FL Smidth Private Limited, CHENNAI V. DCIT, CHENNAI

ITA 393/CHNY/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6282 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-05-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 17-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN MARY BA
• Assessee Lawyers: SHRIG BASKAR
• Keywords: Reopening of assessment; Business income; Transfer pricing; International transaction; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Revenue expenditure; Reassessment proceedings; Capital expenditure
• Section: 143(3); 142(1); 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI ... , , $ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO. 393/CH/2014 / ASSESSMENT YEAR : 2003-04 M/S. FLSMIDTH PRIVATE LIMITED , (FORMERLY FLS AUTOMATION PVT. LTD.) FLSMIDTH HOUSE, 34, EGATOOR, KELAMBAKKAM, OLD MAHABALIPURAM ROAD, CHENNAI 600 103. [PAN: AAACF 4997N] VS. DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(1), CHENNAI 34. ( / APPELLANT) ( / RESPONDENT) &' / APPELLANT BY : SHRIG. BASKAR, ADVOCATE *+&' / RESPONDENT BY : MS. ANN MARY BABY, JCIT ' /DATE OF HEARING : 22.05.2017 ' /DATE OF PRONOUNCEMENT : 18.08.2017 /O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-II, CHENNAI IN ITA NO. 458/2013-14 DATED 24.10.2013 FOR ASSESSMENT YEARS 2003-04. 2 2. FLSMIDTH PRIVATE LIMITED (FORMERLY FLS AUTOMATIO N INDIA PRIVATE LIMITED) IS A COMPANY, ENGAGED IN THE BUSINESS OF D ESIGN AND SUPPLY OF AUTOMATION SYSTEMS TO CEMENT AND OTHER INDUSTRIES. FOR THE ASSESSMENT YEAR 2003-04, THE ASSESSING OFFICER COMPLETED THE ASSESS MENT U/S. 143(3) ON 08.02.2006. SUBSEQUENTLY, THE ASSESSMENT WAS REOPEN ED ON 18.03.2008 , PRIMARILY FOR THE REASON THAT THE ASSESSEE OBTAINED CERTAIN ENGINEERING DRAWINGS FROM FLS AUTOMATION A/S, DENMARK AND CLAIM ED IT AS REVENUE EXPENDITURE. ENGINEERING DRAWINGS NORMALLY FORMS I NTANGIBLE ASSETS AND ACCORDINGLY BECOMES CAPITAL EXPENDITURE, BUT THE AS SESSEE BY MISTAKE HAS CLAIMED THE SAME AS REVENUE EXPENDITURE. IN THE RE -ASSESSMENT ORDER, THE AO CONCLUDED THAT THE ENGINEERING DRAWINGS OBTAINED FROM FLS AUTOMATION A/S,DENMARK WAS ULTIMATELY SUPPLIED TO THE CUSTOMER S AND HENCE TREATED THE EXPENDITURE AS REVENUE IN THE HANDS OF ASSESSEE. H OWEVER, HE FOUND THAT ON THE PAYMENT FOR THE DRAWINGS, TDS SHOULD HAVE BEEN DEDUCTED, BUT THE ASSESSEE DID NOT DO SO AND HENCE DISALLOWED THE EXP ENDITURE U/S. 40(A)(I). AGGRIEVED, THE ASSESSE FILED AN APPEAL, INTER ALIA, CHALLENGING THE VALIDITY OF RE-OPENING THE ASSESSMENT U/S. 147 AND THE DISALLOW ANCE MADE U/S. 40(A)(I). THE CIT(A) HAS DISMISSED THE APPEAL. AGGRIEVED, THE ASSESSEE FILED THIS APPEAL, INTER ALIA, WITH THE FOLLOWING GROUNDS: I. GENERAL (I) THE ORDER OF THE COMMISSIONER OF INCOME-TAX (AP PEALS) DATED 24.10.2013 IS BAD IN LAW AND ON FACTS AND IS LIABLE TO BE QUAS HED AB-INITIO. 3 II ASSESSMENT BARRED BY LIMITATION (I) THE COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN NOT NOTING THAT THE RE-OPENING OF ASSESSMENT WAS BARRED BY LIMITATION I N SO FAR AS IT HAS BEEN EFFECTED BEYOND THE PERIOD OF FOUR YEARS FROM THE E ND OF THE RELEVANT ASSESSMENT YEAR BY INVOCATION OF THE PROVISO TO SEC . 147 OF THE INCOME-TAX ACT. IN SO FAR AS THE STATUTORY CONDITIONS SET OUT IN SEC. 147 HAVE NOT BEEN SATISFIED, THE PROCEEDINGS FOR RE-ASSESSMENT ARE WH OLLY BAD IN LAW. (II) THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOLDING THE RE- OPENING U/S 147 NOTWITHSTANDING THE NON-SATISFACTIO N OF THE CONDITIONS SET OUT IN THE PROVISO THERETO. HE OUGHT TO HAVE NOTED THAT THE ASSESSEE HAD DISCLOSED FULLY AND TRULY ALL THE MATERIAL FACTS NE CESSARY FOR THE ASSESSMENT AT THE TIME OF REGULAR ASSESSMENT U/S 143 (3) ITSELF. (III) THE COMMISSIONER OF INCOME-TAX (APPEALS) AS WELL AS THE ASSESSING AUTHORITY ERRED IN RE-OPENING THE ASSESSMENT NOTWIT HSTANDING THAT ADMITTEDLY NO NEW OR TANGIBLE MATERIAL WAS FOUND TO WARRANT TH E RE-OPENING OF ASSESSMENT. IN FACT THE REASONS FOR RE-OPENING RELY ONLY UPON THE RETURN OF INCOME FILED BY THE APPELLANT AND THE ANNEXURES THE RETO, MAKING IT APPARENT THAT NO MATERIAL HAS BEEN FOUND BY THE ASSESSING AU THORITY AND FURTHER THAT THERE HAS BEEN NO NON- DISCLOSURE OF MATERIALS BY T HE ASSESSEE WARRANTING THE INVOCATION OF THE PROVISO TO SEC. 147. (IV) THE LOWER AUTHORITIES ERR IN RELYING UPON EXP LANATION 1 TO SEC. 147 OF THE ACT WHICH IS WHOLLY INAPPLICABLE IN THE PRESENT CASE. IN ANY EVENT, THE 4 PROVISIONS OF THE EXPLANATION WOULD NOT OVERRIDE TH E PROVISIONS OF THE PROVISO AND THE SATISFACTION OF THE STATUTORY CONDITIONS SE T OUT THEREIN. THE APPELLANT RELIES ON VARIOUS JUDICIAL PRONOUNCEMENTS IN THIS R EGARD. THE RE-OPENING IS THUS WHOLLY BAD IN LAW, BARRED BY LIMITATION AND LI ABLE TO BE QUASHED IN FULL. (V) THE LOWER AUTHORITIES FURTHER ERR IN RELYING U PON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF RAJESH JAVERI STOCK BR OKERS WHICH HAS BEEN RENDERED IN THE CONTEXT OF AN INTIMATION U/S 143(1) AND IS WHOLLY INAPPLICABLE IN THE PRESENT LEGAL CONTEXT WHERE THE ORIGINAL ASS ESSMENT HAS BEEN COMPLETED U/S 143 (3) OF THE ACT. FURTHER, THE JUDG MENTS RELIED ON BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IN UPHOLDING T HE ASSUMPTION OF JURISDICTION, ARE DISTINGUISHABLE AND NOT APPLICABL E IN THE PRESENT CIRCUMSTANCES. (VI) THE COMMISSIONER OF INCOME-TAX (APPEALS) ERR I N NOT NOTING THAT A DETAILED ENQUIRY HAD BEEN CALLED FOR BY THE ASSESSI NG AUTHORITY ON THE VERY ISSUE FOR WHICH PROCEEDINGS FOR RE-ASSESSMENT HAD B EEN INITIATED AT THE TIME OF ORIGINAL ASSESSMENT AND THE APPELLANT HAD, VIDE RESPONSE DATED 19.1.2006, SUBMITTED ALL RELEVANT PARTICULARS IN THIS REGARD. THE CONCLUSION THAT THERE HAD BEEN NO ENQUIRY AT THE TIME OF ORIGINAL ASSESSMENT IS THUS WHOLLY BAD IN LAW. III. NON-COMPLIANCE WITH STATUTORY CONDITIONS UNDER THE PROVISO TO SEC. 147 OF THE ACT 5 (I) THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRS IN NOT NOTING THAT THE REASONS FOR RE-OPENING DID NOT CONTAIN EVEN AN ALLE GATION TO THE EFFECT THAT THERE HAD BEEN NON-DISCLOSURE OF RELEVANT MATERIALS FULLY AND TRULY BY THE ASSESSEE, JUSTIFYING THE INVOCATION OF EXTENDED PER IOD OF LIMITATION OF SIX YEARS. IN THE ABSENCE OF SUCH ALLEGATION, THE STATU TORY CONDITIONS SET OUT UNDER THE PROVISO TO SEC. 147 DO NOT STAND COMPLIED WITH. (II) THE APPELLANT RELIES ON VARIOUS JUDGMENTS OF THE HIGH COURTS AND TRIBUNALS TO THE EFFECT THAT A SPECIFIC ALLEGATION IS REQUIRED TO BE MADE IN THE REASONS FOR RE-OPENING WITH REGARD TO THE FAILURE T O MAKE A FULL AND TRUE DISCLOSURE AS WELL AS SETTING OUT THE NEW AND TANGI BLE MATERIAL FOUND BY THE ASSESSING AUTHORITY, WARRANTING THE INVOCATION OF T HE PROVISO TO SEC. 147. IN THE ABSENCE OF SUCH FINDING, COURTS HAVE CONFIRMED THE POSITION THAT THE PROCEEDINGS FOR RE-ASSESSMENT ARE LIABLE TO FAIL. IV. MERITS DISALLOWANCE U/S 195 AND 40(A)(I) OF THE ACT - RS.3 1 ,34,000/- (I) IN ANY EVENT AND WITHOUT PREJUDICE TO THE ABOV E GROUND CHALLENGING THE ASSUMPTION OF JURISDICTION U/S 147 OF THE ACT, THE IMPUGNED ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) DATED 24.10.20 13 IS ERRONEOUS AND CONTRARY TO STATUTORY PROVISIONS. (II) THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRS IN UPHOLDING THE DISALLOWANCE U/S 40 (A) (I) R.W.S. 195 OF THE ACT O F AN AMOUNT OF 6 RS.31,34,000/- BEING PAYMENT TO M/S. FLS AUTOMATION NS, DENMARK TOWARDS THE PURCHASE OF ENGINEERING DRAWINGS. (III) THE COMMISSIONER OF INCOME-TAX (APPEALS) OUG HT TO HAVE NOTED THAT THE REMITTANCE OF AN AMOUNT OF RS.31,34,000/- REPRE SENTS AN AMOUNT NOT CHARGEABLE TO TAX IN INDIA, CONSEQUENT UPON WHICH T HERE IS NO REQUIREMENT TO DEDUCT TAX AT SOURCE U/S 195 OF THE ACT. THE PROVI SIONS OF SEC. 40 (A) (I) OF THE ACT ARE THUS NOT ATTRACTED IN THE PRESENT CASE. (IV) THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGH T TO HAVE NOTED THAT THE REMITTANCES WERE MADE WITH REGARD TO ENGINEERIN G AND SCIENTIFIC DRAWINGS THAT CONSTITUTE PLANT AND EQUIPMENT AND ARE THUS NO T CLASSIFIABLE AS 'FEES FOR TECHNICAL SERVICES' U/S 9 (1) (VII) OF THE ACT. THE EXPENDITURE IS THUS NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE. (V) THE LOWER AUTHORITIES ERR IN STATING THAT THE REQUIRED DOCUMENTATION, NOT PRODUCED. IN FACT, ALL DOCUMENTS REQUIRED FOR A DJUDICATION UPON THE ISSUE HAVE BEEN PRODUCED BEFORE THE LOWER AUTHORITIES. (VI) THE LOWER AUTHORITIES ERRED IN RELYING UPON E XPLANATION TO SEC. 9 OF THE ACT WHICH IS WHOLLY INAPPLICABLE IN THE PRESENT CAS E, IN SO FAR AS THE SAID EXPLANATION WOULD APPLY ONLY IN THE CONTEXT OF INTE REST, ROYALTY OR FEES FOR TECHNICAL SERVICES AND NOT IN THE PRESENT CIRCUMSTA NCES. (VII) THE COMMISSIONER OF INCOME-TAX (APPEALS) OUG HT TO HAVE APPRECIATED THE POSITION THAT THE REMITTANCE OF RS.31,34,000/- WHILE REPRESENTING ALLOWABLE EXPENDITURE, BEING PART OF THE PROJECT CO ST, DID NOT REPRESENT 7 INCOME IN THE HANDS OF THE NON-RESIDENT. THE CONSID ERATION RELATED TO THE PURCHASE OF TECHNICAL DRAWINGS FROM M/S. FLS AUTOMA TION ALS, DENMARK THAT CONSTITUTED 'BUSINESS INCOME' IN THE HANDS OF THE E NTITY AT DENMARK. THE PAYMENTS WERE THUS NOT LIABLE TO TAX IN INDIA. (VIII) THE LOWER AUTHORITIES OUGHT TO HAVE NOTED THAT THE CONSIDERATION RELATED TO AN OUTRIGHT PURCHASE OF OFFSHORE SUPPLY OF GOODS AND THUS THERE WAS NO TAXABILITY IN THIS REGARD IN INDIA. THE GOOD S HAD BEEN PREPARED OFFSHORE, TITLE TRANSFERRED OFFSHORE AND REMITTANCE S RECEIVED OUTSIDE INDIA. IN SO FAR AS NO PART OF THE TRANSACTION HAD BEEN OCCAS IONED IN INDIA, NO INCOME AROSE OR ACCRUED IN INDIA FOR CHARGEABILITY. THE VA RIOUS JUDGMENTS RELIED ON BY THE LOWER AUTHORITIES ARE WHOLLY DISTINGUISHABLE AND RELATE TO A DIFFERENT FACTUAL MATRIX. OMISSION TO GRANT RELIEF THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN N OT CONSIDERING THE SPECIFIC GROUND RAISED BY THE APPELLANT HEREIN PERT AINING TO THE COMPUTATION OF TAXABLE INCOME IN GROUND NO.6 OF THE APPEAL MEMO RANDUM. THE APPELLANT HAD CONTENDED THAT THE RELIEF GRANTED BY THE ASSESS ING AUTHORITY BY ORDER DATED 6.11.2006 OUGHT TO BE GIVEN EFFECT TO WHICH H AS BEEN OMITTED TO BE CONSIDERED IN THE PRESENT IMPUGNED ORDER OF THE COM MISSIONER OF INCOME TAX (APPEALS). 8 3. THE AR SUBMITTED THAT THE RE-OPENING OF THE ASSE SSMENT IS ON A MERE CHANGE OF OPINION. HE INVITED OUR ATTENTION TO THE FOLLOWING PORTION OF THE ORIGINAL ASSESSMENT ORDER: A NOTICE U/S. 142(1) OF THE IT ACT WAS ISSUED REQ UESTING THE ASSESSEE TO FURNISH THE SALES TAX ORDER, BILLS FOR ADDITION TO FIXED ASSETS, DETAILS OF SUNDRY DEBTORS, LOANS AND ADVANCES, CURRENT LIABILI TIES, RENT PAID, ENGINEERING DRAWINGS, REPAIRS AND MAINTENANCE, PROFESSIONAL CHA RGES, LEASE RENTALS, PROVISION FOR WARRANTY AND MISCELLANEOUS EXPENSES. IN RESPONSE TO THE HEARING NOTICE, THE ASSESSEES REPRESENTATIVE SHRI V.P. MANIKANDAN, CA, APPEARED AND FILED POWER. HE HAD ALSO FURNISHED TH E DETAILS. THE ASSESSEES REPRESENTATIVE HAS ALSO FURNISHED THE PROOF FOR TDS ON FOREIGN EXCHANGE, DETAILS OF HIRING CHARGES AND OTHER DETAILS. AFTER DISCUSSING THE CASE WITH THE ASSESSEES REPRESENTATIVE THE ASSESSMENT IS COMPLET ED. AND SUBMITTED THAT BASED ON THE ORIGINAL TURN OF IN COME, THE AO HAD CALLED FOR VARIOUS DETAILS AND THE ASSESSEE HAD FULLY AND TRULY DISCLOSED ALL MATERIAL FACTS INCLUDING THE DETAILS OF ENGINEERING DRAWINGS . THE AO HAS APPLIED HIS MIND WHILE ALLOWING THE CLAIM OF ENGINEERING DRAWIN G EXPENSES WHICH HAS BEEN MENTIONED IN THE ABOVE EXTRACTED PORTION.THUS, THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y THE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. THE INITIATION OF RE-ASSESSMEN T WITHOUT ANY FRESH EVIDENCE AMOUNTS TO CHANGE OF OPINION AND HENCE THE RE-ASSESSMENT IS BAD IN LAW. IN THIS REGARD, THE AR INVITED OUR ATTENTION TO THE RATIOS REPORTED IN 320 9 ITR 361, 340 ITR 299, 378 ITR 547& 369 ITR 209. HE FURTHER SUBMITTED THAT THE REASSESSMENT MADE ON THE GROUND DIFFERENT FROM REASONS RECORDED IN NOTICE IS NOT VALID. IN THIS REGARD, HE INVITED OU R ATTENTION TO PARA 11 OF THE REASSESSMENT ORDER AND RELIED ON THE RATIOS REPORTE D IN 331 ITR 236, 349 ITR 482 AND 372 ITR 762. HE HAS ALSO RELIED ON THE BOA RD CIRCULAR NO 3/2015 DATED 12.02.2015 REPORTED IN 371 ITR 359 (ST) TO SA Y THAT THE DISALLOWANCE MADE BY THE AO U/S. 40(A)(I) IS WITHOUT JURISDICTIO N. PER CONTRA, THE DR SUPPORTED THE ORDER OF THE AO AND THE ORDER OF THE CIT(A). 4. WE HEARD THE RIVAL SUBMISSIONS, GONE THROUGH REL EVANT ORDERS AND MATERIAL. THE RELEVANT PORTION OF THE REASON RECOR DED FOR REOPENING THE ASSESSMENT AS RECORDED FROM THE REASSESSMENT IS EXT RACTED AS UNDER: 2. SUBSEQUENTLY, REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT WAS INITIATED AS THERE WAS A PRIMA FACIE BELIEF THAT TH E ASSESSEE HAS FAILED TO DISCLOSE ALL MATERIAL FACTS RELEVANT FOR THE ASSESS MENT. THE ISSUE INVOLVED IS BRIEFLY GIVEN AS UNDER. 3. FROM THE P&L ACCOUNT SCH.11 OPERATING EXPEN SES AN AMOUNT OF RS.31,34,788 HAS BEEN DEBITED TOWARDS ENGINEERING DRAWINGS. IN ANNEXURE- III TO FORM 3CEB CLAUSE 9 (PARTICULARS RELATING T O INTERNATIONAL TRANSACTION), IT IS MENTIONED THAT ENGINEERING DRAWINGS CONSTITUT E INTANGIBLE PROPERTY AND CLASSIFIED THEM ACCORDINGLY IN THE CERTIFICATE IN F ORM 3CEB. 5. IN AS MUCH AS THE PURCHASE OF ENGINEERING DRAWIN GS IS CLASSIFIED AS INTANGIBLE PROPERTY AND THEY ARE NOT TRADED GOODS, IT IS A MISTAKE ON THE PART OF THE ASSESSEE TO CLAIM THE COST OF ENGINEERING DR AWINGS AS A REVENUE 10 EXPENDITURE. IN VIEW OF THE ABOVE, THE THEN ASSESS ING OFFICER HAD REASONS TO BELIEVE THAT THE ASSESSEE HAS FAILED TO DISCLOSE FU LLY AND TRULY ALL MATERIAL FACTS RELEVANT FOR THE ASSESSMENT AND INCOME CHARGE ABLE TO TAX HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SEC. 147 OF THE IN COME TAX ACT, 1961. ACCORDINGLY,THE ASSESSMENT WAS RE-OPENED U/S.147 OF THE ACT AFTER OBTAINING ADMINISTRATIVE APPROVAL OF THE COMMISSIONER OF INCO ME TAX -1, CHENNAI. THE ASSESSING OFFICERS OBSERVATIONS IN THE ORIGINA L ASSESSMENT ORDER WITH REGARD TO THE ISSUES EXAMINED BY HIM ARE EXTRA CTED, SUPRA, IN PARA 3 ABOVE. FROM THE ABOVE , IT IS CLEAR THAT THE ISSUES ON WHICH INITIATION OF THE REASSESSMENT PROCEEDINGS WAS MADE WERE CLEARLY CONS IDERED BY THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMEN T ITSELF. FURTHER, THE REASONS RECORDED ABOVE DO NOT INDICATE AVAILABILITY OF ANY FRESH MATERIAL. THE AOS OBSERVATION IN THE REASSESSMENT ORDER IS E XTRACTED AS UNDER : 11.IT WAS EXPLAINED TO THE ASSESSEES REPRESENTATI VE THAT IF THE COPY OF THE MASTER AGREEMENT WITH FLS AUTOMATION A/S, DENMARK I S NOT FURNISHED, THE NATURE OF THE SAID DRAWINGS AND IT USAGE, I.E., WHE THER THE DRAWINGS ARE INTELLECTUAL PROPERTIES OF FLS AUTOMATION A/S DENMA RK THAT ARE USED FOR MULTIPLE CUSTOMERS OR WHETHER SEPARATE DRAWINGS ARE PREPARED FOR EACH CUSTOMER, COULD NOT BE ASCERTAINED. FURTHER, A QUE STION ARISES AS TO WHETHER THE DRAWINGS WERE SOLD TO THE ASSESSEE COMPANY BY F LS AUTOMATION A/S, DENMARK AND HAD BECOME ITS PROPERTY AND THE ASSESSE E COMPANY IN TURN UTILIZES THESE DESIGNS FOR VARIOUS PROJECTS OF CUST OMERS. THERE IS NO SANCTITY THAT ONE DRAWING USED FOR ONE PROJECT CANNOT BE REU SED FOR ANOTHER PROJECT. WHILE QUESTIONED, THE ASSESSEE COULD NOT FURNISH AN Y CONCRETE PROOF THAT THERE IS NO RE-USAGE OF DRAWINGS. IN THE ABSENCE O F MASTER AGREEMENT BETWEEN THE ASSESSEE COMPANY AND FLS AUTOMATION A/S DENMARK, THE EXACT 11 NATURE OF THE DRAWINGS AND THE OWNERSHIP COULD NOT BE ASCERTAINED. HOWEVER, FOR THE YEAR UNDER CONSIDERATION, SINCE TH E DRAWINGS WERE ULTIMATELY SUPPLIED TO THE CUSTOMERS, THE EXPENDITU RE IS TREATED AS REVENUE, IN THE HANDS OF THE ASSESSEE COMPANY. 4.2 FROM THE ABOVE IT IS CLEAR THAT THE AO IN THE R EASSESSMENT PROCEEDINGS HAD ALSO ARRIVED TO THE SAME CONCLUSION AS WAS MADE BY THE AO IN THE ORIGINAL ASSESSMENT ORDER. THIS FACT FURTHER EVIDE NCES THAT THE REASSESSMENT PROCEEDINGS IS NOTHING BUT MERE CHANGE OF OPINION. THEREAFTER, THE AO TRAVELLED TO AN ISSUE IE THE ISSUE U/S 40 (A) (I) O N WHICH HE HAS NOT INITIATED THE REASSESSMENT PROCEEDINGS. THE BOMBAY HIGH COUR T IN 349 ITR 482(BOM) HELD AS UNDER IN THE HEAD NOTE: THE SINE QUA NON FOR ISSUE OF A NOTICE FOR REOPENI NG OF ASSESSMENTS EVEN WITHIN A PERIOD OF LESS THAN FOUR YEARS FROM T HE END OF THE ASSESSMENT YEAR, IS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AND THIS BELIEF SHOULD BE ON THE BASIS OF TANGIBLE MATERIAL, OTHERW ISE THE EXERCISE OF POWER TO REOPEN WOULD BE A REVIEW OF THE ASSESSMENT ORDER . THE MERE FACT THAN AN ASSESSMENT ORDER DOES NOT DEAL WITH A PARTICULAR CLAIM CANNOT LEAD TO THE CONCLUSION THAT WHILE ALLOWING THE-CLAIM THE ASSESS ING OFFICER HAD NOT APPLIED HIS MIND. HELD, DISMISSING THE APPEAL, THAT THE REASONS PROVI DED A CONCLUSION AND GAVE NO MATERIAL PARTICULARS OF INFORMATION OBTAINED DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 1998 -99. THEREFORE, THE REASONS RECORDED DID NOT INDICATE ANY TANGIBLE MATE RIAL WHICH HAD LED TO A REASONABLE BELIEF THAT INCOME HAD ESCAPED ASSESSMEN T. FURTHER, WHILE PASSING THE ORDER OF REASSESSMENT, THE ASSESSING OF FICER HAD TAKEN A GROUND DIFFERENT FROM THE GROUNDS IN THE REASONS RECORDED [OR REOPENING THE 12 ASSESSMENT UNDER SECTION 148 OF THE ACT.THE REASONS FURNISHED FOR REOPENING THE ASSESSMENT ALLEGED THAT THE NON-FUND INCOME HAD BEEN SHOWN IN THE FUND BASED INCOME SO AS TO AVAIL OF A HIGHER DEDUCT ION. HOWEVER, THE BASIS OF THE ORDER DATED MARCH 26, 2002, WAS THAT 20.1 PE R CENT. OUT OF THE GROSS EXPENSES ATTRIBUTED TO THE NON-FUND INCOME WAS EXCE SSIVE AND OUGHT TO BE RESTRICTED TO ONLY 10 PER CENT. THUS, THE BASIS OF THE ORDER WAS COMPLETELY DIFFERENT FROM THE REASONS RECORDED FOR REOPENING T HE ASSESSMENT. THE REOPENING OF ASSESSMENT BY NOTICE UNDER SECTION 148 WAS NOT SUSTAINABLE IN LAW. FOLLOWING THE ABOVE DECISION, THE REASSESSMENT MADE IS HELD AS NOT VALID ON BOTH GROUNDS IE NO FRESH MATERIAL A ND HENCE IT IS MERE CHANGE OF OPINION AND THE BASIS OF THE ORDER B EING COMPLETELY DIFFERENT FROM THE REASONS RECORDED FOR REOPENING T HE ASSESSMENT. THE ASSESSEES APPEAL IS ALLOWED. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON 18 TH AUGUST, 2017 AT CHENNAI. SD/- ( . .. . . .. . . . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, /DATED: 18 TH AUGUST, 2017 JPV /COPY TO: 1. / APPELLANT 2. /RESPONDENT 3. /CIT(A) 4. /CIT 5. /DR 6. /GF