DCIT, New Delhi V. M/s Americom Asia Pacific LLC, New Delhi

ITA 1028/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3654 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 20-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G K DHALL
• Assessee Lawyers: ABHINAV VIJH CAS; SSH KISHORE KUNAL
• Keywords: Reopening of assessment; Business income; Depreciation; Double taxation relief; Permanent establishment; Difference of opinion; Deemed dividend; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 14A; 147; 148; 28; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A , NEW DELHI BEFORE SH. AMIT SHUKLA , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO. 1028 /DE L/ 2015 ASSESSMENT YEAR: 2004 - 05 DCIT, CIRCLE 1(1)(1), INTERNATIONAL TAXATION, NEW DELHI VS. M/S. AMERICOM ASIA PACIFIC LLC, C/O - PRICEWATER HOUSE COOPERS PVT. LTD., 11A, VISHNU DIGAMBER MARG, SUCHETA BHAWAN, NEW DELHI PAN : AAECA4117B ( APPELLANT ) (RESPONDENT) APPELLANT BY SH. G.K. DHALL, CIT(DR) RESPONDENT BY S/SH. KISHORE KUNAL, CA & ABHINAV VIJH, CAS DATE OF HEARING 29.01.2018 DATE OF PRONOUNCEMENT 31.01.2018 ORDER PER O.P. KANT , A. M. : THIS APPEAL BY THE R EVENUE IS DIRECTED AGAINST ORDER DATED 22/12/2014 PASSED BY THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - 42, DELHI [IN SHORT THE LEARNE D CIT - (A) ] FOR ASSESSMENT YEAR 2004 - 05 RAISING FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN QUASHING THE RE - ASSESSMENT PROCEEDINGS CONSIDERING IT 2 AS A MERE CHANGE OF OPINION AND NOT SATISFYING THE 1 ST PROVISO TO SECTION 147 OF THE INCOME TAX ACT. 2. THE APPELLANT CRAVE S TO ADD, AMEND, MODIFY, OR ALTER ANY GROUNDS OF APPEAL AT THE TIME OR BEFORE THE HEARING OF THE APPEAL. 2. B RIEFLY STATED FACTS OF THE CASE ARE THAT ASSESSMENT UNDER SECTION 143(3) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT ) WAS COMPLETED ORIGINALL Y ON 07/12/2006 AT TOTAL INCOME OF RS.11,61,17,327/ - . SUBSEQUENTLY, THE ASSESSING OFFICER OBSERVED THAT ROYALTY INCOME WAS TAXED AT THE RATE OF 15% ON GROSS BASIS, HOWEVER , THE SAID ROYALTY INCOME HAD BEEN EARNED FROM DEPENDENT AGENT PE BASED ON AN AGREEME NT DATED 21/08/2001, IT SHOULD HAVE BEEN TAXED AT THE RATE OF 20% ON GROSS BASIS . IN VIEW OF THIS OBSERVATION, THE ASSESSING OFFICER RECORDED REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AND ACCORDINGLY ISSUED NOTICE UNDER SECTION 148 OF THE ACT ON 30/03/2011. THE ASSESSEE FILED A LETTER DATED 25/04/2011 STATING THAT THE ORIGINAL RETURN OF INCOME FILED ON 09/03/2005 MIGHT BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. AFTER FOLLOWING THE DUE PROCEDURE, THE ASSESSING OFFICER PASSED FINAL ASSESSMENT ORDER UNDER SECTION 144C(1) OF THE ACT ON 11/04/2013 ASSESSING THE ROYALTY INCOME AT T HE RATE OF 20% UNDER SECTION 44D READ WITH SECTION 115 A OF THE ACT. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT - ( A ) AND CHALL ENGED THE LEGALITY OF REASSESSMENT PROCEEDINGS AS WELL AS MERIT OF THE ADDITIONS. THE LD. CIT - ( A ) QUASHED THE REASSESSMENT PROCEEDING AND THE ISSUE ON MERIT WAS DISMISSED AS INFRUCTUOUS. AGGRIEVED , THE R EVENUE IS IN APPEAL BEFORE THE TRIBUNAL CHALLENGING T HE QUASHING OF THE REASSESSMENT PROCEEDING. 3. BEFORE US THE LD. CIT(DR) SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND RELIED ON FOLLOWING DECISIONS TO SUPPORT HIS CONTENTION THAT ASSESSMENT HAS BEEN VALIDLY REOPENED BY THE ASSESSING OFFICER: 3 1. HONDA SIEL POWER PRODUCTS LTD. V. DY. CIT [2012] 20 TAXMANN.COM 5 (SC)/[2012] 206 TAXMAN 33 (SC)(MAG.)/[2012] 340 ITR 64 (SC)/[2012] 247 CTR 316 (SC) WHERE HON BLE SUPREME COURT HELD THAT ASSESSEE HAVING NOT POINTED OUT DURING ASSESSMENT PROCEEDINGS ABOUT EXPENS ES INCURRED RELATABLE TO TAX FREE INCOME U/S 14A THERE WAS OMISSION AND FAILURE ON ITS PART TO DISCLOSE FULLY AND TRULY MATERIAL FACTS AND HENCE REOPENING OF ASSESSMENT WAS JUSTIFIED 2 HONDA SIEL POWER PRODUCTS LTD. V. DY. CIT [2011] 10 TAXMANN.COM 2 (DE LHI) [2011] 197 TAXMAN 415 (DELHI)/[2012] 340 ITR 53 (DELHI)/[2012] 247 CTR 322 (DELHI) WHERE HON BIE DELHI HIGH COURT HELD THAT ASSESSEE HAVING NOT POINTED OUT DURING ASSESSMENT PROCEEDINGS ABOUT EXPENSES INCURRED RELATABLE TO TAX FREE INCOME U/S 14A THER E WAS OMISSION AND FAILURE ON ITS PART TO DISCLOSE FULLY AND TRULY MATERIAL FACTS AND HENCE REOPENING OF ASSESSMENT WAS JUSTIFIED 3. NEW DELHI TELEVISION LTD. VS. DCIT T20171 84 TAXMANN.COM 136 (DELHI) WHERE HON BLE DELHI HIGH COURT HELD THAT PROCEEDINGS UNDER SECTION 147, BEYOND A PERIOD OF 4 YEARS CAN ONLY BE INITIATED IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT THERE HAS BEEN ESCAPEMENT OF INCOME AND THIS ESCAPEMENT IS OWING TO THE LACK OF TRUE AND FAIR DISCLOSURE BY THE ASSESSEE. IN THIS REGAR D, IT IS ESSENTIAL TO UNDERSTAND THE MEANING OF THE PHRASE 'TRUE AND FAIR DISCLOSURE'. THE COURT HAS CONSIDERED THE MEANING OF THIS PHRASE IN HONDA SIEL POWER PRODUCTS LTD. V. DY. CIT[2012] 340 ITR 53/[2011] 197 TAXMAN 415/10 TAXMANN.COM 2 (DELHI) WHERE TH E COURT HELD THAT THAT THE TERM 'FAILURE' ON THE PART OF THE ASSESSEE IS NOT RESTRICTED TO THE RETURN AND THE COLUMNS OF THE RETURN OR THE TAX AUDIT REPORT. THERE CAN BE OMISSION AND FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS FAIRLY AND TRULY DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS [PARA 42] 4 CIT VS P.V.S. BEEDIES (P.) LTD. [1999] 103 TAXMAN 294 (SC)/[1999] 237 ITR 13 (SC)/[1999] 155 CTR 538 (SC) WHERE HON BLE SUPREME COURT HELD THAT AUDIT PARTY HAD MERELY POINTED OUT A FACT WH ICH HAD BEEN OVERLOOKED BY ASSESSING OFFICER AND THIS WAS NOT A CASE OF INFORMATION ON A QUESTION OF 4 LAW. REOPENING OF CASE UNDER SECTION 147(B) ON BASIS OF FACTUAL INFORMATION GIVEN BY INTERNAL AUDIT PARTY WAS VALID IN LAW 5. CIT VS KIRANBHAI JAMNADAS SHE TH (HUF) [2013] 39 TAXMANN.COM 116 (GUJARAT)/[2014] 221 TAXMAN 19 (GUJARAT )( MAG.) WHERE HON BLE GUJARAT HIGH COURT HEID THAT ASSESSMENT WITHOUT SCRUTINY WOULD MANDATE REASSESSMENT BEYOND 4 YEARS EVEN IF ASSESSEE MADE TRUE DISCLOSURE . 6 DISHMAN PHARMACEUTICALS & CHEMICALS LTD. VS CIT T20121 346 ITR 228 (GUI) THE ASSESSEE HAD SHOWN AN AMOUNT AS LOAN FROM COMPANY. THE ASSESSEE HAD NOT DISCLOSED THAT IT HAD SUBSTANTIAL INTEREST IN THE COMPANY. REASSESSMENT PROCEEDINGS AFTER FOUR YEARS TO ASSESS AMO UNT AS DEEMED DIVIDEND WAS HELD TO BE VALID . 4. O N THE CONTRARY, THE LEARNED COUNSEL OF THE ASSESSEE REFERRED T O PAGE 11 AND 12 OF THE ASSESSEE S PAPER BOOK, WHICH IS A COPY OF REASONS RECORDED BY THE ASSESSING OFFICER FOR REOPENING OF THE ASSESSMENT. REF ERRING THE SAID REASONS RECORDED, HE SUBMITTED THAT THE REASONS RECORDED IN THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO REASONS RECORDED IN ASSESSMENT YEAR 2003 - 04, WHEREIN THE TRIBUNAL IN ITA NO. 6355/DEL/2013 HAS HELD THAT THE REASONS RECORDED WERE MERE CHANGE OF OPINION , WHICH DO NOT GIVE JURIS DICTION TO THE ASSESSING OFFICER TO REO PEN THE ASSESSMENT. ACCORDINGLY, HE SUBMITTED THAT LD. CIT - A HAS VALIDLY QUASHED THE REASSESSMENT PROCEEDING. HE FURTHER SUBMITTED THAT IN ITA NO. 596/DEL/2016 FOR ASSESSMENT YEAR 2005 - 06, ALSO IN SIMILAR CIRCUMSTANCE S, THE TRIBUNAL HAS HELD THAT BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR , ASSESSMENT CANNOT BE REOPENED EXCEPT FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND WHICH WAS CONSPICUOUSLY ABSENT IN THAT CASE . IN VIEW OF THE SUBMISSION, HE REQUESTED TO UPHOLD THE ORDER OF THE LD. CIT - A ON THE ISSUE IN DISPUTE. 5 5. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE INSTANT CASE, THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSMENT YEAR INVOLVED IS AY - 2004 - 05. IN THE CASE, PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR EXPIRES ON 31.03.2009, THUS , PROVISO TO SECTION 147, COME INTO FORCE, ACCORDING TO WHICH NO CASE CAN BE REOPENED U NLESS THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS FULLY & TRULY. IN THE CASE, REASONS RECORDED BY THE ASSESSING OFFICER, ARE AVAIL ABLE ON PAGE 11 OF THE ASSESSEEE S PAPER BOOK , WHICH ARE REPRODUCED AS UNDER: ARTICLE 12(6) OF DTAA BETWEEN INDIA AND USA PROVIDES THAT THE PROVISIONS OF PARA 12.2 SHALL NOT APPLY IF THE BENEFICIAL OWNER OF THE ROYALTIES OR FEES FOR TECHNICAL SERVICES ARISE THROUGH A PERMANENT ESTABLISHMENT (PE) AND ATTRIBUTABLE TO SUCH PE AND THE PROVISION OF AR TICLE 7 OR ARTICLE 15, AS THE CASE MAY BE, SHALL APPLY, FURTHER SUB - SECTION (B) OF SECTIONLL5A OF THE INCOME TAX ACT, PROVIDES THAT WHERE THE TOTAL INCOME OF A RESIDENT OR A FOREIGN COMPANY INCLUDES ANY INCOME BY WAY OF ROYALTY OR FEES FOR TECHNICAL SERVIC ES RECEIVED FROM GOVERNMENT OR AN INDIA CONCERN IN PURSUANCE OF AN AGREEMENT AFTER 31ST MARCH 1976, SUBJECT TO PROVISION OF SUB SECTION (2), THE INCOME TAX PAYABLE SHALL BE TWENTY PERCENT WHERE SUCH FEES FOR TECHNICAL SERVICES ARE RECEIVED IN PURSUANCE OF AN AGREEMENT MADE AFTER 31S MAY 1997. FURTHER SUB SECTION (3) OF SECTION 44D OF THE INCOME TAX ACT PROVIDES THAT NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTION 28 TO 44C. IN THE CASE OF ASSESSEE BEING A FOREIGN COMPANY NO DEDUCTION IN RESPE CT OF ANY EXPENDITURE OR ALLOWANCE SHALL BE ALLOWED UNDER IN ANY OF THE SAID SECTIONS IN COMPUTING THE INCOME BY WAY OF ROYALTY OR FEES FOR TECHNICAL SERVICES RECEIVED FROM GOVERNMENT OR AN INDIAN CONCERN IN PURSUANCE OF AN AGREEMENT MADE BY A FOREIGN COMP ANY AFTER 31S MARCH 1976 BUT BEFORE 1ST APRIL 2003. THE INCOME TAX ASSESSMENT OF M/S AMERICOM ASIA PACIFIC COMPANY., FOREIGN COMPANY, FOR THE ASSESSMENT YEAR 2004 - 05 WAS COMPLETED AFTER SCRUTINY IN FEBRUARY 2008 DETERMINING AN INCOME OF RS. 11,61,17,327/ - . PERUSAL OF RECORDS REVEALED THAT THE INCOME RECEIVED BY THE ASSESSEE WAS IN THE NATURE OF 6 RO YALTY/BUSINESS INCOME BUT WAS TAXED AT THE RATE OF 15% OF GROSS BASIS. HOWEVER, AS THE ROYALTY INCOME HAD BEEN EARNED FROM DEPENDED AGENT PE BASED ON AN AGREEMENT DATED 21.08.2001, IT SHOULD HAVE BEEN TAXED AT THE RATE OF 20 PERCENT ON GROSS BASIS INSTEAD OF 15%. THUS THERE HAS BEEN AN ESCAPEMENT OF INCOME IN THE CASE OF THE ASSESSEE. THIS ALSO SATISFIES THE PRE - REQUISITE CONDITION STATED UNDER EXPLANATION 2 TO SECTION 147. RELEVANT PORTION OF SECTION 147 OF THE ACT READS AS BELOW: 'EXPLANATION 2: FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF ANY OT HER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME - TAX; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN; (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDER - ASS ESSED; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RATE; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCESSIVE RELIEF UNDER THIS ACT; OR IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED.' IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE FOR A.Y. 2004 - 05 CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE SAID INCOME HAS ESCAPED ASSESSMENT DUE TO FAILURE ON PART OF THE ASSESSEE TO FURNISH BEFORE THIS OFFICE 7 NECESSARY PARTICULARS REGARDING RATE AT WHICH IT SHOULD BE TAXED. IN THIS CASE, NOT MORE THAN SIX YEARS HAVE ELAPSED FROM THE END OF THE RELEVANT ASSTT. YEAR (I.E. A.Y. 2004 - 05) AND INCOME OF MORE THAN 1 LAKH HAS ESCAPED ASSESSMENT DUE TO FAILURE ON PART OF ASSESSE E TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, THEREFORE, THE NOTICE U/S 148 R.W.S. 147 OF THE I. T. ACT, 1961 SATISFIES THE TIME LIMIT FOR ISSUE OF NOTICE AS PROVIDED IN SECTION 149 OF THE ACT. AS REQUIRED BY SECTION 151 OF TH E INCOME - TAX ACT 1961, THE REASONS ARE HEREBY PUT UP FOR THE KIND PERUSAL & RECORDING OF SATISFACTION. 6. THUS , PRIMARILY THE ASSESSING OFFICER HAS INVOKED E XPLANATION - 2 TO SECTION 147 OF THE ACT FOR REOPENING OF THE ASSESSMENT. 7. WE NOTE THAT IN ASSESSMENT YEAR 2003 - 04, ALSO THE ASSESSMENT WAS REOPENED ON IDENTICAL REASONS TO BELIEVE RECORDED BY THE ASSESSING OFFICER. THE TRIBUNAL IN ITA NO. 6355/DEL/2013 FOR ASSESSMENT YEAR 2003 - 04 HAS REPRODUCED THE REASONS RECORDED IN PARA - 3.4 O F THE ORDER. THE TRIBUNAL HELD THE REASONS RECORDED AS MERE CHANGE OF OPINION. THE RELEVANT FINDING OF THE TRIBUNAL IS REPRODUCED AS UNDER: 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. FURTHER, THERE IS NO DISPUTE AS TO THE FACT THAT NOTIC E FOR REOPENING WAS ISSUED FOUR YEARS AFTER END OF THE RELEVANT ASSESSMENT YEAR, SO 1ST PROVISO TO SECTION 147 NEEDS TO BE SATISFIED BEFORE ISSUANCE OF NOTICE U/S 147/148. FOR READY REFERENCE, 1ST PROVISO TO SECTION 147 IS REPRODUCED BELOW : - 'PROVIDED TH AT WHERE AN ASSESSMENT UNDER SUB - SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN U/S 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUBSECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY (OR HIS ASSESSMENT, (OR THAT ASSESSMENT YEAR' 8 FROM THE PERUSAL OF THE AFORESAID SECTION IT CAN BE SEEN THAT, IN ORDER TO ASSUME JURISDICTION U/S 147, IN A CASE WHERE ASSESSMENT HAS ALREADY BEEN MADE U/S 143(3) OF T HE ACT, TWO CONDITIONS ARE REQUIRED TO BE SATISFIED, VIZ.: (I) THE AO MUST HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT; AND (II) HE MUST ALSO HAVE A REASON TO BELIEVE THAT SUCH ESCAPEMENT OCCURRED BY REASON OF FAILURE ON T HE PART OF THE ASSESSEE EITHER: (A) TO MAKE A RETURN OF INCOME U/S 139 OR IN RESPONSE TO NOTICE ISSUED UNDER SUB - SECTION (1) OF SECTION 142 OR SECTION. 148; OR (B) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT PURPOSE. THUS, THE LD. CIT (A) HAS RIGHTLY INTERPRETED THE LAW THAT IN CASES WHERE ASSESSMENT HAS BEEN MADE U/S 143(3) OF THE ACT AND ACTION U/S 147 IS SOUGHT TO BE TAKEN AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, IT IS NECESSARY THAT CONDITIONS NO.(I) AND EITHER OF CONDITIONS NO.(II)(A) OR (II)(B) MUST CO - EXIST. IN CASE, ANY OF THE SAID TWO CONDITIONS IS NOT SATISFIED, THE VERY INITIATION OF PROCEEDINGS U/S 147 OF THE ACT SHALL BE WHOLLY WITHOUT JURISDICTION. THERE ARE A PLETHORA OF JUDGMENTS ON THIS ISSUE. 8.1 WE CONCUR WITH THE LD. CIT (A) THAT THERE IS NO WHISPER / ALLEGATION THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DI SCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE AO HIMSELF ADMITS THAT WHILE PERUSING THE RECORDS OF THE RELEVANT ASSESSMENT YEAR, HE CAME ACROSS THE DATE OF EXECUTION OF AGREEMENT WITH THE PE AND THAT HE HAS NOT TAKEN INTO CONSIDER ATION THAT FACT WHILE DECIDING THE ORIGINAL ASSESSMENT U/S 143(3) R.W.S. 263 OF THE ACT, THAT MEANS ASSESSEE HAD DISCLOSED EVERYTHING DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. THUS, THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE NOT TO DISCLOSE FULLY A ND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ORIGINAL ASSESSMENT. WE TAKE NOTE OF THE FACT THAT WHILE PASSING THE ORDER U/S 263 R.W.S. 143(3) OF THE ACT, THE 9 CLAUSES OF THE AGREEMENT WITH THE CUSTOMER WAS EXAMINED IN DETAIL TO HOLD THAT THE REVENUES EARNE D UNDER THE SAID AGREEMENT FALLS WITHIN THE TAXABLE AMBIT OF ROYALTY AS DEFINED UNDER SECTION 9(1)(VI) OF THE ACT AS WELL AS ARTICLE 12 OF THE INDIA USA DTAA. THEREFORE, SUCH ROYALTY INCOME WAS SUBJECT TO TAX @ 15% AND EVEN THOUGH PE WAS ALSO ALLEGED AND A RTICLE 7 READ WITH SECTION 9 ITA NO.6355/DEL/2013 44D WAS NOT INVOKED. THIS FACT IN ITSELF MAKES IT CLEAR THAT IT WAS WELL WITHIN THE KNOWLEDGE OF THE LD. AO THAT THE SAID AGREEMENT HAS BEEN ENTERED BEFORE 31.03.2003 FOR INVOKING SECTION 44D OF THE ACT. FO R THIS REASON ALONE, INITIATION OF REOPENING OF ASSESSMENT U/S 147 OF THE ACT FOR THIS ASSESSMENT YEAR BEYOND FOUR YEARS IS NOT FOUND TO BE SUSTAINABLE BOTH IN FACTS AND LAW AS THE CASE FALLS WITHIN THE FIRST PROVISO TO SECTION 147 OF THE ACT. THE CONCLUSI ON IS ALSO SUPPORTED BY THE DECISION RELIED ON BY THE ASSESSEE OF THE JURISDICTIONAL HIGH COURT IN ALCATEL - LUCENT FRANCE & ANOTHER VS. ADIT, CIRCLE 1(1) (2012) [W.P.(C) 8739/2011] WHERE, ON SIMILAR FACTS, THEIR LORDSHIPS HAVE QUASHED NOTICE U/S 148 OF TH E ACT. WE ALSO CONCUR WITH THE VIEW OF CIT (A) THAT IN THIS CASE, THE AO N THE SAME RECORDS BEFORE HIM HAD A CHANGE OF OPINION WHICH CANNOT GIVE JURISDICTION TO HIM TO REOPEN THE ASSESSMENT. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT ( A), SO WE UPHOLD THE SAME AND DISMISS THE REVENUE S APPEAL. 8. IN THE CASE S RELIED UPON BY THE LD. CIT(DR) , THE ISSUE INVOLVED IS WHETHER THERE WAS FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING THE MATERIAL FACTS FULLY & TRULY , IN THE FACTS & CIRCUMSTANCES OF THOSE CASES. AS FACTS OF THOSE CASES ARE DIFFERENT FROM THE INSTANT CASE, RATIOS OF THOSE CASES CANNOT BE APPLIED ON THE FACTS OF THE INSTANT CASE. AS THE REASONS RECORDED, IN THE YEAR UNDER CONSIDERATION ARE EXACTLY IDENTICAL TO THE REAS ONS RECORDED IN ASSESSMENT YEAR 2003 - 04, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL (SUPRA) , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT - ( A ) ON THE ISSUE IN DISPUTE AND THUS, UPHOLD HIS FINDING OF QUASHING THE REASSESSMENT PROCEEDING. ACCORDINGLY, THE GRO UND NO. 1 OF THE APPEAL OF THE R EVENUE IS DISMISSED. 10 9. THE GROUND NO. 2 BEING GENERAL IN NATURE, WE DISMISS IT AS INFRUCTUOUS. 10. IN THE RESULT , APPEAL OF THE R EVENUE IS DISMISSED. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 3 1 S T JAN . , 201 8 . S D / - S D / - ( AMIT SHUKLA ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 1 S T JANUARY , 201 8 . RK / - (D.T.D) COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI