International Global Networks BV v. Dy. Director of IT

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers2012 TaxPub(DT) 1994 (Mum-Trib) : (2012) 050 SOT 0433 INCOME TAX ACT, 1961 --Reassessment--ValidityChange of opinion--Assessee was a company incorporated in the Netherlands. It filed its return declaring interest on income-tax refund of certain amount as chargeable to tax under article 11 of DTAA between India and Netherlands. The original assessment was passed under section 143(3) wherein income from advertisement, not offered by assessee, was brought to tax by assessing officer at the rate of 40 per cent and income from other sources representing interest income on income-tax refund was taxed at 10 per cent as per article 11 of aforesaid DTAA. Subsequently, assessing officer issued notice under section 148 after observing that since assessee had PE in India and income of current year was earned through this PE, total assessable income should have been taxed at 41 per cent, assessing officer, therefore, concluded that there was escapement of income as there was short levy of tax on interest income on income-tax refund. Assessee contended that all the relevant details concerning the falling of interest on refund of income-tax were duly placed before the assessing officer, who after due application of mind accepted the assessee's contention in assessment made under section 143(3) and therefore, now to tax the same at higher rate amounted to change of opinion on same set of facts available before assessing officer during the course of original assessment proceedings. Revenue argued that clause (c) of Explanation 2 to section 147 provides that where an assessment has been made but the income has been assessed at too low a rate, then it would be deemed to be a case of income escaping assessment. Held: Explanation 2(c) would be invoked if there was some material with the assessing officer which could give a basis for the escapement of income, apart from a mere change of opinion on the same facts which were there during the original assessment proceedings. If the assessing officer after due application of mind decided a particular issue in a particular manner in the original assessment, then he could not initiate reassessment proceedings without there being any fresh material coming to his notice after the passing of assessment order. Obviously the present case was a change of opinion by the assessing officer on the same set of facts which were there at the time of completing the original assessment. Therefore, the initiation of reassessment proceedings in this case was not valid. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 1994 (Mum-Trib) : (2012) 050 SOT 0433

INCOME TAX ACT, 1961

--Reassessment--ValidityChange of opinion--Assessee was a company incorporated in the Netherlands. It filed its return declaring interest on income-tax refund of certain amount as chargeable to tax under article 11 of DTAA between India and Netherlands. The original assessment was passed under section 143(3) wherein income from advertisement, not offered by assessee, was brought to tax by assessing officer at the rate of 40 per cent and income from other sources representing interest income on income-tax refund was taxed at 10 per cent as per article 11 of aforesaid DTAA. Subsequently, assessing officer issued notice under section 148 after observing that since assessee had PE in India and income of current year was earned through this PE, total assessable income should have been taxed at 41 per cent, assessing officer, therefore, concluded that there was escapement of income as there was short levy of tax on interest income on income-tax refund. Assessee contended that all the relevant details concerning the falling of interest on refund of income-tax were duly placed before the assessing officer, who after due application of mind accepted the assessee's contention in assessment made under section 143(3) and therefore, now to tax the same at higher rate amounted to change of opinion on same set of facts available before assessing officer during the course of original assessment proceedings. Revenue argued that clause (c) of Explanation 2 to section 147 provides that where an assessment has been made but the income has been assessed at too low a rate, then it would be deemed to be a case of income escaping assessment. Held: Explanation 2(c) would be invoked if there was some material with the assessing officer which could give a basis for the escapement of income, apart from a mere change of opinion on the same facts which were there during the original assessment proceedings. If the assessing officer after due application of mind decided a particular issue in a particular manner in the original assessment, then he could not initiate reassessment proceedings without there being any fresh material coming to his notice after the passing of assessment order. Obviously the present case was a change of opinion by the assessing officer on the same set of facts which were there at the time of completing the original assessment. Therefore, the initiation of reassessment proceedings in this case was not valid.