Unjha Formulations Ltd., Sidhpur V. The ACIT.,Patan Circle, Patan

ITA 1306/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6834 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-03-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 22-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIMALENDU VERMA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Reopening of assessment; Capital asset; Business income; Depreciation; Audit objection; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : SMC BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M .) I.T.A. NO. 1306/AHD./2009 ASSESSMENT YEAR : 2003-2004 UNJHA FORMULATIONS LTD., SIDHPUR - VS- A.C.I.T., PATAN CIRCLE, PATAN (PAN : AAACU 1998G) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.N.SOPARKAR, A .R. RESPONDENT BY : SHRI VIMALENDU VERMA, D .R. O R D E R THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 30.01.2009 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), GANDH INAGAR FOR THE ASSESSMENT YEAR 2003-2004. 2. BRIEF FACTS RELATING TO THE CONTROVERSY INVOLVED IN THE ONLY GROUND OF APPEAL TAKEN BY THE ASSESSEE IS THAT THE ASSESSEE IS A COMPANY ENGA GED IN MANUFACTURING AND SELLING OF HUMAN, VETERINARY AYURVEDIC MEDICINES. FOR THE ASSE SSMENT YEAR UNDER APPEAL, IT FILED THE RETURN OF INCOME ON 28.11.2003 SHOWING TOTAL LOSS A T RS.(-)81,035/-. THE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 30 .03.2006 DETERMINING THE LOSS AT RS. (-)69,530/-. SUBSEQUENTLY, THE ASSESSING OFFICER IS SUED A NOTICE UNDER SECTION 148 READ WITH SECTION 147 OF THE I.T. ACT, 1961. IN RESPONSE TO T HE SAID NOTICE, THE ASSESSEE VIDE LETTER DATED 12.08.2008, RAISED THE FOLLOWING OBJECTIONS: .......1. WE HAD FILED RETURN OF INCOME FOR A. Y. 2003-04 ON 28-11-2003 ALONG WITH AUDIT REPORT U/S. 44AB OF THE I.T.ACT. THE AUDIT R EPORT CONTAINED P & L A/C, BALANCE SHEET, DEPRECIATION WORKING, FORM 3CA, 3CD ETC. 2. OUR CASE WAS SELECTED FOR SCRUTINY U/S. 143(3 ) OF THE I.T. ACT AND ASSESSMENT WAS FINALIZED IN THE MONTH OF MARCH, 2006 ACCORDINGLY. ALL DETAILS NECESSARY FOR FINALIZATION OF ASSESSMENT WERE CALLED FOR AND THE SAME WERE FURNISHED DURING THE 2 ITA NO. 1306-AHD-2009 COURSE OF ASSESSMENT PROCEEDINGS. AFTER VERIFICATI ON AND DISCUSSION THE ASSESSMENT WAS FINALIZED U/S. 143(3) BY THE A.C. I.T., PATAN RANGE, PATAN. 3. OUR ASSESSMENT IS SUBSEQUENTLY REOPENED BY IS SUING NOTICE U/S. 148 OF THE I. T. ACT DATED, 19-3-2008. AS PER THE PERSONAL DISCUSSI ON WHICH THE UNDERSIGNED HAD WITH YOUR GOODSELF, THE REASON FOR REOPENING OF THE ASS ESSMENT WAS INFORMED. IT IS LEARNT THAT THE CASE WAS REOPENED SINCE THE A.G. AUDIT PA RTY HAD TAKEN OBJECTION REGARDING ALLOWANCE OF DEPRECIATION ON GOODWILL. 4. AT THE OUTSET, WE STRONGLY OBJECT THE REOPENI NG OF OUR ASSESSMENT U/S. 148 DUE TO AUDIT OBJECTION. AS MENTIONED ABOVE, OUR ASSESSME NT WAS FINALIZED U/S. 143(3) AFTER SCRUTINY AND VERIFICATION OF OUR RETURN, AUDIT REP ORT AND OTHER CALLED FOR DETAILS. AT THE TIME OF ASSESSMENT, THE THEN A.O. HAD ALLOWED DEPRECIATION ON GOODWILL TREATING THE SAME AS AN INTANGIBLE ASSET. THE AUDITOR IN HI S DEPRECIATION CHART ATTACHED ALONG WITH THE AUDIT REPORT ALSO CALCULATED THE DEPRECIA TION ON GOODWILL TREATING THE SAME AS AN INTANGIBLE ASSET. NOW, SINCE THE AUDIT PARTY HAS OPINED THAT GOODWILL CANNOT BE SAID TO BE AN INTANGIBLE ASSET, THE WHOLE PROCEEDI NGS U/S. 148 HAVE BEEN INITIATED. 5. IT HAS BEEN DECIDED IN MANY CASES OF OUR TER RITORIAL HIGH COURT AS WELL AS SUPREME COURT THAT ASSESSMENT CANNOT BE REOPENED M ERELY DUE TO CHANGE OF OPINION. SOME OF THE DECISIONS ARE AS UNDER:- 1. PARSHURAM POTTERY WORKS CO.LTD. VS.ITO RAJKOT 106 ITR I (SUPREME COURT.) IN THIS CASE, DEPRECIATION WAS ALLOWED IN THE ASSE SSMENT BUT SUBSEQUENTLY, A.O. NOTICED THAT DEPRECIATION WAS WRONGLY ALLOWED ON H IGHER SIDE. IN THIS CASE, THEIR LORDSHIPS HELD THAT, THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE ANY MATERIAL FACTS. NO OMISSION ON THE PART OF THE ASSESSEE TO DISCLOSE T HE MATERIAL FACTS TRULY AND FULLY. MERE DUE TO CHANGE OF OPINION INITIATION OF ACTION FOR REOPENING ASSESSMENT WOULD NOT BE JUSTIFIED. TAXES ARE THE PRICE THAT WE PAY FOR CIVILIZATION AND THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS. 2. ITO VS. MEVALAL DWARKAPRASAD 176 ITR 529 (SUPREME COURT) IN THIS JUDGEMENT THEIR LORDSHIPS OF SUPREME COURT HELD THAT: ' ALLEGED ESCAPEMENT OF INCOME DID NOT RESULT FROM FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND TH EREFORE, ASSESSMENT CANNOT BE REOPENED U/S.147. 3. ITO VS. LAKHMANI MEWAL DAS L03 ITR 437 ( SUPREME COURT) IDENTICAL VIEW WAS TAKEN AS IN THE CASE OF PARSHUR AM POTTERY WORKS CO. LTD. 3 ITA NO. 1306-AHD-2009 4. CALCUTTA DISCOUNT CO. LTD. VS. ITO 41 IT R 191 (SUPREME COURT) IT WAS DECIDED IN THIS CASE ALSO THAT MERE DUE TO CHANGE OF OPINION ASSESSMENT CANNOT BE REOPENED U/S 147. 5. INDIAN & EASTERN NEWSPAPER SOCIETY VS. CI T 119 ITR 996 (SC.) IN THIS CASE, THE ASSESSMENT WAS MADE TREATING INC OME EARNED FROM LETTING OF CONFERENCE HALL AS BUSINESS INCOME. SUBSEQUENTLY, AUDIT PARTY EXPRESSED THE VIEW THAT THIS INCOME SHOULD BE TREATED AS PROPERTY INC OME. THE A. O. THEREFORE REOPENED THE CASE. IN THIS CASE, IT WAS HELD BY THEIR LORDS HIPS OF SUPREME COURT THAT, VIEW EXPRESSED BY AUDIT PARTY OF INCOME-TAX ON A LAW PO INT CANNOT BE REGARDED AS NEW INFORMATION FOR INITIATING PROCEEDINGS U/S. 147. I T IS MERELY CHANGE OF OPINION AND ON THE STRENGTH OF THIS, ACTION U/S. 147 CANNOT BE RE SORTED AND IT DOES NOT GIVE A.O. POWER TO REOPEN THE ASSESSMENT. IDENTICAL VIEW WAS TAKEN IN FOLLOWING THREE JUDGEMENTS OF THE SUPREME COURT. 1. MAHARAJKUMAR KAMALSINGH VS. CIT 351 ITR 1 (S.C .) 2. BANKIPUR CLUB LTD. VS. CIT 82 ITR 831 (S.C) 3. A. RAMAN & CO. VS. CIT 67ITR 11 (S.C.) 6. KALYANJI MAVJI & CO. VS. CIT 102 ITR 287 (SUP REME COURT) THE RATIO OF JUDGEMENT IN THIS CASE WAS THAT MEREL Y DUE TO CHANGE OF OPINION, A.O. CANNOT REOPEN THE ASSESSMENT. 7. ADANI EXPORTS VS. DCIT 240 ITR 224 (GUJ.) IN THIS CASE THE AUDIT PARTY HAD TAKEN OBJECTION R EGARDING REBATE ALLOWED U/S.80HHC IN THE ORIGINAL ASSESSMENT. THE A.O., AT THE INS TANCE OF AUDIT, INITIATED PROCEEDINGS U/S. 147. IT WAS DECIDED THAT INFORMATION OF AUDIT PARTY CANNOT BE TREATED AS NEW FACTS OR AS MATERIAL ENOUGH TO ASSUME POWERS FOR REASSES SMENT. MOREOVER, IT CANNOT BE SAID THAT A.O. FORMED ANY BELIEF ABOUT ESCAPEMENT OF INCOME. 8. HINDUSTHAN MARBLES LTD. VS. CIT 2L9 ITR 655(GUJ.) IN THIS CASE THE RATIO OF JUDGEMENT WAS AS UNDER:- WHERE A.O. GETS NO NEW INFORMATION SUBSEQUENT TO E ARLIER ASSESSMENT BUT MERELY PROCEEDS TO REOPEN THE EARLIER ASSESSMENT WITHOUT ANY FRESH FACTS OR MATERIAL, IT AMOUNTS TO MERE CHANGE OF OPINION AND CANNOT BE FO UNDATION FOR INITIATING PROCEEDINGS U/S. 147. 9. CIT VS. JAWAHAR D. DHOLAKIYA 220 ITR 39 3 (GUJ.) 4 ITA NO. 1306-AHD-2009 IN THIS CASE, ITO ALLOWED THE DEDUCTION F ROM INCENTIVE BONUS. THEREAFTER, A.O. REOPENED THE CASE ON THE GROUND THAT DEDUCTIO NS WERE WRONGLY ALLOWED FROM INCENTIVE BONUS. THEIR LORDSHIPS OF GUJARAT HIGH COURT STRUCK DOWN THE PROCEEDINGS U/S. 147 ON THE GROUND THAT INFORMATION MUST BE FR ESH AND FROM EXTERNAL SOURCES FOR REOPENING OF THE ASSESSMENT. OPINION EXPRESSED BY AUDIT PARTY IS NOT THE LAWTHE LAW IS LAID DOWN BY THE LEGISLATURE AND THEREFORE MERELY DUE TO CHANGE OF OPINION BASED ON THE VIEW OPINED BY AUDIT PARTY, ASSESSMEN T CANNOT BE REOPENED. 10. VXL LTD. VS. CIT 215 ITR 295(GUJ.) THEIR LORDSHIPS OF GUJARAT HIGH COURT RULED IN THI S CASE THAT: 'HOWSOEVER WIDE THE SCOPE OF TAKING ACTION U/S. 14 8 OF THE ACT BE, IT DOES NOT CONFER JURISDICTION ON CHANGE OF OPINION ON INTERPRETATIO N OF A PARTICULAR PROVISION EARLIER ADOPTED BY THE A.O. SECTION 147 IS NOT FOR REVIEWI NG EARLIER ASSESSMENT ORDER MERE DUE TO CHANGE OF OPINION. ' 11. KESHRIMAL SAMRATHMAL VS. ITO 215 ITR 714 (GU J.) IN THIS CASE THEIR LORDSHIPS HELD THAT, 'WHERE ALL ASPECTS ARE CONSIDERED IN THE ASSESSMEN T, MERELY DUE TO CHANGE OF OPINION, REASSESSMENT IS NOT JUSTIFIED.' 12. BIRLA VXL LTD. VS. ACIT 217 ITR 7 (GUJ.) THE RATIO OF THIS JUDGEMENT WAS AS UNDER:- MERE CHANGE OF OPINION ON THE INTERPRETATION OF A PARTICULAR PROVISION FROM THE EARLIER ADOPTED BY THE A.O. DOES NOT CONFER JURISD ICTION OF REASSESSMENT. ESCAPEMENT SHOULD BE THE REASON OF THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS TRULY AND FULLY. 13. GARDEN SILK MILLS VS. DCIT 237 ITR 668 (GUJ. ) IN THIS CASE ASSESSMENT WAS FINALIZED BY THE A.O. BY APPLYING HIS MIND. THE ASSESSMENT WAS SUBSEQUENTLY REOPENED U/S. 147. THE IR LORDSHIPS OF GUJARAT HIGH COURT STRUCK DOWN THE PROCEEDINGS U/S. 147 SAYING THAT THE ASSESSMENT CANNOT BE REOPENED MERELY DUE TO CHANGE OF OPINION. 14. RAIAN SIIK VS. ITO 154 ITR 474 (GUJ.) IN THIS CASE ALSO IT WAS DECIDED THAT CHANGE OF OP INION DOES NOT CONFER JURISDICTION, ON THE I.T.O. TO INITIATE PROCEEDINGS FOR REASSESSMEN T U/S.147. 5 ITA NO. 1306-AHD-2009 15. GOVIND CHHAPABHAI PATEL VS. DCIT 240 ITR 628 (GUJ.) IN THIS CASE, IT WAS RULED THAT, ASSESSEE HAS NOT SUPPRESSED ANY MATERIAL FACTS. ALL FACTS AND DETAILS NECESSARY FOR FINALIZATION OF HI S ASSESSMENT WERE TRULY AND FULLY FURNISHED BY THE ASSESSEE AND HENCE MERELY DUE TO CHANGE OF OPINION CASE CANNOT BE REOPENED U/S. 147 AND THE WRIT WAS ALLOWED 16. HOTEL APOLLO VS. ITO 213 ITR 762 (GUJ.) IN THIS CASE, IT WAS DECIDED BY THEIR LORDSHIPS TH AT MERE CHANGE OF OPINION WOULD NOT BE A SUFFICIENT GROUND FOR ISSUING A NOTICE U/S.14 7(B) OF THE I.T. ACT. 17. GARDEN SILK MILLS VS. CIT 222 ITR 68(GUJ.) IN THIS CASE, THEIR LORDSHIPS OF GUJ. HIGH COURT W ENT ON TO SAYING THAT, 'A.O. CANNOT TAKE ANY ACTION U/S. 147 MERELY BECAU SE HE HAPPENS TO CHANGE OPINION OF HIS PREDECESSOR. THE PREDECESSOR MADE THE ORDER APPLYING HIS MIND AND NOW MERE CHANGE OF OPINION WOULD NOT AMOUNT TO ESCAPEMENT O F INCOME. ' 6. IN VIEW OF THE ABOVE DECISIONS, IT IS SETTLED POSITION OF LAW THAT, ASSESSMENT CANNOT BE REOPENED MERELY DUE TO CHANGE OF OPINION. WE HA VE THEREFORE, TO REQUEST YOU TO KINDLY DROP THE REASSESSMENT PROCEEDINGS INITIATED IN OUR CASE. 7. WITHOUT ANY ADMISSION AND PREJUDICE TO OUR ABOV E SUBMISSION, EVEN ON MERITS DEPRECIATION ON GOODWILL IS RIGHTLY ALLOWED. BECAU SE, GOODWILL IS A CAPITAL ASSET. IT HAS BEEN DECIDED SO IN SO MANY HIGH COURT CASES IN CLUDING OUR OWN HIGH COURT. WHEN GOODWILL IS A CAPITAL ASSET THEN IT IS NOT A TANGIBLE ASSET, IT IS AN INTANGIBLE ASSET AND IT IS COVERED UNDER THE HEAD OF INTANGIBLE ASS ETS ELIGIBLE FOR DEPRECIATION U/S. 32 OF THE IT, ACT. 8. WE THEREFORE, REQUEST YOU THAT, IF AT ALL YOU D O NOT ACCEDE WITH OUR SUBMISSION FOR DROPPING THE PROCEEDINGS U/S.148 THEN EVEN ON MERI TS, DEPRECIATION IS RIGHTLY ALLOWED ON GOODWILL IN THE ORIGINAL ASSESSMENT.... ...........' 2.1 AFTER CONSIDERING THE AFORESAID REPLY, THE ASSE SSING OFFICER, IN THE ASSESSMENT ORDER, TOOK THE VIEW THAT THE AFORESAID OBJECTIONS OF THE ASSESSEE ARE NOT ACCEPTABLE BECAUSE INTENTIONALLY THE ASSESSEE HAS NOT DISCLOSED TRUE, CORRECT INCOME AND THE WORKING OF THE DEPRECIATION. HE TOOK THE VIEW THAT THE INCOME TO T HE EXTENT OF RS.4,51,758/- HAS ESCAPED ASSESSMENT. THEREAFTER, THE ASSESSING OFFICER OBSER VED THAT AS PER SECTION 32 OF THE ACT, DEDUCTION IN RESPECT OF DEPRECIATION ON TANGIBLE AN D INTANGIBLE ASSETS IS ALLOWABLE AT THE RATES 6 ITA NO. 1306-AHD-2009 AS SPECIFIED IN APPENDIX TO RULE 5 OF I.T. RULES, 1 961. IN THE CASE OF GUJARAT ENTERTAINMENT LTD. VS- ACIT, DELHI REPORTED IN 108 ITJ 180 [2007 ] AND IN THE CASE OF BHARAT J. VYAS VS. ITO REPORTED IN 101 ITJ 1012 [2006], ITAT, AHMEDABA D HELD THAT GOODWILL DOES NOT FALL UNDER ANY OF THE SPECIFIED (TANGIBLE AND INTANGIBLE ) ASSETS AND THEREFORE NO DEPRECIATION THEREON IS ADMISSIBLE. THE ASSESSING OFFICER FURTHE R OBSERVED THAT COMPANY ASSESSMENT FOR THE ASSESSMENT YEAR 2003-04 WAS COMPLETED UNDER SCR UTINY. SCRUTINY OF RECORDS REVEALED THAT ASSESSEE CLAIMED DEPRECIATION ON GOODWILL OF RS.4,5 1,758/- WAS ALLOWED WHICH WAS CONTRARY TO THE PROVISIONS AND DECISION IBID. GOODWILL IS NE ITHER TANGIBLE OR INTANGIBLE ASSET LIKE KNOWHOW, PATENTS, COPYRIGHT, TRADE MARK, LICENSES, FRANCHISES OR ANY OTHER BUSINESS OR NUMERICAL RIGHTS OF SIMILAR NATURE. THUS, INCORRECT ALLOWANCE OF DEPRECIATION ON GOODWILL RESULTED IN UNDER-ASSESSMENT OF INCOME AGGREGATING TO RS.4,51,758/-. HE, ACCORDINGLY, DISALLOWED THE DEPRECIATION OF RS.4,51,758/-. 3. ON APPEAL, IN THE IMPUGNED ORDER, THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) UPHELD THE ACTION OF THE ASSESSING OFF ICER REGARDING REOPENING OF ASSESSMENT ON THE GROUND THAT IT HAS BEEN DONE WITHIN A PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR AND SAME HAS BEEN DONE, AFTER THE A SSESSING OFFICER IS SATISFIED THAT THERE HAS BEEN AN ESCAPEMENT OF INCOME, ON THE BASIS OF I NFORMATION IN HIS POSSESSION. HE FURTHER TOOK THE VIEW THAT IT IS IMMATERIAL WHETHER THERE I S A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY THE FACTS RELATING TO THE ISSUE OR NOT. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ALSO OBSERVED THAT IN THE ORIGI NAL ASSESSMENT FRAMED ON 10.03.2006, THE ASSESSING OFFICER, AT NO STAGE, RAISED THE ISSU E OF DEPRECIATION ON GOODWILL. THEREFORE, IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAD FO RMED AN OPINION AND PRESENT REOPENING EXERCISE WOULD TANTAMOUNT TO A CHANGE OF OPINION. 3.1 ON MERIT ALSO, IN THE IMPUGNED ORDER, THE LEARN ED COMMISSIONER OF INCOME TAX(APPEALS) HELD THAT GOODWILL IS NEITHER A TANG IBLE ASSET NOR AN INTANGIBLE ASSET LIKE KNOW-HOW, PATENTS, COPYRIGHT, TRADE MARK, LICENSES, FRANCHISES OR ANY OTHER BUSINESS OR NUMERICAL RIGHTS OF SIMILAR NATURE. 7 ITA NO. 1306-AHD-2009 3.2 AGGRIEVED WITH THE ORDER OF THE LEARNED COMMISS IONER OF INCOME TAX(APPEALS), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL ON THE FO LLOWING GROUNDS: 1. THE LD. C.I.T.(A) ERRED IN LAW AND ON FACTS IN UPHOLDING THE ASSESSMENT REOPENED U/S.148 OF THE I.T. ACT. 2. THE LD. C.I.T.(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE A.O. IN WITHDRAWING THE DEPRECIATION OF RS.4,51,758/- PERT AINING TO INTANGIBLE ASSETS UNDER THE WRONG NOMENCLATURE OF GOODWILL. 4. AT THE TIME OF HEARING BEFORE THE TRIBUNAL, ON B EHALF OF THE ASSESSEE, SHRI S.N.SOPARKAR APPEARED AND CONTENDED THAT IN THIS CA SE, THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 30.03.2006 DETERM INING THE LOSS AT (-) 69,530/-. THE NOTICE UNDER SECTION 148 READ WITH SECTION 147 OF T HE I.T. ACT WAS ISSUED ON 19.03.2008 AND SERVED ON THE ASSESSEE ON 29.03.2008. IN THE ORIGIN AL ASSESSMENT YEAR, THE DEPRECIATION ON GOODWILL WAS ALLOWED AS CLAIMED IN THE RETURN OF INCOME. THE REOPENING HAS BEEN DONE WITHIN FOUR YEARS. HE POINTED OUT THAT IT IS WELL-S ETTLED LAW THAT REOPENING WITHIN FOUR YEARS CANNOT BE DONE ON CHANGE OF OPINION. IN SUPPORT OF THIS, RELIANCE WAS PLACED ON THE JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT-VS- KELVINATOR OF INDIA LTD. REPORTED IN 320 ITR 561 (SC). THE RELIANCE WAS ALSO PLACED ON THE JUDGEMENT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF ADANI EXPORTS VS - DCIT REPORTED IN 240 ITR 224 (GUJ.) WHEREIN IT WAS HELD THAT INFORMATION THAT INCOME HA S ESCAPED ASSESSMENT ON THE BASIS OF OPINION OF AUDIT PARTY WITH REGARD TO APPLICATION O R INTERPRETATION OF LAW DOES NOT CONSTITUTE INFORMATION FOR REOPENING OF ASSESSMENT. 4.1 WITHOUT PREJUDICE TO ABOVE, ON MERIT, THE COUNS EL OF THE ASSESSEE SUBMITTED THAT ON GOODWILL DEPRECIATION IS ALLOWABLE AS HELD BY THE HON'BLE KERALA HIGH COURT IN THE CASE OF B. RAVEENDRAN PILLAI VS- CIT REPORTED IN [2010] 19 4 TAXMAN 477 (KER.) AND THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT-VS- HINDUSTAN C OCA COLA BEVERAGES PVT. LTD. IN ITA NOS. 1391/2010, 1394/2010 & 1396/2010, JUDGMENT PRO NOUNCED ON 14 TH JANUARY, 2011. 5. ON THE OTHER HAND, SHRI VIMALENDU VERMA, D.R., A PPEARING ON BEHALF OF THE REVENUE, VEHEMENTLY SUPPORTED THE ORDERS OF BOTH THE DEPARTM ENTAL AUTHORITIES BELOW. THE LD. D.R. POINTED OUT THAT NOTICE UNDER SECTION 148 WAS ISSUE D ON 29.03.2008 AND ON THAT DATE, AS PER 8 ITA NO. 1306-AHD-2009 THE DECISION OF ITAT, C BENCH, AHMEDABAD IN THE C ASE OF BHARATBHAI J. VYAS VS- ITO REPORTED IN [2005] 97 ITD 248 (AHD.), GOODWILL IS NOT ELIGIBLE FOR DEPRECIATION BECAUSE ITS PURCHASE DID NOT RESULT INTO ACQUISITION OF ANY KNO W-HOW, PATENTS, COPY RIGHTS, TRADE MARKS, ETC., AS PRESCRIBED IN THAT BEHALF. THEREFORE, IT M AY BE HELD THAT REOPENING WAS RIGHTLY DONE AND THE ASSESSEE IS NOT ENTITLED TO DEPRECIATION ON GOODWILL. 6. HAVING HEARD BOTH THE SIDES, I HAVE CAREFULLY GO NE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT BEF ORE THE ASSESSING OFFICER, THE ASSESSEE FILED A LETTER DATED 12.08.2008 CITING VARIOUS DECISIONS FO R THE PROPOSITION THAT THE ASSESSMENT CANNOT BE REOPENED ON CHANGE OF OPINION BUT NONE OF THE DE CISIONS WERE CONSIDERED BY THE ASSESSING OFFICER. THE LEARNED COMMISSIONER OF INCO ME TAX(APPEALS) HAS ALSO NOT CONSIDERED VARIOUS DECISIONS WHICH ARE CITED BY THE ASSESSEE IN LETTER DATED 12.08.2008, FILED BEFORE THE ASSESSING OFFICER AND REPRODUCED BY HIM IN PARA 2 OF THE ASSESSMENT ORDER. THE HON'BLE SUPREME COURT, IN THE CASE OF KELVINATOR OF INDIA LTD. ( SUPRA ), RELIED ON BY THE LD. COUNSEL OF THE ASSESSEE, WITH REGARD TO CHANGE OF O PINION, HELD AS UNDER: THE CONCEPT OF 'CHANGE OF OPINION' ON THE PART O F THE ASSESSING OFFICER TO REOPEN AN ASSESSMENT DOES NOT STAND OBLITERATED AFTER THE SUBSTITUTION OF SECTION 147 OF THE INCOME-TAX ACT, 1961, BY THE DIRECT TAX LAWS(AMEND MENT) ACTS, 1987 AND 1989. AFTER THE AMENDMENT, THE ASSESSING OFFICER HAS TO HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, BUT THIS DOES NOT IMPLY TH AT THE ASSESSING OFFICER CAN REOPEN ON ASSESSMENT ON MERE CHANGE OF OPINION. THE CONCE PT OF 'CHANGE OF OPINION' MUST BE TREATED AS AN IN-BUILT TEST TO CHECK THE ABUSE OF POWER. HENCE AFTER APRIL 1, 1989, THE ASSESSING OFFICER HAS POWER TO REOPEN AN ASSES SMENT, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASON MUST HAVE A LINK WITH THE FORMA TION OF THE BELIEF. ( HEAD NOTES ) 6.1 ADMITTEDLY IN THE CASE BEFORE ME, REOPENING HAS BEEN DONE WITHIN FOUR YEARS. THE ORIGINAL ASSESSMENT WAS FRAMED UNDER SECTION 143(3) . IN THE ORIGINAL ASSESSMENT ORDER, THE DEPRECIATION ON GOODWILL CLAIMED WAS ALLOWED. OBVIO USLY, THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS NECESSARY FOR ASSESSMENT. EVEN ON MERITS, I AM OF THE VIEW THAT THE ASSESSEE IS ENTIT LED TO DEPRECIATION ON GOODWILL AS HELD BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT-VS- HINDUSTAN COCA COLA BEVERAGES PVT. LTD. ( SUPRA ) AND HON'BLE KERALA HIGH COURT IN THE CASE OF B. R AVEENDRAN PILLAI ( SUPRA ). 9 ITA NO. 1306-AHD-2009 6.2 IN VIEW OF THE FOREGOING, I AM OF THE VIEW THAT THE REOPENING IS BAD IN LAW AND FOLLOWING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD. ( SUPRA ), I QUASH THE ASSESSMENT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 .04.2011. SD/- (T.K. SHARMA) JUDICIAL MEMBER DATED : 15/04/2011 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE 2) THE DEPARTMENT. 3) CIT(A.) CONCERNED, 4) CIT CONCERNED, 5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD TALUKDAR/SR.P.S.