and 1122,83,00,000/­ u/s 115JB of the Act. Subseq....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion of paints for several years with familiarity, experience, and goodwill in the retail market and has represented to Asian Paints that it has the necessary Infrastructure, financial resources inter alia space shop storage facilities, personnel and experience to undertake the intended arrangement and business of paints. - The Dealer has further represented to Asian Paints that he is in lawful possession of the premises situated at 32, Mill Road, Coimbatore, Tamil Nadu­ 641001 for 50 years (approx.), having a total area and measuring approximately 2861 sq.feet free from all encumbrances in respect of which the Confirming Party is an Owner thereof; - The Dealer has approached Asian Paints and agreed to stock, promote and sell the products of Asian Paints from the Designated Shop Area, by installing Asian Paints Decor, design, creatives and concepts; - Based on the above representation of the Dealer, Asian Paints hereby agrees to associate with Dealer and the Dealer agrees to promote Asian Paints products through the Designated Shop Area, make displays and the Dealer has agreed to this business arrangement on the terms and conditions appearing hereunder; NOW THIS AGREEMEN....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s", brochures, literatures and advertisements, counters called as 'Try & Decide counter', 'Be inspired Area' and Choose Your Finish Bar'. Apart from the above counters, the Dealer shall also provide Asian Paints a separate contractor transaction area called as the 'Decorator Express Area' measuring a minimum of 10 sq. meters. - The Dealer shall hand over peaceful and vacant possession of his Shop premises to the contractors and the consultants of Asian Paints so as to enable them to do the necessary demolition, construction / fabrication and installation work in terms of this Agreement. - The Dealer shall get his Shop premises and the Designated Shop Area constructed designed and decorated in accordance with and in the manner suggested by Asian Paints and its consultants / contractors. - The Inspiration Area shall be continuous and must have easy access to the customer. - The Dealer must not use the Designated Shop Area in any other manner than as specified by Asian Paints. - Any other product or display material shall be kept out of the Designated Shop Area unless specified by Asian Paints. - The Designated Shop Area shall not be used for disp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....specified by Asian Paints from time to time. - The Dealer shall be under a strict obligation, not to alter / tamper/ make changes in the construction, fabrication, designs, displays made and installed by Asian Paints during the subsistence of this Agreement unless otherwise permitted by Asian Paints. Any such changes, alterations or distortions or failure to make and sustain the arrangements in respect of the Designated Shop Area shall entail termination of this Agreement and the Dealer shall be liable to make good every loss and damage sustained by Asian Paints in this regard. - The Dealer shall provide an unrestricted and unlimited access to any of the Asian Paints employees, agents and representatives and the records thereto at all reasonable times. - The Dealer shall not charge in excess of the MRP declared by Asian Paints upon its products for the facilities provided to the customers in the Designated Store Area. - The Dealer shall not be entitled to inter alia any special privileges, prerogatives, benefits discounts, rebates or schemes as compared to other dealers by virtue of this Agreement." 2.2. On perusal of the agreement, it clearly emerges that the assessee compa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iled its objections to the reopening notice by letter dated 1st August, 2018. These objections were rejected by order dated 18th September, 2018 of the Assessing Officer. 7. From the reasons recorded in support of the impugned notice dated 28th March, 2018, the following undisputed facts emerge :­ (a) the impugned notice is beyond the period of 4 years from the end of the relevant assessment year; (b) the regular assessment proceedings were completed under Section 143(3) of the Act; (c) the material which forms the basis for the impugned notice is an assessment order passed for Assessment Year 2015­16; and (d) the order for Assessment Year 2015­16 came to be passed on the basis of an agreement dated 6th March, 2014 between the petitioner assessee and its dealers. 8. On the aforesaid facts, Mr. Agarwal, learned Counsel appearing in support of the petition submits that the impugned notice is without jurisdiction for the following reasons :­ (a) The impugned notice has been issued beyond the period of 4 years from the end of the relevant assessment year in respect of an assessment completed under Section 143(3) of the Act. Thus, in the absence of any failure on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion, if there has been no failure on the part of the petitioner assessee to disclose fully and truly all material facts necessary for assessment. In the present facts, we note that in its return of income the petitioner had claimed the expenditure incurred on "Colour Idea Stores" as a part of its Advertisement and Sales Promotion expenses. During the regular assessment proceedings under Section 143(3) of the Act, the Assessing Officer had occasion to examine the petitioner's claim for expenses in respect of "Colour Idea Store" as a part of its advertisement and sales promotion expenses. Thus, there was a complete disclosure of all primary material facts on the part of the petitioner. (See Calcutta Discount Co. Vs. ITO, 41 ITR 191). Therefore, no failure to disclose all fully and truly material facts necessary for assessment. Thus, on the above ground itself the impugned notice is hit by the proviso to Section 147 of the Act and is without jurisdiction. 11. In any case, the application of mind to these facts on the part of the Assessing Officer can be inferred from the fact that the statement constituting the breakup of the total expenditure incurred on sales and promotions was....