COMMISSIONER OF INCOMNE TAX FARIDABAD vs. M/S MOTOROLA SOLUTIONS INDIA PVT LTD

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ITA/416/2014HC Punjab & HaryanaPHHC01109570201427 March 2015Bench: MR. JUSTICE M.M. AGGARWAL,MR. JUSTICE JITENDRA CHAUHAN2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose from the order of the ITAT. The Court agreed with the findings of the CIT(A) and the ITAT that there was no justification for initiating the re-opening of proceedings under Sections 147 and 148 of the Income Tax Act, 1961. The reasoning was that the assessee had disclosed all relevant material, including the fact that software expenditure was treated as revenue expenditure, which was consistent with the order for a previous assessment year. The Court noted that the reopening was based solely on a change of opinion by the Assessing Officer and that no material had been withheld or suppressed by the assessee. Furthermore, no new material was relied upon for the impugned proceedings, nor was it suggested that the Assessing Officer had not noticed the relevant material during the original assessment. Therefore, the appeal filed by the revenue was dismissed.

What were the facts?

The appeal by the Commissioner of Income Tax (CIT), Faridabad, is against the order dated 28.06.2013 passed by the Income Tax Appellate Tribunal (ITAT), New Delhi. The ITAT had dismissed the CIT's appeal against the order dated 19.03.2012 passed by the Commissioner of Income Tax (Appeals). The matter concerns assessment year 2003-04. The CIT(A) and the ITAT held that there was no justification for initiating re-opening of proceedings under Sections 147 and 148 of the Income Tax Act, 1961. The respondent-assessee had disclosed all relevant material, including the assessment order for assessment year 2006-07. A note with the return of income clarified that software expenditure was treated as revenue expenditure, consistent with a prior order for assessment year 1996-97. The assessee argued that the expenditure was revenue in nature and provided necessary details. The re-opening was based solely on a change of opinion.

What were the issues?

1. Whether the reopening of assessment proceedings under Sections 147 and 148 of the Income Tax Act, 1961, was justified, considering the assessee had disclosed all relevant material and the reopening was based on a change of opinion by the Assessing Officer? (Mixed question of law and fact) Assessee's contentions: - The assessee contended that all relevant material was disclosed at the time of the original assessment. - The note enclosed with the return of income clearly indicated the treatment of software expenditure as revenue expenditure. - This treatment was consistent with the order of the CIT(A) for the previous assessment year 1996-97 in the assessee's own case. - The assessee had submitted that the expenditure was revenue in nature and provided all necessary details to the Assessing Officer. - The reopening of proceedings was solely based on a change of opinion by the Assessing Officer, without any new material or suppression of facts. Revenue's contentions: - The judgment does not record any specific contentions made by the revenue regarding the justification for reopening, other than implicitly through the filing of the appeal.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(3)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 27.03.2015 ITA No. 416 of 2014 (O&M) Commissioner of Income Tax, Faridabad ----Appellant Versus M/s Motorola India Electronics Pvt. Ltd. -----Respondent Coram: Hon'ble Mr. Justice S.J. Vazifdar, Acting Chief Justice Hon'ble Mr. Justice Harinder Singh Sidhu 1. To be referred to the Reporters or not? 2. Whether the judgment should be reported in the Digest? Present: Mr. Tajender K. Joshi, Advocate for the appellant. **** S.J. VAZIFADAR, A.C.J. (Oral) CM-26009-CII-2014 For the reasons recorded in the application, the delay of 113 days in re-filing the appeal, is condoned. Civil Misc. Application is allowed. ITA No. 436 of 2014 This appeal is against the order dated 28.06.2013 passed by the Income Tax Appellate Tribunal, New Delhi (for short 'the Tribunal') dismissing the appellant's appeal against the order dated 19.03.2012 passed by the Commissioner of Income Tax (Appeals). The matter pertains to assessment year 2003-04. 2. The Commissioner of Income Tax (Appeals) and the Tribunal held that ATUL KUMAR TRIPATHI 2015.04.06 12:53 I attest to the accuracy and integrity of this document

ITA No. 416 of 2014 (O&M) -2- there was no justification for initiating the re-opening of proceedings under Sections 147 and 148 of the Income Tax Act, 1961 (for short 'the Act'). The Commissioner of Income Tax (Appeals) has dealt with the matter in considerable detail. 3. The respondents had disclosed all relevant material the respondent had filed a copy of the assessment order dated 27.03.2006 earlier passed under Section 143(3) of the Act. The note enclosed with the return of income made it clear that the expenditure incurred on software purchased during the relevant year had been treated as revenue expenditure, which was in accordance with the order of the Commissioner of Income Tax (Appeals) for the previous assessment year 1996-97 in the respondent's own case. The respondents had submitted before the Assessing Officer that the expenditure on purchase of software was a revenue expenditure in nature and had also filed all necessary details as regards the accounts. The re-opening was based only on a change of opinion. 4. It is not even contended that any material has been withheld or suppressed by the respondents inadvertently or otherwise. No new material was relied upon in respect of the impugned proceedings. Nor is it suggested that the assessing officer did not notice the relevant material while making the assessment order. 5. In the circumstances, no substantial question of law arises. The appeal is therefore dismissed. (S.J. VAZIFDAR)

ACTING CHIEF JUSTICE (HARINDER SINGH SIDHU)

JUDGE 27.03.2015 Atul ATUL KUMAR TRIPATHI 2015.04.06 12:53 I attest to the accuracy and integrity of this document

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