HCLTECHNOLOGIES LIMITED v. DEPUTY COMMISSIONER OF INCOME TAX

1. This writ petition is directed against the notice under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the said Act’), which was issued on 28.03.2013 in respect of the assessment year 2006-

07. The petition is also directed against the order dated 21.11.2013, whereby the objections raised by the petitioner were disposed of by the Assessing Officer. 2015:DHC:5661-DB

2. The original assessment was completed under Section 143 (3) read with Section 144C(13) of the said Act on 28.10.2010. The point in issue is with regard to Software Licence Fee. According to the petitioner it had claimed the same as revenue expenditure, but in the assessment order, only a part of the Software Licence Fee was allowed as revenue expenditure and an amount of Rs 25.36 crores was capitalized and depreciation was allowed thereon at the rate of 60%. The petitioner was aggrieved by the fact that the said expenditure was capitalized to the extent of Rs 25.36 crores and has already filed an appeal before the Income Tax Appellate Tribunal, which is pending.

3. After four years from the end of the assessment year 2006-07, the notice under Section 148 was issued on 28.03.2013. When the petitioner sought the reasons for invocation of the provisions of Section 147 of the said Act, the same was supplied to the petitioner. The relevant portion of the reasons is as under:-

4. The petitioner filed its objections on 15.11.2013, which were rejected by the Assessing Officer on 21.11.2013. Thereafter, the petitioner filed the present writ petition.

5. We have heard the learned counsel for the parties. From the reasons extracted above, it is evident that they do not indicate any failure on the part of the petitioner to disclose material particulars which are necessary for the assessment. In fact, there is no such allegation at all. We may point out that in Haryana Acrylic Manufacturing Co. v. CIT: 308 ITR 38 (Delhi), this court had observed as under:-

6. From the above decision, it is evident that the escapement of income from assessment must necessarily be occasioned by failure on the part of the assessee to disclose material facts, fully and truly. It is clear that this is a necessary condition for overcoming the bar set up by the first proviso to Section 147. If this condition is not satisfied, the bar would operate and no action under Section 147 could be taken.

7. In the facts of the present case, we find that the petitioner had clearly claimed Software Licence Fee of Rs 31.69 crores as revenue expenditure. That had been disallowed in part and an amount of Rs 25.36 crores was capitalized and depreciation was allowed at the rate of 60%. The assessment was done under Section 143 (3) read with Section 144C (13) of the said Act. The draft assessment order had made the aforesaid capitalization, which was disputed by the petitioner and, therefore, the matter went before the Dispute Resolution Panel, which confirmed the draft assessment order and thereafter the final assessment order was passed on 28.10.2010. We have already indicated above that insofar as the part disallowance as revenue expenditure is concerned, the petitioner has filed an appeal which is pending before the Income Tax Appellate Tribunal. Insofar as we are concerned, we find that the petitioner had made a full and true disclosure of the material facts and, in any event, there is no allegation in the purported reasons that the petitioner did not make a full and true disclosure of the material facts at the time of the original assessment. That being the position, following the decision in Haryana Acrylic Manufacturing Co. (supra) and several other decisions of this Court in the same vein, we find that the invocation of the reassessment proceedings is not sustainable in law.