TaxTMI 
TaxTMI 
2021 (4) TMI 723
X X X X Extracts X X X X
X X X X Extracts X X X X
....961 (hereinafter referred to as Act) dated 27/03/2015 by the ld. Dy. Commissioner of Income Tax-15(3)(1), Mumbai (hereinafter referred to as ld. AO). 2. The first preliminary issue raised by the assessee is with regard to challenging the validity of reopening of assessment for the Asst Year 2007-08 u/s 147 of the Act. 3. We have heard the rival submissions and perused the materials available on record. We find that the assessee company is engaged in the business of marketing, promotion and distribution of 'Red Hat Subscriptions' to customers in Indian Sub-Continent. The assessee basically acts as a distributor of Red Hat Subscription which enables the customers in India to avail the support services for open source software systems. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....unting. Further, RHIPL has failed to deduct tax as required u/s 195 of the Income Tax Act, 1961, while making the-payments to the foreign company- Red Hat Asia Singapore Pte. Ltd. Reliance is placed on the rulings of the AAR in the case of Citrix Systems Asia Pacific Pty. Ltd. and Acclerys K K, where it has been decided that the payment by the reseller of the software to its AE is in the nature of royalty within the meaning of section 9(1)(vi) of the Act. Therefore payments made by RHIPL to its AE, Red Hat Asia Singapore Pte. Ltd., should be treated as royalty within the meaning of section 9(l)(vi) of the Act, on which no tax is deducted at source by RHIPL. Accordingly, the expenditure incurred for the purchase of the subs....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the ld AO to duly mention in the reasons recorded itself as to whether there is any failure on the part of the assessee in disclosing fully and truly all material facts necessary for the assessment. In the instant case, from the reasons recorded (reproduced hereinabove), it could be seen that there is absolutely no mention of any failure on the part of the assessee in disclosing fully and truly all material facts necessary for the assessment during the original assessment proceedings. Admittedly the original assessment proceedings were completed u/s 143(3) of the Act on 26.11.2009. We find that the law is now very well settled that the reasons recorded by the ld AO for reopening the assessment should duly mention the failure, if any, on th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 16. Mr. Desai, with respect to the contention that the notice under section 148 is barred by limitation and that the Assessing Officer has no jurisdiction to issue such notice, contends that even if the words "failure to disclose fully and truly all material facts relevant for assessment for assessment year" are absent in the reasons recorded, still such reasons can be inferred on the text of the reasons recorded. He, therefore, submits that the notice under challenge is well within the scope of section 147 as such this petition is liable to be dismissed being without any substance. Consideration : 17. Having heard the parties at length, we are of the opinion that the petitioner can be disposed of on the first conten....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year." 18. ............. 19. In the case in hand it is not in dispute that the assessment year involved is 1996-97. The last date of the said assessment year was 31st March, 1997 and from that date if four years are counted, the period of four years expired on 1st March, 2001. The notice issued is dated 5th November, 2002 and received by the assessee on 7th November, 2002. Under these circumstances, the notice is clearly beyond the period of four years. 20. The reasons recorded by the Assessing Officer nowhere state that there was failure on the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavit or making oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced. (emphasis supplied by us herein) 21. Having recorded our finding that the impugned notice itself is beyond the period of four years from the end of the assessment year 1996-97 and d....