In a relief to the Oracle Financial Services Software, the Bombay High court held that the change of opinion of the Assessing Officer cannot be a ground to reopen the assessment for an earlier year.
The petitioner-company, Oracle Financial Services Software Limited is engaged in the business of providing comprehensive information technology solutions to banks and other financial institutions globally. The petitioner develops and markets software products and operates primarily in two business segments namely Products and Services. Under the product business, the petitioner markets its package application software and derives revenue from license fees, customization fee,s and annual maintenance charges. Under the Service business, the petitioner provides services to customers which include IT solutions and consulting and professional services according to customers’ requirements and standards.
For the said business, the petitioner has subsidiaries in different countries. The installation and implementation of the product at the location of the overseas customers require the presence and supervision of technical personnel. This personnel is temporarily seconded by the petitioner on an employment basis to the overseas subsidiaries to perform such functions. During the period of secondment, the personnel are kept on employment and payroll of the overseas subsidiaries. Their salary and related expenses are subsequently reimbursed by the petitioner to the said subsidiaries, on a cost-to-cost basis.
The division bench of Justice N.J.Jamadar and Justice K.R.Shriram held that the Assessing Officer who passed the original assessment order for the assessment year 2014-15 can be said to have been satisfied with the explanation furnished by the petitioner. Looking at the issue from a slightly different perspective, it can be said that the Assessing Officer could have called for the material and information, sought by the Assessing Officer who carried out the assessment for the year 2015-16, and yet would have formed the same opinion, different from the one formed by the Assessing Officer for the assessment year 2015-16. The issue, thus, squarely falls in the realm of “change of opinion”.
“In our view, the only reason that in the succeeding assessment years, the Assessing Officer has come to a different opinion, by itself, may not be a ground to reopen the assessment for an earlier year, wherein a view was conclusively recorded by the concerned Assessing Officer,” the court said.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
