Tax Bulletin - Vol.1 Issue 2

Sword Global India Private Limited vs ACIT

The Assessee filed its return for AY 2007-08 after claiming deduction u/s 10B.The AO after verification of income filed by the Assessee completed assessment u/s 143(3) and accepted return furnished by the assesssee.The DCIT initiated reassessment u/s 147 by issuing notice u/s 148. The said notice did not state whether necessary sanction was obtained and the reason for reassessment proceedings. On assessee's request reasons for the same was furnished.The Assessee subsequently filed writ petition before Madras HC.

HC observed that assessee had failed to satisfy conditions laid down in Sec 2(22A) regarding domestic company. HC further observed that assessee being a foreign company, Dividend Distribution Tax was to be paid u/s 115A(1)(a)(i) and not u/s 115O. Due to the grant of excess relief, income chargeable to tax had escaped assessment as per Explanation 2 to Sec 147. HC further noted that "power to reopen assessment is unrestricted and is subject to the proviso which restricts the time period for reopening the assessment to four years from the end of the relevant assessment year".

HC thus held that "the said reasons are relevant and material and have a bearing on the matters in regard to which, the assessing officer has formed a reason to believe that income chargeable to tax has escaped assessment". Thus HC ruled in Revenue"s favour.

Capital Gains – An overview
Tax Bulletin - Vol.1 Issue 1

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November 2017

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