Karnataka High Court
Eit Services India Pvt. Ltd., Formerly ... vs The Assistant Commissioner Of Income ... on 19 December, 2023
Author: S. Sunil Dutt Yadav
Bench: S. Sunil Dutt Yadav
1
R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE DAY 19TH OF DECEMBER 2023
BEFORE
THE HON'BLE MR.JUSTICE S. SUNIL DUTT YADAV
WRIT PETITION No.15061/2013 (T-IT)
C/W
WRIT PETITION No.43236/2013
WRIT PETITION No.43237/2013
IN W.P. NO.15061/2013
BETWEEN:
EIT SERVICES INDIA PVT. LTD.,
Digitally
FORMERLY HEWLETT PACKARD
signed by
JAGADISH T R GLOBALSOFT PRIVATE LIMITED
Date:
2023.12.20 NO.39/40, ELECTRONIC CITY, PHASE II
10:29:10
+0530 BANGALORE - 560 030
REPRESENTED HEREIN BY ITS
INDIA TAX DIRECTOR
MR. MANOJ BAVLE ... PETITIONER
(BY SRI PERCY PARDIWALLA, SENIOR ADVOCATE FOR
Ms.TANMAYEE RAJKUMAR, ADVOCATE)
AND:
1. THE DEPUTY COMMISSIONER OF INCOME TAX
CIRCLE-11(4), ROOM NO.516
5TH FLOOR, RP BHAVAN
OPP. RBI, NRUPATHUNGA ROAD
BANGALORE - 560 001.
2
2. THE COMMISSIONER OF INCOME TAX-I
CENTRAL REVENUE BUILDING
QUEEN'S ROAD
BANGALORE - 560 001. ... RESPONDENTS
(BY SRI E.I. SANMATHI, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF
CONSTITUTION OF INDIA, PRAYING TO DECLARING THAT
THE IMPUGNED PROCEEDINGS INITIATED BY THE 1ST
RESPONDENT UNDER SECTION 147 READ WITH SECTION
148 OF THE ACT ARE BARRED BY LIMITATION AND OPPOSED
TO THE SAID PROVISIONS AND THEREFORE WITHOUT
JURISDICTION AND ETC.
IN W.P. NO.43236/2013
BETWEEN:
EIT SERVICES INDIA PVT. LTD.,
FORMERLY HEWLETT PACKARD
GLOBALSOFT PRIVATE LIMITED
NO.39/40, ELECTRONIC CITY, PHASE II
BANGALORE - 560 030
REPRESENTED HEREIN BY ITS
INDIA TAX DIRECTOR
MR. MANOJ BAVLE ... PETITIONER
(BY SRI PERCY PARDIWALLA, ADVOCATE FOR
MS.TANMAYEE RAJKUMAR, ADVOCATE)
AND:
1. THE ASSISTANT COMMISSIONER OF INCOME TAX
CIRCLE-11(4), ROOM NO.516
5TH FLOOR, RP BHAVAN
OPP. RBI, NRUPATHUNGA ROAD
BANGALORE - 560 001.
3
2. THE DEPUTY COMMISSIONER OF INCOME TAX
CIRCLE-11(4), ROOM NO.516
5TH FLOOR, RP BHAVAN
OPP. RBI, NRUPATHUNGA ROAD
BANGALORE - 560 001.
3. THE COMMISSIONER OF INCOME TAX-I
CENTRAL REVENUE BUILDING
QUEEN'S ROAD
BANGALORE - 560 001. ... RESPONDENTS
(BY SRI E.I. SANMATHI, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF
CONSTITUTION OF INDIA, PRAYING TO DECLARING THAT
THE IMPUGNED PROCEEDINGS INITIATED BY THE 1ST
RESPONDENT UNDER SECTION 147 READ WITH SECTION
148 OF THE ACT ARE BARRED BY LIMITATION AND OPPOSED
TO THE SAID PROVISIONS AND THEREFORE WITHOUT
JURISDICTION AND ETC.
IN W.P. NO.43237/2013
BETWEEN:
EIT SERVICES INDIA PVT. LTD.,
FORMERLY HEWLETT PACKARD
GLOBALSOFT PRIVATE LIMITED
NO.39/40, ELECTRONIC CITY, PHASE II
BANGALORE - 560 030
REPRESENTED HEREIN BY ITS
INDIA TAX DIRECTOR
MR. MANOJ BAVLE
... PETITIONER
(BY SRI PERCY PARDIWALLA, ADVOCATE FOR
MS. TANMAYEE RAJKUMAR, ADVOCATE)
4
AND:
1. THE ASSISTANT COMMISSIONER OF INCOME TAX
CIRCLE-11(4), ROOM NO.516
5TH FLOOR, RP BHAVAN
OPP. RBI, NRUPATHUNGA ROAD
BANGALORE - 560 001.
2. THE DEPUTY COMMISSIONER OF INCOME TAX
CIRCLE-11(4), ROOM NO.516
5TH FLOOR, RP BHAVAN
OPP. RBI, NRUPATHUNGA ROAD
BANGALORE - 560 001.
3. THE COMMISSIONER OF INCOME TAX-I
CENTRAL REVENUE BUILDING
QUEEN'S ROAD
BANGALORE - 560 001.
... RESPONDENTS
(BY SRI E.I. SANMATHI, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF
CONSTITUTION OF INDIA, PRAYING TO DECLARING THAT
THE IMPUGNED PROCEEDINGS INITIATED BY THE 1ST
RESPONDENT UNDER SECTION 147 READ WITH SECTION
148 OF THE ACT ARE BARRED BY LIMITATION AND OPPOSED
TO THE SAID PROVISIONS AND THEREFORE WITHOUT
JURISDICTION AND ETC.
THESE WRIT PETITIONS PERTAINING TO PRINCIPAL
BENCH, BENGALURU HAVING BEEN HEARD AND RESERVED
ON 03.11.2023 AND COMING ON FOR PRONOUNCEMENT OF
ORDERS THROUGH VIDEO CONFERENCING AT DHARWAD
BENCH, THIS DAY, THE COURT MADE THE FOLLOWING:
5
ORDER
S. SUNIL DUTT YADAV. J
This Order has been divided into the following
Sections to facilitate analysis:
(i) Whether the petitioner assessee has 22
failed to "disclose fully and truly all
material facts necessary for
assessment"?
(ii) Whether the re-assessment notice under 38
Section 147 r/w Section 148 of the I.T.
Act is merely a product of change in
opinion and accordingly is impermissible
in law?
(iii) Whether the re-assessment notice under 55
Section 147 r/w Section 148 amounts to
borrowed satisfaction as it places
reliance on findings recorded in the
assessment proceedings recorded in the
Assessment Year 2008-2009?
(iv) Whether the bar under third Proviso to 60
Section 147 of the I.T. Act is a legal
impediment insofar as the present
re-assessment notice is concerned?
The petitioner has filed three Writ Petitions before
this Court i.e., W.P. Nos.15061/2013, 43236/2013,
43237/2013. The petitioner who is common in all these
Writ Petitions has sought to challenge the re-assessment
proceedings initiated pursuant to the notice issued under
Section 148 read with Section 147 of the Income Tax
Act, 1961 ('I.T. Act').
2. W.P.No.15061/2013 pertains to the
Assessment Year 2005-2006; W.P.No.43236/2013
pertains to the Assessment Year 2006-2007;
W.P.No.43237/2013 pertains to the Assessment Year
2007-2008.
I. FACTS:-
3. The petitioner has sought for a declaration
that the proceedings initiated by the respondent No.1-
Deputy Commissioner of Income Tax (DCIT) under
Section 147 read with Section 148 of the I.T. Act, as
being barred by limitation and without jurisdiction. The
challenge is laid to the notice at Annexure-'G' dated
29.03.2012, under Section 148 r/w Section 147 of I.T.
Act for the Assessment Year 2005-2006 which preceded
the order of reassessment. The petitioner has also
sought for quashing of the order at Annexure-'P' dated
13.03.2013, which is the order passed by respondent
No.1 rejecting the objections filed by the petitioner to the
notice under Section 148 of I.T. Act for re-opening of
assessment for the year 2005-2006.
4. The petitioner's regular assessment for the
Assessment Year 2005-2006 was concluded by the
Assessing Officer and an order was passed under Section
143(3) of the I.T. Act dated 30.12.2008 at Annexure-'B'
and in such order, petitioner's claim for deduction under
Section 10A of the I.T. Act came to be allowed for a sum
of Rs.114,87,47,042/-. However, portion of the
deduction claimed was disallowed on other grounds.
5. As against such order, on 22.12.20091, the
Commissioner of Income Tax, Bangalore-1, Bangalore
("CIT") initiated proceedings under Section 263 of the
I.T. Act on the ground that the assessment completed
was erroneous and was prejudicial to the interest of the
Revenue and set aside the Assessment Order.
6. Further, the CIT had directed the Assessing
Officer to re-examine the claim for deduction under
Section 10A/80HHE of the I.T. Act on the ground that
part of the petitioner's profits was related to rendering
technical services outside India which was not eligible for
deduction.
7. The Assessing Officer thereafter taking note of
the order of the CIT dated 22.12.2009 and having
examined the matter afresh, passed a fresh Assessment
Order dated under Section 143 (3) r/w Section 263 of
the I.T. Act dated 24.12.2010 (Annexure-'D'), wherein
Annexure-'C'
the Assessing Officer made further disallowances of
deductions claimed under Section 10A of the I.T. Act
after excluding the expenses incurred in foreign currency
from the export turnover to the extent of
Rs.74,25,62,786/-, on the ground that the said amount
related to the petitioner's personnel rendering technical
services outside India.
8. The petitioner thereafter preferred an appeal
to the Commissioner of Income Tax (Appeals)-I,
Bangalore against the fresh Assessment Order dated
24.12.2010. The said appeal came to be dismissed by
its order dated 18.10.2011. It is further submitted that
the petitioner has preferred an appeal against the order
dated 18.10.2011 before the Appellate Tribunal, which is
still pending adjudication.
9. During the consideration of such of the
proceedings referred to above, the Additional
Commissioner of Income Tax Range-11, Bangalore, took
up the petitioner's assessment for the Assessment Year
2008-2009 and had disallowed the petitioner's claim for
deduction under Section 10A of the I.T. Act substantially.
It is the case made out by the petitioner that taking note
of the assessment for the Assessment Year 2008-2009,
the Assessing Officer issued a notice dated 29.03.2012
under Section 148 r/w Section 147 of the I.T. Act
proposing to reassess the petitioner's income for the
Assessment Year 2005-2006.
10. Insofar as the reassessment under Section
148 of the I.T. Act, the reasons recorded prior to
issuance of notice was responded by filing of detailed
objections by the petitioner invoking the provisions
under Section 147 of the I.T. Act which came to be
rejected by an order dated 13.03.2013.
11. The petitioner has sought for a declaration
that the proceedings initiated by the respondent No.1-
Assistant Commissioner of Income Tax under Section
147 read with Section 148 of the I.T. Act as being barred
by limitation and without jurisdiction. The petitioner has
also challenged the notice dated 13.09.2012 (Annexure-
'D') under Section 148 read with Section 147 of the I.T.
Act for the Assessment Year 2006-2007. Further, the
petitioner has also sought for quashing of the order
F.No.DCIT-C-11-4/BGL/13-14 dated 22.08.2013 at
Annexure-'J' which is the order passed by respondent
No.2 rejecting the objections filed by the petitioner to the
notice under Section 148 of the I.T. Act for reopening of
assessment in respect of Assessment Year 2006-2007.
12. Petitioner's regular assessment for the
Assessment Year 2006-2007 was taken up under Section
143(3) of the I.T. Act. In the due course of assessment
with regard to certain international transaction and
furnishing of Audit Reports under Section 92E reference
was made to Transfer Pricing Officer under Section 92CA
of the I.T. Act. Thereafter, vide order dated 30.12.2009
a draft assessment order was forwarded to the assessee
and the assessee filed objections to it before the dispute
resolution panel. Subsequently, the Assessment Order
came to be passed vide order dated 11.10.2010 and in
such order the petitioner's claim for deduction under
Section 10A of the I.T. Act came to be allowed for a sum
of Rs.68,26,69,401/-.
13. Being aggrieved by the said Assessment
Order, the petitioner preferred an appeal before the
Income Tax Appellate Tribunal, Bangalore, which is
pending adjudication.
14. In the meanwhile, the Additional
Commissioner of Income Tax, Range-11, Bangalore, took
up the petitioner's assessment for the Assessment Year
2008-2009 and had disallowed the petitioner's claim for
deduction under Section 10A of the I.T. Act. It is the
case of the petitioner that taking note of the Assessment
Year 2008-2009, the Assessing Officer issued a notice
dated 13.09.2012 under Section 148 r/w Section 147 of
the I.T. Act proposing to reassess the petitioner's income
for the Assessment Year 2006-2007.
15. Insofar as the reassessment under Section
148 of the I.T. Act, the reasons recorded prior to
issuance of notice was responded by filing of detailed
objections by the petitioner invoking provisions under
Section 147 of the I.T. Act which came to be rejected by
an order dated 22.08.2013.
16. The petitioner has sought for a declaration
that the proceedings initiated by the respondent No.1-
Assistant Commissioner of Income Tax under Section
147 read with Section 148 of the I.T. Act for the
Assessment Year 2007-2008 as being barred by
limitation and without jurisdiction. The petitioner has
also challenged the notice dated 08.10.2012
(Annexure-'D') under Section 148 r/w Section 147 of the
I.T. Act for the Assessment Year 2007-2008. Further,
the petitioner has also sought for quashing of the order
bearing F.No.DCIT-C-11-4/BGL/13-14 dated 26.08.2013
(Annexure-'J') which is the order passed by respondent
No.2 rejecting the objections filed by the petitioner to the
notice issued under Section 148 of the I.T. Act for
reopening of assessment in respect of Assessment Year
2007-2008.
17. Petitioner's regular assessment for the
Assessment Year 2007-2008 was taken up under Section
143(3) of the I.T. Act. In due course of assessment with
regard to certain international transaction and furnishing
of Audit Reports under Section 92E reference was made
to Transfer Pricing Officer under section 92CA of the I.T.
Act. Thereafter, vide order dated 23.12.2010 a draft
assessment order was forwarded to the assessee and the
assessee filed objections to it before the Dispute
Resolution Panel. Subsequently, the Assessment Order
came to be passed vide order dated 30.08.2011 and in
such order the petitioner's claim for deduction under
Section 10A of the I.T. Act came to be allowed for a sum
of Rs.67,70,69,653/-.
18. Being aggrieved by the said Assessment
Order, the petitioner preferred an appeal before the
Income-tax Appellate Tribunal, Bangalore, which is
pending adjudication.
19. In the meanwhile, the Additional
Commissioner of Income Tax, Range-11, Bangalore, took
up the petitioner's assessment for the Assessment Year
2008-2009 and had disallowed the petitioner's claim for
deduction under Section 10A of the I.T. Act. It is the
case of the petitioner that taking note of the Assessment
Order for the Year 2008-2009, the Assessing Officer
issued a notice dated 08.10.2012 under Section 148 of
the I.T. Act proposing to reassess the petitioner's income
for the Assessment Year 2007-2008.
20. Insofar as the reassessment under Section
148 of the I.T. Act, the reasons recorded prior to
issuance of notice was responded by filing of detailed
objections by the petitioner invoking provisions under
Section 147 of the I.T. Act which came to be rejected by
an order dated 26.08.2013.
II. CONTENTIONS OF THE PETITIONER :-
21. The petitioner has raised common contentions
in all these writ petitions, which are as follows:-
(a) That the present matter is covered by the
judgment of this Court in Infosys Ltd. v. Deputy
Commissioner of Income Tax, Circle-11 (4),
Bangalore2.
(b) That jurisdictional conditions for exercise of
power are absent and accordingly, the authority could
not have initiated reassessment without (i) there
being reason to believe that income has escaped
assessment of the assessing officer; (ii) such
escapement as being on account of failure on part of
the assessee to disclose fully and truly all material
facts; (iii) that the belief is not on the basis of change
of opinion; (iv) a valid sanction has been obtained
W.P.No.29828/2011 c/w W.P.Nos.14424 and 53886/2013 (TIT) dated 17.06.2009
from the sanctioning Authority after application of
mind.
III. CONTENTIONS OF THE RESPONDENT/REVENUE:-
22. The Revenue has raised common contentions
in these Writ Petitions, which are as follows:-
(a) The reassessment proceedings are taken up
by the Authority on the basis of valid reasons recorded
which satisfies the conditions for invoking reassessment
proceedings and such reason is based on the tangible
material noticed in the assessment for of the year 2008-
2009. That the materials, such as, Master Service
Agreements (MSA), Works Contracts/ Scope of Work
(SCW), Invoices and other details related to claim of
rebate under Section 10A of the I.T. Act establishes that
the assessee has earned income from Deputation of
Technical Manpower (DTM) and not from export of
software. Such material was not part of the assessment
proceedings for the Assessment Years in question.
(b) The Tangible material that has come forth
during the assessment proceedings for the Assessment
Year 2008-2009 was not a part of the records during the
earlier assessment proceedings and accordingly, on the
basis of such material re-assessment is permissible.
(c) That the aspect of deputation of technical
manpower was not dealt with by the Assessing Authority
in the earlier assessment proceedings and such DTM
came to light only in the assessment year 2008-09 and
hence subject matter is different and accordingly third
proviso to Section 147 is not attracted.
(d) The re-assessment notice cannot be said to be
on the basis of change of opinion as assessment
proceedings never dealt with the issue of eligibility of
Section 10A deduction, but only dealt with type of
expenditure that has to be excluded as per Section
10A(4) of the I.T. Act and the definition of export
turnover.
(e) There is no nexus between the software
developed in India which has emerged from Software
Technology Park (STP) unit of assesee and technical
manpower deputed outside India.
(f) Petitioner has failed to give primary facts and
details relating to DTM Activity were not forthcoming at
the relevant period of time which is now evident from
MSA, SCW and Invoices submitted during assessment
proceedings for the year 2008-2009. When assessee is
substantively in business of providing of deputation of
technical manpower services, it should have disclosed
the same before the Assessing Officer and not having
done so, can be construed to be withholding of facts and
making of a wrongful claim of deduction under Section
10A of the I.T. Act.
IV. ANALYSIS:-
23. The following points arise for consideration:-
(i) Whether the petitioner assessee has failed
to "disclose fully and truly all material
facts necessary for assessment"?
(ii) Whether the re-assessment notice under
Section 147 r/w Section 148 of the I.T.
Act is merely a product of change in
opinion and accordingly is impermissible
in law?
(iii) Whether the re-assessment notice under
Section 147 r/w Section 148 amounts to
borrowed satisfaction as it places reliance
on findings recorded in the assessment
proceedings recorded in the Assessment
Year 2008-2009?
(iv) Whether the bar under third Proviso to
Section 147 of the I.T. Act is a legal
impediment insofar as the present re-
assessment notice is concerned?
24. The analysis of the points for consideration
raised hereinabove is as follows:-
(i) Whether the petitioner assessee has
failed to "disclose fully and truly all
material facts necessary for
assessment?"
25. In W.P.No.15061/2013, for the purpose of
initiating proceedings under Section 147 of the I.T. Act,
as the Assessment Year in question is 2005-2006 and
notice at Annexure-'G' seeking to initiate proceedings
was issued on 29.03.2012, in terms of the proviso to
Section 147 of I.T. Act, any action taken after the expiry
of four years from the end of relevant assessment year
would require that the assessee has failed to disclose
fully and truly all material facts necessary for
assessment.
26. The relevant extract of Section 147 of I.T. Act
prior to its substitution reads as follows:-
"147. If the Assessing Officer has reason to
believe that any income chargeable to tax has escaped
assessment for any assessment year, he may, subject
to the provisions of sections 148 to 153, assess or
reassess such income and also any other income
chargeable to tax which has escaped assessment and
which comes to his notice subsequently in the course
of the proceedings under this section, or recompute
the loss or the depreciation allowance or any other
allowance, as the case may be, for the assessment
year concerned (hereafter in this section and
in sections 148 to 153 referred to as the relevant
assessment year) :
Provided that 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
under section 139 or in response to a notice issued
under sub-section (1) of section 142 or section 148 or
to disclose fully and truly all material facts necessary
for his assessment, for that assessment year:
xxx"
Accordingly, the jurisdiction to re-open the
assessment is only if there is statement of income filed
by the petitioner failing to fully and truly disclose all
material facts necessary for assessment.
27. The law laid down by the Constitution Bench
of the Apex Court in Calcutta Discount Company Ltd.
v. Income Tax Officer3 on the above aspect regarding
disclosure requires to be noticed. The validity of notice
under Section 34 of Indian Income Tax I.T. Act, 1922
(corresponding to Section 147 of the Income Tax Act,
1961), whereby re-assessment proceedings was sought
to be initiated was called in question by the assessee on
the ground that the said notice was issued without the
existence of necessary condition precedent which confers
jurisdiction under Section 34 of Indian Income Tax I.T.
Act, 1922. The relevant observations are as follows:-
(1961) 41 ITR 191 (SC)
"8. Before we proceed to consider the materials
on record to see whether the appellant has
succeeded in showing that the Income Tax Officer
could have no reason, on the materials before him,
to believe that there had been any omission to
disclose material facts, as mentioned in the section,
it is necessary to examine the precise scope of
disclosure which the section demands. The words
used are "omission or failure to disclose fully and
truly all material facts necessary for his assessment
for that year". It postulates a duty on every
assessee to disclose fully and truly all material facts
necessary for his assessment. What facts are
material, and necessary for assessment will differ
from case to case. In every assessment
proceeding, the assessing authority will, for the
purpose of computing or determining the proper
tax due from an assessee, require to know all the
facts which help him in coming to the correct
conclusion. From the primary facts in his
possession, whether on disclosure by the assessee,
or discovered by him on the basis of the facts
disclosed, or otherwise--the assessing authority
has to draw inferences as regards certain other
facts; and ultimately, from the primary facts and
the further facts inferred from them, the authority
has to draw the proper legal inferences, and
ascertain on a correct interpretation of the taxing
enactment, the proper tax leviable. Thus, when a
question arises whether certain income received by
an assessee is capital receipt, or revenue receipt,
the assessing authority has to find out what
primary facts have been proved, what other facts
can be inferred from them, and taking all these
together, to decide what the legal inference should
be.
9. There can be no doubt that the duty of
disclosing all the primary facts relevant to the
decision of the question before the assessing
authority lies on the assessee. To meet a possible
contention that when some account books or other
evidence has been produced, there is no duty on
the assessee to disclose further facts, which on due
diligence, the Income Tax Officer might have
discovered, the legislature has put in the
Explanation, which has been set out above. In view
of the Explanation, it will not be open to the
assessee to say, for example -- "I have produced
the account books and the documents: You, the
assessing officer examine them, and find out the
facts necessary for your purpose : My duty is done
with disclosing these account-books and the
documents". His omission to bring to the assessing
authority's attention these particular items in the
account books, or the particular portions of the
documents, which are relevant, amount to
"omission to disclose fully and truly all material
facts necessary for his assessment". Nor will he be
able to contend successfully that by disclosing
certain evidence, he should be deemed to have
disclosed other evidence, which might have been
discovered by the assessing authority if he had
pursued investigation on the basis of what has
been disclosed. The Explanation to the section,
gives a quietus to all such contentions; and the
position remains that so far as primary facts are
concerned, it is the assessee's duty to disclose all
of them--including particular entries in account
books, particular portions of documents and
documents, and other evidence, which could have
been discovered by the assessing authority, from
the documents and other evidence disclosed.
10. Does the duty however extend beyond the
full and truthful disclosure of all primary facts? In
our opinion, the answer to this question must be in
the negative. Once all the primary facts are before
the assessing authority, he requires no further
assistance by way of disclosure. It is for him to
decide what inferences of facts can be reasonably
drawn and what legal inferences have ultimately to
be drawn. It is not for somebody else -- far less the
assessee -- to tell the assessing authority what
inferences whether of facts or -- law should be
drawn. Indeed, when it is remembered that people
often differ as regards what inferences should be
drawn from given facts, it will be meaningless to
demand that the assessee must disclose what
inferences -- whether of facts or law he would draw
from the primary facts.
11. If from primary facts more inferences than
one could be drawn, it would not be possible to say
that the assessee should have drawn any particular
inference and communicated it to the assessing
authority. How could an assessee be charged with
failure to communicate an inference, which he
might or might not have drawn?
12. It may be pointed out that the Explanation
to the sub-section has nothing to do with
"inferences" and deals only with the question
whether primary material facts not disclosed could
still be said to be constructively disclosed on the
ground that with due diligence the Income Tax
Officer could have discovered them from the facts
actually disclosed. The Explanation has not the
effect of enlarging the section, by casting a duty on
the assessee to disclose "inferences" to draw the
proper inferences being the duty imposed on the
Income Tax Officer.
13. We have therefore come to the conclusion
that while the duty of the assessee is to disclose
fully and truly all primary relevant facts, it does not
extend beyond this."
28. From the above, it can be stated as follows:-
a) Assessee is to disclose the primary facts in
his possession and the Assessing Authority
on the basis of such recovery or facts
discovered on the basis of facts disclosed or
otherwise, could draw inferences regarding
such other facts.
b) The duty to disclose does not extend beyond
full and truthful disclosure of all primary
facts.
c) It is not the duty of the assessee to tell the
Assessing Authority what inferences whether
of facts or law should be drawn.
d) There is no duty cast on the assessee to
disclose inferences which is a duty imposed
on the Income Tax Officer.
e) The duty to disclose primary facts extends
to making a disclosure which is full and true
and excludes falsity.
29. It is to be noted that as the profits derived
from export of computer software is eligible for deduction
under Section 10A of the I.T. Act which has been claimed
by the petitioner, at the same time profits derived from
business of rendering technical services outside India are
eligible for deduction under section 80HHE of the
I.T. Act.
30. Further, in terms of Explanation-2 to Section
10A(iv), the term export turnover excludes "... expenses,
if any incurred in foreign exchange in providing the
technical services outside India". Section 80HHE provides
for deductions in respect of profits from export of
computer software where the business entity provides
technical services outside India in connection with
developments or production of computer software.
Hence, the aspect of deduction under Section 10A or
under Section 80HHE of the I.T. Act as the case may be,
has been a subject matter of litigation between the
petitioner and the Revenue. Whether the petitioner is
eligible for deduction under Section 10A under the head
of 'Profits' derived from export of computer software or
under the head of 'rendering technical services outside
India' and having a nexus with export outside India of
computer software is an unresolved issue between the
petitioner and the Revenue. It is the case of Revenue
that unless a nexus is shown, the assessee cannot claim
deduction and that the tangible material that was made
available during the assessment proceedings for the
Assessment Year 2008-2009 including MSAs, Work
Orders, SCWs and Invoices has led to the initiation of
proceedings under Section 147 of the I.T. Act. The case
made out by the Revenue is that there is non-disclosure
as contemplated under Section 147 of the I.T. Act of the
tangible material that was placed before the assessing
authority with respect to the proceedings in Assessment
Year 2008-2009 and on such ground of non-disclosure
fully and truly, that the re-assessment proceedings have
been initiated. It is in such context that a finding is to
be recorded as to whether the assessee has failed to
"disclose fully and truly all material facts necessary for
assessment".
31. In the present case, the assessee has filed his
declaration in Form-56F in terms of Rule 16D of the
Income Tax Rules, 1962 whereby, assessee who seeks to
claim deduction under Section 10A of the I.T. Act has to
make a declaration in Form-56F in the form of report of
an accountant along with the return of income4. The
omission of Rule 16D was only later and was in existence
on the relevant date when the assessee has filed the
return of Income. In terms of the declaration, the
accountant has certified that the petitioner was engaged
in export of computer software and the relevant details
relating to deduction under Section 10A of the I.T. Act
has been detailed in Annexure-'A'. The further
declaration in Annexure-'1' annexed to Annexure-'A'
which provides details relating to claim by the exporter
for deduction under Section 10A of the I.T. Act contains
a declaration as follows:-
Rule 16D has been omitted by IT(21st Amendment) Rules, 2021 w.e.f. 29.07.2021
Name of the Software Software Software Software Software
undertaking Technology Park Technology Technology Technology Technology
Unit-I Park(India Park(India Park Unit-IV Park Technical
Development Engineering Support
Centre)Unit-II Centre)Unit-III Contact Centre
Unit-V
Location and Digital GlobalSoft Digital GlobalSoft Digital GlobalSoft Digital Digital
address of Limited 45/14 Limited 45/14, Limited 45/14, GlobalSoft Globalsoft
undertaking Tumkur Road Tumkur Road Tumkur Road Limited 3rd Limited Plot No.
Yeshwanthpur, Yeshwanthpur, Yeshwanthpur, floor, Khanija 39/40,
Bangalore-560 Bangalore-560 Bangalore-560 Bavan, 49, Electronics City
022 022. 022. Race Course Hosur Road,
Road, Bangalore-560
Digital Globalsoft Digital Globalsoft Bangalore-560 100
Limited 93A, Limited 93A, 001.
Industrial Industrial Suburb, Digital
Suburb, Yeshwanthpur II Digital Globalsoft
Yeshwanthpur II Stage Bangalore- GlobalSoft Limited "Surya
Stage, Bangalore- 560 022. Limited Plot Park",
560 022. No. 39/40, Electronics City
Electronics City Hosur Road
Hosur Bangalore-560
Bangalore-560
Nature of Development of Development of Development of Development IT Enabled
Business of Computer Computer Computer software of Computer Services
the software and software and and software software and (Technical
undertaking software services software services services software Support)
services
Date of Initial October 21, 1992 April 22, 1996 December 18, March 10, 2000 March 22, 2002
Registration 1997
in
FTZ/EPZ/SEZ
Date of September 13, September 1, September 1, March 10, 2000 June 30, 2002
commenceme 1993 1996 1998
nt of
Manufacture
or production
Number of Note 1 Nine Seven Six Third
consecutive
years of
which
deduction is
claimed
Amount of 13,484,517 163,088,699 231,579,813 1,350,964,255 32,231,736
sale proceeds, Reference Reference Reference Reference Reference
if any that are Number of Number of Number of Number of Number of
credited to permission permission permission permission permission
separate EC.BY.OPL363/25 EC.BY.OPL363/25 EC.BY.OPL363/25 EC.BY.OPL363/ EC.BY.OPL363/2
maintained (1256)-92/93 (1256)-92/93 (1256)-92/93 (1256)-92/93 (1256)-92/93
by the EC.BY.OPL.53/25 EC.BY.OPL.53/25 EC.BY.OPL.53/254 EC.BY.OPL.53/2 EC.BY.OPL.53/2
any bank (1793)-93/94 (1793)-93/94 (1793)-93/94 (1793)-93/94 (1793)-93/94
outside India
and the
reference
number of
Reserve Bank
of India
according
permission
for the same
32. The obligation of disclosure extends to
disclosing fully and truly material facts necessary for
assessment. Pursuant to the order passed by CIT,
Bangalore-1 under Section 263 of the I.T. Act dated
22.12.2009 the assessment proceedings were directed to
be re-done by recording a finding as to eligibility of
deduction under Section 10A/80HHE of the I.T. Act. In
the fresh assessment proceedings initiated culminating in
passing of the Assessment Order by the order dated
24.12.2010 as regards the expenditure relating to
providing technical services outside India, the material
was placed before the Assessing Officer on such aspect
as is revealed from the observations at paras-9 and 10 of
the order, which are extracted hereinbelow:
"9. When the above issues are raised before
the AR of the assessee, AR of the assessee made
a detailed submission. The gist of the submission
made by the assessee are that the activities
regarding which the expenditure incurred in
foreign exchange do not amount to providing of
technical services outside India regarding
exclusion of communication expenses from both
export turn over and total turn over, the same
was claimed to be done on the basis of parity
between export turn over and total turn over and
also on the basis of definition of total turn over
elsewhere in the provisions of the IT Act.
10. In light of the above submissions, on
verification of the details collected in respect of
expenditure incurred in foreign exchange, it is
clear that the company's employees visit the
clients' location and provide software
development services to the clients which are
group companies. Therefore all these services
rendered by the company are of the nature of
technical services and therefore expenditure
incurred in providing these services amounting to
Rs.263,01,80,361/- are required to be reduced
from the export turn over as per the definition of
export turn over contained in the provisions of
Section 10A of the I.T. Act."
33. Accordingly, it is clear that there has been
declaration including of expenditure relating to providing
technical services. Once such primary facts have been
declared and the assessee had made the declaration and
claimed deduction under Section 10A of the I.T. Act,
there was no further obligation on the assessee. If the
Assessing Officer was of the view that details furnished
would fall within Section 80HHE and not under Section
10A of the I.T. Act and accordingly, assessee was not
entitled to claim such expenditure under Section 10A of
the I.T. Act, the non-drawing of such legal inference by
the assessing officer at the relevant point of time cannot
result in holding that there is no true and full disclosure
of primary facts.
(ii) Whether the re-assessment notice
under Section 147 r/w Section 148
of the I.T. Act is merely a product of
change in opinion and accordingly is
impermissible in law?
34. In W.P.No.15061/2013, the notice at
Annexure-'G' under Section 148 of I.T. Act came to be
issued on 29.03.2012 seeking to reassess the income
which has escaped assessment in terms of Section 147
of the I.T. Act with respect to the Assessment Year 2005-
2006, the assessee was called upon to deliver return
within 30 days. Subsequently, the reasons for initiating
proceedings under Section 147 of the I.T. Act for
re-opening the assessment was communicated, which
reads as follows:
"2. The said return had been taken up for
scrutiny and an order u/s 143(3) dated 30.12.2008
had been passed arriving at a total income of
Rs.72,52,77,770/-. The various issues of additions
and disallowances made in the assessment order
are as below:
1. Recomputation of deduction u/s 10A
a. Reduction of communication charges is restricted
to export turn over only.
b. Loss of one 10A unit was set off against the
profits of other 10A units
2. Capitalization of Software Expenditure
On account of additions and disallowances as
above, the deduction of claim under Section 10A
had been reduced to Rs.114,87,47,042/-. Further
order u/s 143 (3) rws 263 was passed on
24.12.2010 reducing the expenditure incurred in
foreign currency for providing technical services
from export turn over only and the deduction u/s
10A was revised to Rs.74,25,62,786/-
3. During the course of scrutiny proceedings
conducted for A.Y.2008-09 various information
including a large number of Master Service
Agreements, Work Contracts/Scope of works,
Invoices and other details related to the deduction
claimed u/s 10A of the Income-tax Act were called
for. On account of detailed fact finding during the
course of this scrutiny proceedings for A.Y.2008-
09, the following additions/disallowances to the
returned income for A.Y. 2008-09, were made
a. It is noticed that the assessee
company is rendering a large body of work
onshore abroad related to software
developmental activities. However, it was
detected that none of the said software
development activities onshore abroad had
any link whatsoever with the STP
Undertakings in India. It had been noticed
that the assessee had claimed all revenue
from Software developmental activities
under STPs based in India only. No part of
the income had ever been admitted as
generated out of the company's activities
abroad. During the course of investigation
conducted, it had been detected on facts
as per various contracts/SOW, work orders
and invoices that a large body of work
related to software development activity
conducted onshore abroad had no link
whatsoever with the STP units in India.
The said revenue receipt from onshore
activity was treated as not related to the
undertaking eligible for deduction u/s 10A
of the I.T.Act. Such onshore receipts were
treated as companywide software receipts
not related to the STP Undertakings in
India. This had been computed and the
deduction claimed u/s 10A of the I.T.Act
had been drastically reduced.
b. During the course of said fact
finding it had also been detected that the
assessee company is in the business of
deputing technical manpower (DTM) of
providing short duration technical
manpower abroad. Such business activity
commonly known as Body Shopping was
eligible for deduction u/s 80HHE of the I.T.
Act and was not included as an eligible
activity u/s 10A of the I.T. Act. It had
been noticed from the contracts and
invoices that the assessee company had
substantial revenue from such DTM
activity and it claimed the revenue receipt
from the same as software development
activity. It had been detected that
assessee had made similar claims for
earlier Assessment Years also.
6. None of these facts of DTM activity
conducted, onshore revenues earned without any
link to the STP Undertakings in India have been
disclosed by the assessee in the returns of income
and the Annual Reports submitted. It is also seen
that failure on the part of assessee to disclose fully
and truly all materials with regard to deduction u/s
10A has resulted in allowing excess deduction u/s
10A for AY 2005-06."
35. It is the contention of Sri Percy Pardiwalla,
learned Senior Counsel appearing on behalf of
Ms.Tanmayee Rajkumar for the petitioner/assessee, that
the reasons for re-opening would indicate the stand of
the Revenue that the deputation of technical man-power
relating to software development activity conducted
abroad had no link with the STP units in India. Further,
that such activity was known as body shopping
and eligible for deduction under Section 80HHE of the
I.T. Act and was not an activity that was eligible for
deduction as regards expenses under Section 10A of the
I.T. Act.
36. It is submitted that this very aspect has been
a subject matter of consideration by the Assessing
Officer while passing a fresh Assessment Order on
24.12.2010 consequent to the directions made in the
order under Section 263 of the I.T. Act dated 22.12.2009
vide F.No.17/263/CIT-1/2009-10 (Annexure-'C'). It is
submitted that in the Assessment Order passed, while
computing deduction under Section 10A there was
exclusion of expenditure relating to the visits of the
Company's employees as well as expenses incurred
relating to software development services to the clients
amounting to Rs.263,01,80,361/-. Accordingly, it is
contended that the very aspect of profits from rendering
technical services in context of export of computer
software having been examined and a decision based on
legal appreciation having been arrived at, cannot be
reconsidered subsequently in reassessment proceedings,
as it is impermissible to reopen assessment on the basis
of "mere change of opinion".
37. The Apex Court in Commissioner of Income
Tax, Delhi v. Kelvinator of India Ltd5 [Kelvinator]
has reiterated the settled position that mere change of
opinion cannot be a ground for re-opening concluded
assessments. The observations made at paras-5, 6, 7
and 8 are extracted as herein below:
"5. On going through the changes, quoted
above, made to Section 147 of the Act, we find
that, prior to the Direct Tax Laws (Amendment)
Act, 1987, reopening could be done under the
above two conditions and fulfillment of the said
conditions alone conferred jurisdiction on the
assessing officer to make a back assessment, but
in Section 147 of the Act (with effect from 1-4-
1989), they are given a go-by and only one
(2010) 2 SCC 703
condition has remained viz. that where the
assessing officer has reason to believe that
income has escaped assessment, confers
jurisdiction to reopen the assessment. Therefore,
post-1-4-1989, power to reopen is much wider.
However, one needs to give a schematic
interpretation to the words "reason to believe"
failing which, we are afraid, Section 147 would
give arbitrary powers to the assessing officer to
reopen assessments on the basis of "mere change
of opinion", which cannot be per se reason to
reopen.
6. We must also keep in mind the conceptual
difference between power to review and power to
reassess. The assessing officer has no power to
review; he has the power to reassess. But
reassessment has to be based on fulfillment of
certain precondition and if the concept of "change
of opinion" is removed, as contended on behalf of
the Department, then, in the garb of reopening
the assessment, review would take place.
7. One must treat the concept of "change of
opinion" as an in-built test to check abuse of
power by the assessing officer. Hence, after 1-4-
1989, the assessing officer has power to reopen,
provided there is "tangible material" to come to
the conclusion that there is escapement of income
from assessment. Reasons must have a live link
with the formation of the belief. Our view gets
support from the changes made to Section 147 of
the Act, as quoted hereinabove. Under the Direct
Tax Laws (Amendment) Act, 1987, Parliament not
only deleted the words "reason to believe" but
also inserted the word "opinion" in Section 147 of
the Act. However, on receipt of representations
from the companies against omission of the words
"reason to believe", Parliament reintroduced the
said expression and deleted the word "opinion" on
the ground that it would vest arbitrary powers in
the assessing officer.
8. We quote herein below the relevant portion
of Circular No. 549 dated 31-10-1989, which
reads as follows:
"7.2. Amendment made by the Amending Act,
1989, to reintroduce the expression 'reason to
believe' in Section 147.--A number of
representations were received against the
omission of the words 'reason to believe' from
Section 147 and their substitution by the 'opinion'
of the Assessing Officer. It was pointed out that
the meaning of the expression, 'reason to believe'
had been explained in a number of court rulings
in the past and was well settled and its omission
from Section 147 would give arbitrary powers to
the Assessing Officer to reopen past assessments
on mere change of opinion. To allay these fears,
the Amending Act, 1989, has again amended
Section 147 to reintroduce the expression 'has
reason to believe' in the place of the words 'for
reasons to be recorded by him in writing, is of the
opinion'. Other provisions of the new Section 147,
however, remain the same."
38. It must be noticed that, in the present case,
as against the Assessment Order passed for the
Assessment Year 2005-06, under Section 143(3) of I.T.
Act 1961, the Department took up proceedings under
Section 263 of the I.T. Act observing that the order was
erroneous and prejudicial to the interest of the Revenue.
The observation at paras-4 and 16 of the order dated
22.12.2009 which touches on the aspect of allowable
claims under Sections 10A and 80HHE of the I.T. Act,
which are as follows:
"4. It was also seen from the records that
the assessee company had incurred substantial
expenses in foreign currency for rendering
technical services outside India which indicates
that apart from the export of computer
software, the assessee was also engaged in the
activity of providing technical services outside
India. The profits from such activity, though
eligible for deduction u/s 80HHE, was not
eligible for deduction u/s 10A in respect of the
entire profits without examining whether the
activity of rendering technical services outside
India in connection with the development or
production of computer constitutes a business
distinct from the business of export out of India
of computer software.
16. As mentioned in the show-cause notice,
the profits derived from the export of computer
software is eligible for deduction u/s 10A of the
I.T. Act, 1961, whereas, u/s 80HHE, the profits
derived from the export of computer software as
well as the business of rendering technical
services outside India are eligible for deduction.
Section 10A itself recognizes that there can be
certain technical services rendered outside India
in connection with the business of export of
computer software and accordingly, provides by
way of clause (iv) of Explanation 2 that the
expenses incurred in foreign currency for
rendering technical services outside India are
required to be reduced from the export turn
over, while computing the deduction u/s 10A.
The issue involved in the assessee's case which
is one of the subject matters of the proposed
action u/s 263 is whether the activity of
rendering technical services outside India, was a
business carried on by the assessee company
distinct from the business of export of computer
software and if so, the receipts on account of
rendering technical services outside India are
eligible for deduction u/s 80HHE and not Section
10A. The information as available in the records
does not indicate that the Assessing Officer had
examined the nature of receipts in detail having
regard to the nature and extent of technical
services rendered outside India during the
relevant previous year ended 31.03.2005
irrespective of the nomenclature used for
describing such services. In view of the failure
of the Assessing Officer to examine this aspect
of the matter, the assessment order is held to
be erroneous and pre-judicial to the interest of
the revenue. With reference to the submissions
made by the assessee based on the
assessments made for the earlier assessment
year, it is necessary to mention that each year's
assessment is a separate proceeding and
deduction allowable u/s 10A/80HHE depends on
the facts of the case for the relevant assessment
year."
39. Finally, the order dated 22.12.2009 concludes
with a direction as follows:-
"17....to allow the deduction/deductions
allowable u/s 10A/ 80HHE in accordance with
law after making the necessary verification in
the light of my observation above after giving
the assessee a reasonable opportunity of
being heard".
40. Consequent to such direction, the Assessing
Officer has taken up the proceedings afresh and has
passed an assessment order on 24.12.2010 while
considering the aspect of deduction under section 10A of
the I.T. Act. The observations made at para-7 of the
order would indicate application of mind to be an aspect
of excluding, "7. ...b) expenses, if any, incurred in foreign
exchange in providing the technical services outside
India".
41. Further, the observations at para-10 in nature
of finding reads as follows:
"10. In light of the above submissions, on
verification of the details collected in respect of
expenditure incurred in foreign exchange, it is clear
that the company's employees visit the clients'
location and provides software development
services to the clients which are group companies.
Therefore, all these services rendered by the
company are of the nature of technical services and
therefore expenditure incurred in providing these
services amounting to Rs.263,01,80,361/- are
required to be reduced from the export turn over as
per the deduction to export turn over contained in
the provisions of Section 10A of the I.T.Act."
42. The conclusion at para-14 is extracted
hereinbelow:-
"14. In view of the above discussion,
exclusion of the abovementioned expenses namely
expenses incurred in foreign exchange in providing
technical services outside India to the extent of
Rs.263,01,80,361/-, has been restricted to export
turn over only and accordingly deduction u/s 10 A
of the IT Act has been computed."
43. It is clear that the Assessing Officer excluding
the expenditure incurred by the assessee in connection
with the provision of technical services outside India and
specifically expenditure involved relating to Company's
employees visit to client's location to provide software
development services to the clients have been excluded
[see para 10]. If that were to be so, revisiting the
decision arrived at once again to further reduce the
eligible deduction under Section 10A of the I.T. Act
would amount to a review on the ground of change of
opinion which is impermissible.
44. Though in Kelvinator (supra), the
observation is that where there is tangible material to
come to the conclusion that there is escapement of
income from assessment, in the present case, the
tangible material as asserted by the Revenue is itself not
complete.
45. A perusal of Section 148 of I.T. Act, the notice
along with the reasons for reopening make it clear that
the tangible material relied upon are the MSA's, Works
contracts/SCW's, Invoices and other details relating to
the deduction claimed under Section 10A of the I.T. Act.
All of which is stated to have come to the notice of the
Department relating to the Assessment Year 2008-2009.
However, even on a perusal of para-2.10 of the
Assessment Order relating to the Assessment Year 2008-
2009, "... the assessee as has been asked on
innumerable occasions to submit MSAs and SOWs that it
had with its clients the assessee has only been able to
provide some of the sample MSAs and SOWs...". Similar
observation is made at para-2.12, which reads as
follows, "... the assessee has not been able to submit all
the SOWs and MSAs entered for software contract
services...". The finding by the Assessing Authority is by
placing the burden on the assessee regarding correlation
between the MSA, SOW/ work order vis-a-vis work
carried out by STP/SCZ unit.
46. In light of the above, the tangible material
sought to be relied upon itself not being complete, it
cannot be held that the MSAs and SCWs would
demonstrate that the declaration made by the assessee
leads to a conclusion that there has been escapement of
income. It is also a settled position that reassessment
proceedings cannot be in the nature of review and
accordingly, the material as has come to light in the
assessment proceedings for the Assessment Year 2008-
2009 cannot be a sufficient ground to resort to
reassessment proceedings.
(iii) Whether the re-assessment notice
under Section 147 r/w Section 148
amounts to borrowed satisfaction as
it places reliance on findings
recorded in the assessment
proceedings recorded in the
Assessment Year 2008-2009?
47. The jurisdictional requirement under Section
147 of the I.T. Act for re-assessment requires "the
assessing officer to entertain reasons to believe that
income chargeable to tax has escaped assessment". It is
clear that the reason to believe has to be entertained by
the Assessing Officer by forming an opinion himself.
48. In W.P.No.15061/2013, pursuant to the notice
under Section 148 of I.T. Act, upon request, the reasons
for reopening the assessment were communicated vide
communication dated 04.04.2012 (Annexure-'H') and the
reasons assigned are as follows:-
"3. During the course of scrutiny proceedings
conducted for A.Y.2008-09 various information
including a large number of Master Service
Agreements, Work Contracts/Scope of works,
Invoices and other details related to the deduction
claimed u/s 10A of the Income-tax Act were called
for. On account of detailed fact finding during
the course of this scrutiny proceedings for
A.Y.2008-09, the following additions/disallowances
to the returned income for A.Y. 2008-09, were
made
a. It is noticed that the assessee
company is rendering a large body of work
onshore abroad related to software
developmental activities. However, it was
detected that none of the said software
development activities onshore abroad had
any link whatsoever with the STP
Undertakings in India. It had been noticed
that the assessee had claimed all revenue
from Software developmental activities
under STPs based in India only. No part of
the income had ever been admitted as
generated out of the company's activities
abroad. During the course of investigation
conducted, it had been detected on facts
as per various contracts/SOW, work orders
and invoices that a large body of work
related to software development activity
conducted onshore abroad had no link
whatsoever with the STP units in India.
The said revenue receipt from onshore
activity was treated as not related to the
undertaking eligible for deduction u/s 10A
of the I.T.Act. Such onshore receipts were
treated as companywide software receipts
not related to the STP Undertakings in
India. This had been computed and the
deduction claimed u/s 10A of the I.T.Act
had been drastically reduced.
b. During the course of said fact
finding it had also been detected that the
assessee company is in the business of
deputing technical manpower (DTM) of
providing short duration technical
manpower abroad. Such business activity
commonly known as Body Shopping was
eligible for deduction u/s 80HHE of the
I.T.Act and was not included as an eligible
activity u/s 10A of the I.T.Act. It had
been noticed from the contracts and
invoices that the assessee company had
substantial revenue from such DTM
activity and it claimed the revenue receipt
from the same as software development
activity. It had been detected that
assessee had made similar claims for
earlier Assessment Years also.
4. During the course of assessment for A.Y.
2008-09, it had been clearly detected that similar
issues of additions/disallowances were there for
previous Assessment Years also. In fact the
assessee company is in the same business for the
last few years and the business agreements and
business practices of A.Y. 2008-09 had actually
continued from the last several years. This had
been noticed with respect to the MSAs, Work
orders, SOWs and Invoices called for and seen
during the course of assessment proceeding for
A.Y. 2008-09.
5. As per A.Y. 2008-09, 12.5% of the total
onsite revenues by the assessee have been held to
be out of deputation of technical manpower
receipts. Similarly 12.5% of the total onsite
receipts of the assessee have been held to be on
account of onshore revenues not related to the STP
Undertakings in India. As per this preliminary
estimation and considering similar percentages of
DTM activity and onshore revenue activities for the
year, more than Rs.33.70 Crores of software
services revenue claimed by the assessee for the
year is not eligible for deduction u/s 10A of the I.T.
Act."
6. None of these facts of DTM activity
conducted, onshore revenues earned without any
link to the STP Undertakings in India have been
disclosed by the assessee in the returns of income
and the Annual Reports submitted. It is also seen
that failure on the part of assessee to disclose fully
and truly all materials with regard to deduction u/s
10A has resulted in allowing excess deduction u/s
10A for AY 2005-06."
49. Clearly, reasons for reopening rests on the
satisfaction of the Assessing Officer who has passed an
Assessment Order for the Assessment Year 2008-09
which would amount to substitution of the assessment
orders of reasons to believe by borrowed satisfaction of
the Assessing Officer who has passed an order for the
year 2008-09 which is impermissible in law.
(iv) Whether the bar under third Proviso
to Section 147 of the I.T. Act is a
legal impediment insofar as the
present re-assessment notice is
concerned?
50. The third proviso to Section 147 of I.T. Act as
it existed prior to amendment of Finance Act 2021 reads
as follows:
"Provided also that the Assessing Officer may
assess or reassess such income, other than the
income involving matters which are the subject
matters of any appeal, reference or revision, which
is chargeable to tax and has escaped assessment."
51. The details of the issuance of Section 148
notice as well as subsisting appeals as on the relevant
dates is as follows:-
W.P. No. Date of Pendency of Date of Remarks
& Year of issuance Appeal/Revision/ institution
Assessment of Reference of
Section column(3)
148 proceedings
Notice
Appeal No. IT(TP)A Appeal
15061/2013 No.162(Bang)2012 pending as
A.Y.2005-06 29.03.2012 (A.Y.2005-06) 30.01.2012 on date of
Appeal filed against 148 notice.
the order of
CIT-(Appeals)-I
dt. 18.10.2011.
The CIT(Appeals)-I
had rejected the
appeal challenging
the order passed
giving effect to Order
under Section 263 by
the Assessing Officer.
43236/2013 Appeal No.IT(TP)A Appeal
A.Y.2006-07 13.09.2012 No.1455(Bang)(2010) 14.12.2010 pending as
(A.Y.2006-07) on date of
Appeal filed against 148 notice.
the Assessment Order
dated 11.10.2010.
43237/2013 Appeal No.IT(TPA) Appeal
A.Y.2007-08 08.10.2012 No.1031/Bang/2011 04.11.2011 pending as
(A.Y.2007-08) on date of
Appeal filed against 148 notice.
the Assessment Order
dated 30.08.2011.
52. In the above context and looking into the bar
under the third proviso to Section 147, the object being
to prohibit proceedings under Section 148, when
appeal/revision/reference is pending, in the present
case, taking note of the details in the Table above, more
particularly, noticing pendency of appeals in Column
No.(4) as on the date of Section 148 notice, clearly,
notice under Section 148 was hit by the bar under third
proviso to Section 147 of I.T. Act.
Analysis in W.P.No.43236/2013 and 43237/2013:-
53. In respect of re-assessment notice for the
Assessment Year 2006-2007 in W.P.No.43236/2013
and for the Assessment Year 2007-2008 in
W.P.No.43237/2013 in light of the detailed discussion
made hereinabove, though it relates to the Assessment
Year 2005-2006, the points raised for consideration
supra at para-20 are also applicable as regards the
Assessment Year 2006-2007 and 2007-2008 and are
answered as hereinbelow:-
In W.P.43236/2013:-
54. Insofar as Assessment Order relating to the
Assessment Year 2006-2007 has dealt with the
computation of deduction under Section 10A of the I.T.
Act and the relevant paragraphs which deal with the
said aspect are as follows:
"12. Even though assessee has
incurred expenditure to the extent of
Rs.294,66,48,857/- which is of the nature
of expenses incurred in providing technical
services outside India the same has not
been excluded from the export turn over as
per the above provisions of the I.T. Act. In
respect of expenditure incurred to the
extent of Rs.17,28,91,032/- towards
telecommunication charges attributable to
the delivery of software outside India, the
same has been deducted both from export
turn over and total turn over contrary to the
provisions of Section 10A of the I.T. Act.
13. When the above issues are raised
before the AR of the assessee, AR of the
assessee made detailed submissions vide
letter dated : 10/12/09. The gist of the
submission made by the assessee are that
the activities regarding which the
expenditure incurred in foreign exchange do
not amount to providing of technical
services outside India and regarding
exclusion of communication expenses from
both export turn over and total turn over,
the same was claimed to be done on the
basis of parity between export turn over
and total turn over and also on the basis of
definition of total turn over elsewhere in the
provisions of the I.T. Act.
14. In the light of the above submissions,
on verification of the details collected in
respect of expenditure incurred in foreign
exchange, it is clear that the Company's
employees visit the clients' location and
provide software development services to
the clients which are group companies.
Therefore all these services rendered by the
Company are of the nature of technical
services and therefore expenditure incurred
in providing these services amounting to
Rs.294,66,48,857/- are required to be
reduced from the export turn over as per
the definition of export turn over contained
in the provisions of Section 10A of the I.T.
Act.
15. The AR of the assessee further argued
that the Company does not recover any
amounts from its clients towards any
expenses related to provision of technical
services outside India. The stand taken by
the Assessee is not acceptable. The
argument of the AR of the assessee that
there was no recovery by the assessee from
its customers towards provision of technical
services outside India is not acceptable for
the reason that assessee need not have to
recover from the clients separately for each
and every item of the expenditure incurred
by the assessee in any contract for services
it had entered into with the client. The
assessee while pricing a product or service
normally arise at the cost of providing the
product or service and then adds a margin
of profit. In such a case the expenses,
incurred in foreign currency in connection
with provision of technical service outside
India, not forming part of turn over does
not arise at all. Therefore the amount of
expenditure incurred by the assessee in
foreign currency in connection with
provision of technical services outside India
are deemed to have been recovered and
deemed to have been included in the
receipts received from the client. Therefore
the said expenditure is to be reduced from
the export turn over as the same has been
specifically provided by the Act.
20. In view of the above discussion,
exclusion of the above mentioned expenses
namely expenses incurred in foreign
exchange in providing technical services
outside India to the extent of
Rs.294,66,48,857/- and expenses incurred
on communication expenses attributable to
the delivery of software outside India to the
extent of Rs.17,28,91,032/-, has been
restricted to export turn over and
accordingly deduction u/s 10A of the IT Act
has been computed.
24. As discussed above, the deduction u/s
10A of the IT Act has been computed after
excluding the expenses incurred in foreign
exchange in respect of providing technical
services outside India and expenses on
telecommunications attributable to the
delivery of software outside India and the
computation has been done for all the
eligible units under Section 10A
disregarding whether the unit is profit
making or loss making."
55. A perusal of the above would make it clear
that the Assessing Officer has specifically bestowed
attention on the extent of Section 10A deduction with
specific reference to expenses incurred in foreign
exchange in respect of providing technical services
outside India.
56. The notice under Section 148 of the I.T. Act
dated 13.9.2012 which seeks to reassess income for the
Assessment Year 2006-2007 leads subsequently to
enumerating reasons for re-opening assessment. The
relevant reasons detailed in "reasons for reopening
assessment" are reproduced below:-
"3. ...
a. It is notified that the assessee
company is rendering a large body of work
on shore related to software developmental
activities. However, it was detected that
none of the said software development
activities onshore abroad had any link
whatsoever with the STP undertakings in
India. It had been noticed that the
assessee had claimed all revenue from
software development activities under STPs
based in India Only. No part of the income
had ever been admitted as generated out of
the Company's activities abroad. During
the course of investigation conducted, it had
been detected on facts as per various
contracts/SOW, work orders and invoices
that a large body of work related to
software development activity conducted
onshore abroad had no link whatsoever
activity was treated as no related to the
undertaking eligible for deduction u/s. 10A
of the I.T. Act. Such onshore receipts were
treated as Company wide software receipts
not related to the STP undertakings in India.
This had been concluded and the deduction
claimed u/s.10A of the I.T. Act had been
drastically reduced.
b. During the course of said fact finding
it had also been detected that the assessee
company is in the business of deputing
technical man power (DTM) of providing
short duration technical man power abroad.
Such business activity commonly known as
Body Shopping was eligible for deduction
u/s. 80HHE of the I.T. Act and was not
included as an eligible activity u/s. 10A of
the I.T. Act. It had been noticed from the
contracts and invoices that the assessee
Company had substantial revenue from
such DTM activity and it claimed the
revenue receipt from the same as software
development activity. It had been detected
that assessee had made similar claims for
earlier Assessment Years also.
4. During the course of assessment for A.Y.
2008-09, it had been clearly detected that similar
issues of additions/disallowances were there for
previous Assessment Years also. In fact, the
assessee Company is in the business for the last
few years and the business agreements and
business practices for A.Y. 2008-09 had actually
continued for the last several years. This had been
noticed with respect to MSAs, Work orders, SOWs
and Invoices called for and seen during the course
of assessment proceedings for A.Y. 2008-09.
5. As per A.Y. 2008-09, 12.5% of the total
onsite revenues by the assessee has been held to
be out of deputation of technical man power
receipts. Similarly, 12.5% of the total onsite
receipts of the assessee have been held to be on
account of onshore revenues not related to the STP
undertakings in India. As this preliminary
estimation and considering similar percentages of
DTM activity and onshore revenue activities for the
year, more than Rs.26.06 crores of software
services revenue claimed by the assessee for the
year is not eligible for deduction u/s. 10A of I.T.
Act.
6. None of these facts of DTM activity
conducted onshore revenues earned without any
link to the STP undertakings in India have been
disclosed by the assessee in the returns of income
and the Annual Reports submitted. It is also seen
that failure on the part of assessee to disclose fully
and truly all material facts with regard to deduction
u/s.10A has resulted in allowing excess deduction
u/s. 10A for A.Y. 2006-07."
57. The question as to weather the Deputation of
Technical Manpower [DTM] activity leading to generation
of revenue and having a nexus with the STP undertaking
is a legal requirement to claim deduction under Section
10A of the I.T. Act, whereas, in the absence of such
nexus, income from DTM could be claimed as a deduction
only under Section 80HHE of the I.T. Act. This precise
aspect has been adverted to in the Assessment Order for
the Assessment Year 2006-2007 as noticed above. The
nexus between the technical services rendered and the
STP which is necessary for an allowable deduction under
Section 10A of the I.T. Act is a legal requirement and
existence of such nexus is a conclusion to be arrived at
by the Assessing Officer. Once the primary facts
regarding providing of technical services outside India is
made out, there would end the duty of the assessee and
the question of nexus is a matter that the Assessing
Officer ought to have clarified by further investigation.
58. Further, the reliance on documents that has
come out as regards the proceedings for the Assessment
Year 2008-2009 by way of MSAs, Work Contracts, SCWs
and Invoices cannot be sufficient by itself to initiate
proceedings for deduction under Section 10A of the I.T.
Act in light of absence of nexus. If that were to be so, as
the reliance on such documents for the purpose of
reducing Section 10A of I.T. Act, the deduction for
Assessment Year 2008-2009, itself has not attained
finality and is subject to appeal as averred by the
petitioner in the pleadings which remains
uncontroverted. If that were to be so, the material relied
upon in assessment proceedings for the Assessment Year
2008-2009 not having been finally adjudicated so as to
indicate requirement to reduce Section 10A deduction,
the same cannot be made use of for reassessment
proceedings. The requirement that there must be true
and full disclosure cannot be stated to have been
breached by taking recourse to the material produced
during the Assessment Year 2008-2009 as such
conclusion for the Assessment Year 2008-2009 leading to
reduction in Section 10A deduction itself is a subject
matter of further adjudication.
In W.P. 43237/2013:-
59. In the Assessment Order, for the Assessment
Year 2006-2007, the deduction under Section 10A of the
I.T. Act to the extent of Rs.96,02,15,533/- was sought
for as regards 4 units in the STPI. The scope of deduction
under Section 10A is specifically dealt with under the
caption 'computation of deduction' under Section 10A of
the I.T. Act, out of the total expenditure in foreign
currency of Rs.342,32,22,291/-, an amount of
Rs.336,14,67,945/- was the expenses incurred in
providing technical services outside India. Insofar as the
deduction claimed under Section 10A of the I.T. Act and
queries were raised, the observations of the Assessing
Officer is as follows:
"10. When the above issues were raised
before the AR of the assessee, AR of the
assessee made detailed submissions. The gist
of the submission made by the assessee are that
the activities regarding which the expenditure
incurred in foreign exchange do no amount to
providing of technical services outside India and
regarding exclusion of communication expenses
from both export turn over and total turn over,
the same was claimed to be done on the basis of
parity between export turn over and total turn
over and also on the basis of definition of total
turn over else where in the provisions of the I.T.
Act.
11. In light of the above submissions, on
verification of the details collected in respect of
expenditure incurred in foreign exchange, it is
clear that the Company's employees visit the
clients' location and provide software
development services to the clients which are
group companies. Therefore, all these services
rendered by the company are of the nature of
technical services and therefore expenditure
incurred in providing these services amounting
to Rs.336,14,67,945/- are required to be
reduced from the export turn over as per the
definition of export turn over contained in the
provisions of Section 10A of the I.T. Act.
17. In view of the above discussion, exclusion
of the abovementioned expenses, namely
expenses incurred in foreign exchange in
providing technical services outside India to the
extent of Rs.336,14,67,945/- and expenses
incurred on communication expenses
attributable to the delivery of software outside
India to the extent of Rs.9,77,74,451/-, has
been restricted to export turn over only and
accordingly deduction u/s 10A of the IT Act has
been computed.
19. As discussed above, the deduction u/s 10A
of the IT Act has been computed after excluding
the expenses incurred in foreign exchange in
respect of providing technical services outside
India and expenses on telecommunications
attributable to the delivery of software outside
India and the competition has been done for all
the eligible units under Section 10A disregarding
whether the unit is profit making or loss
making."
60. It is clear that the Assessing Officer has dealt
with expenditure incurred in providing technical services
outside India and despite the assertion by the Company
that the expenditure incurred on activities in foreign
exchange do not amount to providing technical services
outside India, the Assessing Officer has concluded that
the said expenditure incurred in foreign exchange for
visit of the Company's employees to the location of the
clients' and providing software development services
would not fall within the permissible deduction under
Section 10A of the I.T. Act.
61. Subsequently, after notice was issued under
Section 148 of the I.T. Act for reassessment and upon
request, reasons for reopening assessment was
communicated, it is made out in the order that during
the course of scrutiny proceedings conducted for
Assessment Year 2008-2009, documents in the nature of
MSAs, Work contracts/SCWs, Invoices have come forth.
The basis of materials that has come forth for the
Assessment Year 2008-09 leading to disallowing of
expenditure is reflected in paras-3(a) and 3(b) and the
same is extracted hereinbelow:-
"3. ...
a. It is notified that the assessee
company is rendering a large body of work
on shore related to software developmental
activities. However, it was detected that
none of the said software development
activities onshore abroad had any link
whatsoever with the STP undertakings in
India. It had been noticed that the
assessee had claimed all revenue from
software development activities under STPs
based in India Only. No part of the income
had ever been admitted as generated out of
the Company's activities abroad. During
the course of investigation conducted, it had
been detected on facts as per various
contracts/SOW, work orders and invoices
that a large body of work related to
software development activity conducted
onshore abroad had no link whatsoever
activity was treated as no related to the
undertaking eligible for deduction u/s. 10A
of the I.T. Act. Such onshore receipts were
treated as Company wide software receipts
not related to the STP undertakings in India.
This had been concluded and the deduction
claimed u/s.10A of the I.T. Act had been
drastically reduced.
b. During the course of said fact finding
it had also been detected that the assessee
company is in the business of deputing
technical man power (DTM) of providing
short duration technical man power abroad.
Such business activity commonly known as
Body Shopping was eligible for deduction
u/s. 80HHE of the I.T. Act and was not
included as an eligible activity u/s. 10A of
the I.T. Act. It had been noticed from the
contracts and invoices that the assessee
Company had substantial revenue from
such DTM activity and it claimed the
revenue receipt from the same as software
development activity. It had been detected
that assessee had made similar claims for
earlier Assessment Years also.
62. The reasons for reopening the assessment are
identical in all respects to reasons for reopening made
out as regards the Assessment Year 2006-2007 and the
discussion made supra at paras-57 and 58 relating to the
said Assessment Year 2006-07, is adopted to arrive at
the conclusion that the assessing officer has not made
out grounds for the for the purpose of reopening the
assessment.
IV Implication of Circular No.1/20136:-
63. It must be noted that Circular No.1/2013 has
sought to clarify issues relating to export of computer
software. The clarifications issued at para-2(ii)
specifically deals with the requirement of separate
Master Service Agreement. The observations at para-
2(ii) is extracted as hereinbelow:
"2( ii) WHETHER IT IS NECESSARY TO
HAVE SEPARATE MASTER SERVICE AGREEMENT
(MSA) FOR EACH WORK CONTRACT AND TO
WHAT EXTENT IT IS RELEVANT.
As per the practice prevalent in the
software development industry, generally two
F.No.178/84/2012 - ITA.I - Government of India, Ministry of Finance, Department of
Revenue, CBDT dated 17.01.2013.
types of agreement are entered into between
the Indian software developer and foreign client.
Master Services Agreement (MSA) is an initial
general agreement between a foreign client and
a Indian software developer setting out the
broad and general terms and conditions of
business under the umbrella of which specific
and individual Statement of Works (SOW) are
formed. These SOWs, in fact, enumerate the
specific scope and nature of the particular task
or project that has to be rendered by a
particular unit under the overall ambit of the
MSA. Clarification has been sought whether
more than one SOW can be executed under the
ambit of particular MSA and whether SOW
should be given precedence over MSA.
The matter has been examined. It is clarified
that the tax benefits under Sections 10A, 10AA
and 10B would not be denied merely on the
ground that a separate and specific MSA does
not exist for each SOW. The SOW would
normally prevail over the MSA in determining
the eligibility for tax benefits unless the
Assessing Officer is able to establish that there
has been splitting up or reconstruction of an
existing business or non-fulfillment of any other
prescribed condition. "
64. The Circular as extracted hereinabove makes
it clear that the benefit under Section 10A is not
dependant on separate MSA and the Statement of Works
would prevail over the MSA. If that were to be so, the
discovery of tangible material in the form of MSAs does
not by itself have the effect of permitting revisiting of the
closed assessment proceedings. Further, the Circular also
deals with the question at para-2(i)(b) as regards
receipts from deputation of technical man power for such
onsite "software development at the client's place". The
clarification in this regard at para 2(i)(b) which is of
relevance is extracted hereinbelow:-
"(b) It has also been brought to notice that it is
a common practice in the software industry to
depute Technical Manpower abroad (at the
client's place) for software development
activities (like upgradation, testing,
maintenance, modification, trouble-shooting
etc.), which often require frequent interaction
with the clients located outside India. Due to the
peculiar nature of software development work, it
has been suggested that such deputation of
Technical Manpower abroad should not be
considered detrimental to the benefits of the
exemption under sections 10A, 10AA and 10B
merely because such activities are rendered
outside the eligible units/undertakings.
The matter has been examined. Explanation 3 to
sections 10A and 10B and Explanation 2 to
section 10AA clearly declare that profits and
gains derived from 'services for development of
software' outside India would also be deemed as
profits derived from export. It is therefore
clarified that profits earned as a result of
deployment of Technical Manpower at the
client's place abroad specifically for software
development work pursuant to a contract
between the client and the eligible unit should
not be denied benefits under sections 10A, 10AA
and 10B provided such deputation of manpower
is for the development of such software and all
the prescribed conditions are fulfilled."
65. It clarifies that the expenditure incurred for
services to develop software outside India could be
allowed under section 10A of the I.T. Act if deputation is
for development of software.
66. Para 2(i)(a) deals with the clarification
relating to onsite development of computer software
which qualifies as export activity for tax benefit under
section 10A. The clarification in that regard at para-
2(i)(a) is extracted below:
(a) CBDT had earlier issued a Circular (Circular
No. 694 dated 23.11.1994) which provided
that a unit should not be denied tax-
holiday under sections 10A or 10B on the
ground that the computer software was
prepared 'on-site', as long as it was a
product of the unit, i.e., it is produced by
the unit. However, certain doubts appear
to have arisen following the insertion of
Explanation 3 to sections 10A and 10B
(vide Finance Act, 2001) and Explanation 2
to section 10AA (vide Special Economic
Zones Act, 2005) providing that "the
profits and gains derived from on site
development of computer software
(including services for development of
software) outside India shall be deemed to
be the profits and gains derived from the
export of computer software outside
India", and a clarification has been sought
on the impact of the Explanation on the
tax-benefits as compared to the situation
that existed prior to the amendments.
The matter has been examined. In view of
the position of law as it stands now, it is
clarified that the software developed
abroad at a client's place would be eligible
for benefits under the respective
provisions, because these would amount to
'deemed export' and tax benefits would not
be denied merely on this ground. However,
since the benefits under these provisions
can be availed of only by the units or
undertakings set up under specified
schemes in India, it is necessary that there
must exist a direct and intimate nexus or
connection of development of software
done abroad with the eligible units set up
in India and such development of software
should be pursuant to a contract between
the client and the eligible unit. To this
extent, Circular No. 694 dated 23.11.1994
stands further clarified.
67. It is clear that the clarification stipulates that
the benefits under Section 10A deductions can be availed
of, if there exists a direct and intimate nexus or
connection between the development of software abroad
with the eligible units setup in India. Though the
clarification is issued on 17.01.2013, whereas the said
circular is only clarificatory and does not confer any new
benefit and hence can be made use of to interpret the
scope of deduction under Section 10A of the I.T. Act as
regards development of software at the client's place
abroad by deputation of technical man power. The
circular clarifies as follows:-
a) There has to be a nexus between development
of software done abroad and the eligible units
set up in India.
b) Deputation of technical man power abroad
cannot be considered detrimental to benefits of
exemption under Section 10A of the I.T. Act
merely on the ground that such activities are
rendered outside the eligible units
c) Tax benefits under Section 10A of the I.T. Act
cannot be denied merely on the ground that
specific MSA does not exist. Even in the presence
of MSA, it is the Statement of works that would
prevail.
d) Accordingly, the circular further clarifies the
position in relation to services of software
development activities in the clients' place
abroad and widens the scope of allowability of
deduction under Section 10A of the I.T. Act itself
without claiming deduction under Section 80HHE
of the I.T. Act.
e) When the present facts are looked into, it is clear
that the deductions sought for could fall within
the scope of Section 10A of the I.T. Act, which
however is a determination to be made on
merits while this court is only considering as to
whether the Assessing Officer has applied his
mind to the issue of deduction under Section 10A
of the I.T. Act, whether the assessee has made
true and full disclosure of relevant primary facts.
In order to come to a conclusion regarding the
above two aspects, the circular would throw
some light and it is in such context that the
circular could be referred to.
68. Accordingly, the conclusion arrived at by the
Assessing Officer for the Assessment Years 2005-2006,
2006-2007 and 2007-2008, when examined from the
point of view of the Circular would strengthen the case of
upholding deduction under Section 10A of the I.T. Act
and would indicate that the resort to a review by
recourse to Section 148 of the I.T. Act in the guise of
reassessment would be a futile exercise.
69. Accordingly, the Writ Petitions are disposed
off in terms of the following:-
(i) In W.P.No.15061/2013, the re-assessment
notice issued under Section 147 r/w Section
148 of the I.T. Act at Annexure-'G' dated
29.03.2012 for the Assessment Year 2005-
2006, is set aside and consequently, the
order bearing F.No.DCIT-C-11(4)/12-13 at
Annexure-'P' dated 13.03.2013 passed by
respondent No.1 rejecting the petitioner's
objection as regards jurisdiction to issue
Section 148 notice, is set aside.
(ii) In W.P.No.43236/2013, the re-assessment
notice issued under Section 147 r/w Section
148 of the I.T. Act at Annexure-'D' dated
13.09.2012 for the Assessment Year 2006-
2007, is set aside and consequently, the
order bearing F.No.DCIT-C-11(4)/BGL/13-14
at Annexure-'J' dated 22.08.2013 passed by
respondent No.2 rejecting the petitioner's
objection as regards jurisdiction to issue
Section 148 notice, is set aside.
(iii) In W.P.No.43237/2013, the re-assessment
notice issued under Section 147 r/w Section
148 of the I.T. Act at Annexure-'D' dated
08.10.2012 for the Assessment Year 2007-
2008, is set aside and consequently, the
order bearing F.No.DCIT-C-11(4)/BGL/13-14
at Annexure-'J' dated 26.08.2013 passed by
respondent No.2 rejecting the petitioner's
objection as regards jurisdiction to issue
Section 148 notice, is set aside.
Sd/-
JUDGE
NP/VGR
