Case Law Details
Infosys limited Vs DCIT (Karnataka High Court)
Conclusion:
Reopening of assessment on basis of withdrawal of deduction allowed under Section 10A relating to the assessment year 2007-08 was without application of mind and nothing but the change of opinion, which tantamounted to review and the same was not permissible to initiate the proceedings under Section 147/148.
Held:
Assessee had challenged the proceedings initiated by Department under Section 147 r/w section 148 relating to the assessment years 2004-05, 2005-06 and 2006-07 as Addl. Commissioner by taking clue form the order relating to assessment year 2007-08 wherein assessee’s claim for deduction under Section 10-A had been disallowed substantially issued notices under Section 148 proposing to re-assess assessee for the assessment years in question on the ground that certain income had escaped assessment. Assessee contended that the proceedings initiated was against the third proviso to Section 147 and was without jurisdiction while the issue of deduction under Section 10-A was in appeal. The re-assessment proceedings were time-barred as assessee had not failed to disclose any material facts for the assessment and the reasons recorded for issuing the notice under Section 148 were furnished to assessee only after the expiry of the extended period of six years. It was held ‘Note’ on Software development projects and the various stages of software development placed by assessee before AO disclosed the stages wherein assessee was required to carry out the project at the customer’s site/onsite and the same were reflected in the Annual Reports. Considering these materials, deduction under Section 10A was allowed in the order passed under Section 143[3]. In such circumstances, it was presumed that AO had examined the entitlement of deduction under Section 10A by assessee in all angles. Withdrawal of deduction allowed under Section 10A based on the assessment order relating to the assessment year 2007-08 was without application of mind and nothing but the change of opinion, which tantamounted to review and the same was not permissible to initiate the proceedings under Section 147/148 of the Act. There was no iota of material available in the reasons recorded by AO to believe escapement of tax on any such agreement where assessee had received the revenue from foreign companies for deputing the technical members independent of software development work. Thus, AO had no jurisdiction to invoke Section 147 and 148 for the assessment years in question.
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