The New Delhi bench of Income Tax Appellate Tribunal quashed the re-assessment in Dy.C.I.T Vs. M/s Yamaha Motor India Sales since there was no new tangible material brought on record by the Assessing Officer.
Two cross appeals were filed by assessee and revenue, in addition to the challenge of the disallowance assessee also challenged the re-opening of the assessment under section 147 of the Act. Pursuant to the notice Assessee re-opened the assessment under section 147 of the Act.
In instant case Assessee had claimed depreciation on goodwill amounting 27 crores where goodwill cannot be considered as any commercial right or business and depreciation cannot be allowed. Also advertisement expenditure incurred from another party which was reimbursed later was disallowed.
The counsel for Assessee contended that the only international transaction entered by them was the financial support received from the parent company towards advertisement and sales promotion. Assessee also added that analysis of international transaction is also included in the paper book submitted by him.
The ITAT bench including Judicial member Suchitra Kamble and Accountant Member N.K Billaiya heard the rival contentions and stated that during the assessment proceedings assessee replied well with the queries supported by the evidences and the action AO would confer arbitrary power upon the Assessing Officer to reopen the proceedings.
The bench opinioned that mere change in the opinion doesn’t give any jurisdiction to AO for initiate proceeding under section 147 of the Act. The bench perused the reasons for reopening and said that no new tangible material evidences with the AO to issue notice for re-opening the assessment.
Finally, the bench observed as “it can be seen that the Assessing Officer had proceeded to reopen the assessment on wrong assumption of facts in so far as claim of advertisement expenditure are concerned and wrong assumption of law in so far as claim of depreciation is concerned. In any case, there was no new tangible material evidence brought on record by the Assessing Officer. Assessment was reopened only on the basis of details available on record and wrongly interpreted by the Assessing Officer.”
Accordingly the bench quashed the re-open assessment since the Assessing Officer interpreted the matter wrongfully.
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