tax appellant memo blkul final

8/17/2019 TAX Appellant Memo Blkul Final

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BEFORE THE HON’BLE

HIGH COURT OF SOUTHERIA

INNOVATIVE PVT LTD

(Appellant)

V.

COMMISSIONER OF INCOME TAX

(Respondent)

CASE CONCERNING R EOPENING OF ASSESSMENT AS UNDER

SECTION 147 OF INCOME TAX ACT, 1961.

Mem!"#$%m # &'e (e'")* * &'e A++e))"#&

SUBMITTED TO SUBMITTED B-

MR . CHAMARTI R AMESH UMAR SLESHA SURITI

ASST. PROF. SSLG B.A. LL.B. /HONS.0 VII SEM


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TABLE OF CONTENTS

Index of Authority......................................................................................................................2

Statutes Referred:...................................................................................................................2

Cases Referred:.......................................................................................................................2

Books Cited:...........................................................................................................................2

Jurisdiction.................................................................................................................................

State!ents of the "acts...............................................................................................................#

$uestions %resented...................................................................................................................&

Ar'u!ents in Adance...............................................................................................................

Issue I: *he present case inoles Su+stantial $uestion of la,.............................................

Issue II: *he reopenin' of the assess!ent +y the Assessin' -fficer under Section # of the

Inco!e *ax Act/ 0& ,as not 1ustified.................................................................................

*he reopenin' of the assess!ent +y the Assessin' -fficer under Section # of the

Inco!e *ax Act/ 0& ,as not 1ustified..............................................................................

*here can +e no reopenin' of the assess!ent on the +asis of a !ere chan'e of

opinion..............................................................................................................................3

*he royalty is attri+uted as reenue expenditure and not capital expenditure..........

%rayer "or Relief......................................................................................................................2

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INDEX OF AUTHORIT-

STATUTES R EFERRED

. *he Inco!e *ax Act 0&

CASES R EFERRED

1. CIT v. Kelvinator of India Ltd(2010) 320 ITR 561 (SC)

2. CIT v. Sharda Motor Industrial Limited. 319 ITR 1093. Commissioner of Inome Ta! II v. "#lti$le! Tradin% & Ind#strial Co. LtdIT' o.

356 of 20134. Coperion Ideal Private Limited v. Commissioner ! In"ome Ta# IT$ %o. &&'

o! 201&&. (eput) Commissioner o! In"ome Ta# v. Coperion Ideal private limited IT$

%. 43'& (el2010

*. ar*ana 'r*li "an#fat#rin% Co. Ltd. v. CIT 30+ ITR 3+ ,(el.-+. R. S#,,arao v. . -eera# 'IR 1/51 "ad /6/

BOOS CITED

1. (r. inod /. Sinhania (r. Moni"a Sinhania Students uide to In"ome

Ta# Ta#man 4&th dition

2


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URISDICTION

*he appellant respectfully su+!its +efore the 4on5+le 4i'h Court of Southeria that the

4on5+le Court has the 1urisdiction to entertain the present appeal/ ide/ Section 2&3A of *he

Inco!e *ax Act/ 0&.

1

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STATEMENTS OF THE FACTS

Te Innovative vt Ltd (erein after referred as assessee) esta,lised #nder te

Com$anies 't of Indiana4 a o#ntr* it a stead* eonomi $ro%ress. Te 'ssessees

re%istered offie is loated in So#teria4 a ,ilin%#al state in te so#tern $art of te

Indiana. Te assessee filed its ret#rn of inome for te 'ssessment ear 2003708 on 31st

9to,er 2003 delarin% inome at Rs.14 6+4 /14500. Te 'ssessees ase as seleted

for sr#tin* #nder Setion 183(1) of te 't on 28 th :#l* 2008. 'n order as $assed on

1; :an#ar* 2006 #nder Setion 183(3)4 assessin% te inome at Rs.14 +14 8641+0. 9ne of

te items of e!$endit#re as a s#m of Rs.304 +148;/ #nder te ead $a*ment toards

Ro*alt* & Cess.

9n 15t Se$t 20064 te 'ssistant Commissioner of Inome Ta! iss#ed a notie #


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ase as seleted for sr#tin* and order #


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2UESTIONS PRESENTED

ISSUE I : WHETHER THE PRESENT CASE INVOLVES ANY SUBSTANTIAL

QUESTION OF LAW OR NOR.

ISSUE II: WHETHER THE REOPENING OF THE ASSESSMENT BY THE

ASSESSING OFFICER UNDER SECTION 147 OF THE INCOME TAX ACT,

191 WAS !USTIFIED OR NOT.

*


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ARGUMENTS IN ADVANCE

ISSUE I: THE PRESENT CASE INVOLVES SUBSTANTIAL QUESTION OF LAW.

Ss. (1) to S. 260' $rovides tat an a$$eal sall lie to te i% Co#rt a%ainst an order

$assed in a$$eal ,* te '$$ellate Tri,#nal4 if te i% Co#rt is satisfied tat te ase

involves a s#,stantial A#estion of la.

Te $resent ase involves te s#,stantial A#estion of la in it as te $resent ase

involves room for differene of o$inion into it from te side of te o#rt.

In te ase of R. Subbarao v. N. Veeraju2 it as eld tat Fen a A#estion of

la is fairl* ar%#a,le4 en tere is room for differene of o$inion on it4 or ere te

o#rt to#%t it neessar* to deal it tat A#estion at some lent and dis#ss

alternative vie ten s# a A#estion o#ld ,e a s#,stantial A#estion of la.

Te $resent ase is ver* m# similar to te ase of CIT v. Kelvinator of India

Ltd.3in i te o#rt as eld tat4 even in terms of te amended Setion 18+ tere

as to ,e some tan%i,le material for an '9 to ave reason to ,elieve tat inome as

esa$ed assessment. Te S#$reme Co#rt em$asised tat alto#% te $oer to

reo$en is m# ider after te amendment4 te ords Dreason to ,elieveE needed a

semati inter$retation and tat te '9 o#%t not ,e %iven $oer to reo$en te

assessment on te ,asis of a mere an%e of o$inion. It as em$asised tat Gre7

assessment as to ,e ,ased on f#lfilment of ertain $re7ondition and if te one$t of

an%e of o$inion is removed4 as ontended on ,ealf of te He$artment4 ten4 in te%ar, of re7o$enin% te assessment4 revie o#ld ta=e $lae. 9ne m#st treat te

one$t of an%e of o$inion as an in7,#ilt test to e= a,#se of $oer ,* te

'ssessin% 9ffierE. Te S#$reme Co#rt eld as #nderB Dene4 after 1st '$ril4 1/;/4

2$IR 19&1 Mad 9*9

3,2010- 320 ITR &*1 ,SC-

'


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'ssessin% 9ffier as $oer to re7o$en4 $rovided tere is Gtan%i,le materialG to ome

to te onl#sion tat tere is esa$ement of inome from assessment.E

In te li%t of te a,ove #d%ments and ta=in% into onsideration te fats of te instant

ase4 it is #m,l* s#,mitted tat te $resent ase involves a s#,stantial A#estion of

la.

+


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ISSUE II: THE REOPENING OF THE ASSESSMENT BY THE ASSESSING OFFICER

UNDER SECTION 147 OF THE INCOME TAX ACT, 191 WAS NOT !USTIFIED.

• T"# $#%'(') %* +"# --#--#'+ /0 +"# A--#--(') O2#$

3'#$ S#2+(%' 147 %* +"# I'2%# T5 A2+, 191 6- '%+

3-+(8#.

Te effet of te an%e ,ro#%t a,o#t to Setion 18+ ,* a* of amendment it effet

from 1st '$ril 1/;/ reA#ires to ,e e!amined. rior to 1st '$ril 1/;/4 in order to reo$en

an assessment te '9 o#%t to ave ad reason to ,elieve tat te inome of te

'ssessee as esa$ed assessment on ao#nt of te omission or fail#re ,* te 'ssessee

to file a ret#rn or to dislose f#ll* and tr#l* all material fats neessar* for assessment

for tat *ear. 'fter te amendment te onl* reA#irement as far as Setion 18+ (1) is

onerned is tat te '9 so#ld ave reason to ,elieve tat te inome of te 'ssessee

as esa$ed assessment. oever te proviso to Setion 18+ (1) as amended =i=s in

ere te reo$enin% is so#%t to ,e done after fo#r *ears after te end of te relevant

assessment *ear for i te ori%inal assessment as made. Tis ,rin%s in te

reA#irement of te '9 satisf*in% imself of te e!istene of eiter #risditional fat.

Te esa$ement of inome so#ld ,e oasioned G,* reason of te fail#re on te $art

of te assessee to ma=e a ret#rn #nder setion 13/ or in res$onse to a notie iss#ed

#nder s#,7setion(1) of setion 182 or setion 18;G or Gto dislose f#ll* and tr#l* all

material fats neessar* for is assessment4 for tat assessment *ear.G

In Haryana Acrylic anufacturin! Co. Ltd. v. CIT" # tis Co#rt reiterated

te la in relation to reo$enin% of an assessment #nder Setion 18+


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i is ,e*ond te $eriod of fo#r *ears from te end of te relevant assessment *ear4

te ondition tat tere as ,een a fail#re on te $art of te 'ssessee to tr#l* and f#ll*

dislose all material fats m#st ,e onl#ded it ertain level of ertaint*.E 16. In te

$resent ase4 tere as no fail#re on te $art of te 'ssessee to dislose te material$arti#lars it te ret#rn ori%inall* filed. 9n te ontrar*4 te '9 imself re$lied to te

a#dit o,etion $ointin% o#t tat ro*alt* as alloed to ,e laimed as reven#e

e!$endit#re ,* te 'ssessee for te *ears earlier to ' 2002703. ' o$* of te

a%reement #nder i ro*alt* as ,ein% $aid as $rovided to te Reven#e.

In li%t of te le%al $osition after te amendment to Setion 18+ of te 't4 as e!$lained

in CIT v. Kelvinator of India Ltd. (supra)4 te Co#rt is of te vie tat4 in a

ase ere te assessment is so#%t to ,e reo$ened in 200/4 fo#r *ears after it as

ori%inall* made4 i.e. 20054 te mere fat tat tere as a #d%ment of te S#$reme

Co#rt of 1//+ i as not notied ,* te '9 en e framed te ori%inal assessment

annot per se onstit#te te onl* material on te ,asis of i te assessment o#ld

ave ,een reo$ened. Fen on te same material4 fo#r *ears after te assessment *ear

for i te ori%inal assessment is finalised4 te '9 see=s to reo$en te assessment

on te ,asis of a #diial $reedent delivered more tan ei%t *ears earlier4 it o#ld ,ea ase of mere an%e of o$inion4 sometin% learl* eld im$ermissi,le ,* CIT v.

Kelvinator of India Ltd.$(supra)4 Te tresold reA#irement of tat te '9

so#ld4 on te ,asis of some tan%i,le material4 onl#de tat tere as esa$ement of

inome on ao#nt of te 'ssessee failin% to dislose material $arti#lars4 is not f#lfilled

in te $resent ase. ConseA#entl*4 te reo$enin% of te assessment as4 in te fats of

te $resent ase4 not #stified.

*,2010- 320 ITR &*1 ,SC-

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• T"#$# 2' /# '% $#%'(') %* +"# --#--#'+ %' +"# /-(- %*

#$# 2"')# %* %&('(%'.

In te $resent ase te 9n 15t Se$t 20064 i.e. after te om$letion of te time $eriod

(8 *ears) of reo$enin% te assessment4 te 'ssistant Commissioner of Inome Ta!

iss#ed a notie #


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• T"# $%0+0 (- ++$(/3+# - $##'3# #5'(+3$# ' '%+

2&(+ #5'(+3$#.

's $er te order $assed on 1; :an#ar* 2006 #nder Setion 183(3)4 assessin% te inome

at Rs.14 +14 8641+04 one of te items of e!$endit#re as a s#m of Rs.304 +148;/ #nder

te ead $a*ment toards Ro*alt* & Cess.

Te $a*ment as treated as reven#e e!$endit#re as it did not relate to aA#isition of

tenial =noo and e as $a*in% ro*alt* at 10? on its domesti sales to "


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PRA-ER FOR R ELIEF

"or the fore'oin' reasons/ the Appellant/ respectfully reuests the Court to ad1ud'e anddeclare that:

. The ro)alt) is attri5uted as revenue e#penditure and not "apital

e#penditure

2. Reopenin o! the assessment 5) the $ssessin 6"er under Se"tion 14'

o! the In"ome Ta# $"t 19*1 7as not 8ustied.

. There "an 5e no reopenin o! the assessment on the 5asis o! a mere

"hane o! opinion.

AN- OTHER ORDER IT DEEMS FIT IN THE INTERESTS OF USTICE, E2UIT- AND GOOD

CONSCIENCE.

ALL OF WHICH RESPECTFULLY SUBMITTED BY THE APPELLANT.

;COUNSEL FOR THE APPELLANT<

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tax appellant memo blkul final

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