×Latest Case Laws on Income Tax by various High Courts of India
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COPERION IDEAL PRIVATE LIMITED vs. Commissioner of Income Tax
High Court of Delhi
DR. JUSTICE S.MURALIDHAR & MR. JUSTICE VIBHU BAKHRU
Oct 9,2015 1015Taxpundit 29
Section 37, 139, 142, 143, 147, 148, 154, 260A
Asst. Year 2002-03
1. This appeal by the Assessee under Section 260A of the Income Tax Act, 1961 („Act‟) is directed against an order dated 26th September 2014 passed by the Income Tax Appellate Tribunal („ITAT‟) in ITA No. 4375/D/2010 for the Assessment year („AY‟) 2002-03.
3. Having heard learned counsel for the parties, the following question of law is framed: “Whether the ITAT erred in law in upholding the reopening of the assessment by the Assessing Officer under Section 147 of the Income Tax Act, 1961 in the facts of the case?”
4. The Assessee filed its return of income for the Assessment Year („AY‟) 2002-03 on 31st October 2002 declaring income at Rs.67,91,500. The Assessee‟s case was selected for scrutiny under Section 143(1) of the Act on 24th June 2003. An order was passed on 31st January 2005 under Section 143(3), assessing the income at Rs.71,46,170. One of the items of expenditure was a sum of Rs.20,71,489 under the head “Royalty & Cess”.
5. On 5th September 2005, the Assistant Commissioner of Income Tax („ACIT‟) issued a notice under Section 154 of the Act to the Assessee seeking explanation on the ground that there was mistake apparent from the record since the aforesaid amount should have been treated as capital expenditure as the benefit was of enduring nature. The Assessee replied to this notice on 21st September 2005 clarifying that (a) it was paying royalty at 5% on its domestic sales to M/s Coperion Waeschle Co. Germany on year to year basis; (b) that the payment did not pertain to acquisition of technical knowhow and therefore was booked as revenue expenditure and debited to the profit and loss (P&L) account. The Assessee also pointed out that it had been paying royalty for the previous 5-6 years based on the turnover and in all those years it has been allowed as a revenue expenditure.
6. It appears that an audit objection was raised, in response to which the ACIT wrote to the Senior Audit Officer on 28th October 2005, clarifying that the expenditure was rightly treated as revenue expenditure.
7. On 24th March 2009, more than four years after the assessment was completed, the ACIT penned the reasons for reopening of assessment as..........