Case Law Details
Brief of the Case
In the case of Coperion Ideal Private Limited v. CIT, Delhi High Court while giving the decision in the favour of the assessee, held that there should be some tangible material available with the Revenue, whenever they want to conclude that Assessee have escaped Assessment.
Facts of the case
The Assessee filed its return of income for the AY 2002-03 on 31st October 2002 declaring income at Rs.67,91,500. The Assessee showed expenditure of a sum of Rs.20,71,489 under the head “Royalty & Cess”. The, ACIT issued a notice u/s 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. In the reply it was mentioned 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. 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. On 24th March 2009, more than four years after the assessment was completed, the ACIT reopened the assessment by relying on the Judgment of Hon’ble Supreme Court in the case of Southern Switchgears Ltd. vs. CIT, 232 ITR 359 that grant of technical aid fees for setting up factory and right to sell the products as per collaboration agreement is not allowable as revenue expenditure and was to be treated as capital expenditure. As per that decision the said expenditure was not allowable. Therefore, the income to the tune of Rs 1973337/- has escaped assessment because of failure on part of assessee to disclose fully and truly material facts necessary for Assessment and hence notice u/s 148 is issued for reopening u/s 147 of the IT Act. The appeal of the Assessee was allowed by the CIT(A) but was reversed by the Hon’ble Tribunal.
Contentions of the Revenue
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