C/SCA/13860/2014 JUDGMENT IN HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 13860 of 2014 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH Sd/- and HONOURABLE MR.JUSTICE S.H.VORA Sd/- ================================================================ 1 Whether Reporters of Local Papers may be allowed to NO see judgment ? 2 To be referred to Reporter or not ? NO 3 Whether their Lordships wish to see fair copy of NO judgment ? 4 Whether this case involves substantial question of NO law as to interpretation of Constitution of India or any order made thereunder ? ================================================================ M/S E-INFOCHIPS LIMITED....Petitioner(s) Versus DEPUTY COMMISIONER OF INCOME TAX, CIRCLE-4....Respondent(s) ================================================================ Appearance: MR B S SOPARKAR, ADVOCATE for Petitioner(s) No. 1 MRS MAUNA M BHATT, ADVOCATE for Respondent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE S.H.VORA Date : 07/04/2015 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) Page 1 of 20 HC-NIC Page 1 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT 1.00. By way of this petition under Article 226 of Constitution of India, petitioner assessee has prayed for appropriate writ, order and/or direction to quash and set aside impugned notice issued under section 148 of Income Tax Act, 1961 dated 27/3/2014 for A.Y. 2007-2008. Thus, petitioner has challenged reopening proceedings of assessment for A.Y. 2008-2009 initiated in exercise of powers under section 147 of Income Tax Act. 2.00. Facts leading to present Special Civil Application in nutshell are as under :- 2.01. That petitioner is Company engaged in I.T. Enabled Services and Software Development. petitioner has filed its return of income for A.Y. 2008-2009 declaring total income at Rs.52,78,610/-. 2.02. That case was selected for scrutiny and notices under section 142(1) and under section 143(2) of Income Tax Act were issued and served upon petitioner - assessee. It appears that in notice dated 28/7/2011, specific query regarding Software License Fees as well as deduction under section 10(B), was raised. petitioner assessee furnished details required vide communication dated 24/10/2011 and 8/11/2011. 2.03. That thereafter assessing officer passed assessment order under section 143(3) of Income Tax Act on 9/12/2011, making several additions to income under various heads of income of assessee. Page 2 of 20 HC-NIC Page 2 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT 2.04. That thereafter beyond period of four years of concerned assessment year, assessing officer has issued impugned notice under section 148 of Income Tax Act on 27/3/2014 reopening assessment for A.Y. 2008-2009. 2.05. That on receiving notice, assessee requested for reasons recorded for reassessment assessment vide letter / communication dated 28/4/2014. That vide letter / communication dated 20/5/2014, assessing officer recorded reasons for reopening of assessment (Annexure-E to petition). 2.06. That it appears that on receipt of reasons recorded for reassessment, assessee raised various objections submitting that there was no omission or failure on part of assessee to disclose truly and fully all material facts and therefore, initiation of reassessment proceedings beyond four years, was not valid. assessee also raised various objections on merits also. 2.07. That vide communication / letter dated 16/9/2014, Assessing Officer disposed of objections raised by petitioner assessee against reopening of assessment. Hence, petitioner has preferred present Special Civil Application under Article 226 of Constitution of India challenging impugned reassessment proceedings for A.Y. 2008-2009. 3.00. Mr.B.S. Soparkar, learned advocate appearing on behalf of petitioner - assessee has vehemently submitted Page 3 of 20 HC-NIC Page 3 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT that ground for reopening of assessment is completely misconceived and baseless. It is submitted that in present case reassessment proceedings have been initiated after period of four years. It is submitted that therefore, escapement of income must also be occasioned by failure on part of assessee to disclose fully and truly all material facts. 3.01. Mr.B.S. Soparkar, learned advocate appearing on behalf of petitioner - assessee has further submitted that in present case, as such there is/ was no failure on part of assessee to disclose truly and fully all material facts necessary for assessment. It is submitted that all details of payment for Software License Fees were duly provided as and when sought and/or required by Assessing Officer and same was scrutinized by Assessing Officer. It is submitted that therefore, now having allowed claim, it is not open to respondent Assessing Officer to reopen assessment, merely for re-computation taking different view on same material available with him. 3.02. Mr.B.S. Soparkar, learned advocate appearing on behalf of petitioner - assessee has further submitted that only query which was raised by Assessing Officer at time of framing original assessment was whether Software License Fees was revenue in nature or not. It is submitted that at relevant time, no query was raised at all with respect to Tax Deducted at Source ( TDS for short) deducted on Software License Fees. It is submitted that thereafter when Assessing Officer passed assessment order and that as such there was no failure on part assessee to disclose fully and truly all material facts, Page 4 of 20 HC-NIC Page 4 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT initiation of reassessment proceedings on reasons recorded, is absolutely invalid, illegal and without jurisdiction and more particularly, condition precedent for initiation of reassessment proceedings beyond period of four years are not satisfied. It is submitted that even Assessing Officer accepted claim of assessee for deduction under section 10(B) of Act after raising specific query. It was submitted that therefore, as such there was no failure on part of assessee in not disclosing truly and fully all material facts for assessment. 3.03. Mr.B.S. Soparkar, learned advocate appearing on behalf of petitioner - assessee has further submitted that on perusal of reasons supplied, it appears that reopening for issue of deduction under section 10(B) is made due to decision of Delhi High Court in case of Commissioner of Income Tax Versus Regency Creations Limited, reported in [2012] 27 taxmann.com 322 (Delhi). It is submitted that reopening of assessment, on basis of decision of any Court after expiry of four years from relevant assessment year, is not justified merely because court pronounced law to be otherwise than on date of filing of return of income when assessee made claim for deduction. It is submitted that in case of Pune unit, relief of deduction was granted to petitioner Company since A.Y. 2005-06 and therefore, assessee was entitled to continuation of that relief for subsequent years. 3.04. Mr.B.S. Soparkar, learned advocate appearing on behalf of petitioner - assessee has further submitted that even in case of KASEZ unit, petitioner assessee had Page 5 of 20 HC-NIC Page 5 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT obtained relevant approval of Development Commissioner and same was submitted to Assessing Officer during assessment and hence petitioner was entitled to deduction under section 10(B) of Income Tax Act. It is submitted that therefore, initiation of reassessment proceedings on reasons recorded is absolutely illegal and invalid. 3.05. Mr.B.S. Soparkar, learned advocate appearing on behalf of petitioner - assessee has heavily relied upon decision of this Court in case of Niko Resources Ltd. Versus Assistant Director of Income Tax, reported in (2014) 51 Taxman.com 568 (Gujarat) in support of his above submissions and request to quash and set aside impugned reassessment proceedings. 3.06. Mr.B.S. Soparkar, learned advocate appearing on behalf of petitioner - assessee has also heavily relied upon decision of Division Bench of this Court in Case of Gujarat Lease Financing Limited Versus Deputy Commissioner of Income Tax, Circle-IV, Ahmedabad dated 24/6/2013 passed in Special Civil Application No. 3048 in support of his submissions that initiation of impugned reassessment proceedings are absolutely illegal and without jurisdiction. 4.00. Present petition is opposed by Mr.M.R. Bhatt, learned counsel appearing on behalf of revenue. 4.01. Affidavit-in-reply is filed on behalf of respondent justifying reopening of assessment for Page 6 of 20 HC-NIC Page 6 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT A.Y. 2008-2009, in exercise of powers under section 147 of Income Tax Act. 4.02. Mr.M.R. Bhatt, learned counsel appearing on behalf of revenue has vehemently submitted that as such present petition is filed at premature stage, as only notice under section 148 read with section 147 of Income Tax Act has been issued. It is submitted that in event, petitioner assessee is aggrieved by reassessment order, alternative efficacious remedy is available by way of appeal to CIT(A) and thereafter to learned tribunal as per provisions of Act. Therefore, it is requested not to entertain present petition. 4.03. On merits, Mr.M.R. Bhatt, learned counsel appearing on behalf of revenue has vehemently submitted that impugned reassessment proceedings are absolutely just and proper and in accordance with provisions of Act, more particularly section 147 read with section 148 of Income Tax Act. 4.04. Mr.M.R. Bhatt, learned counsel appearing on behalf of revenue has further submitted that in case of petitioner, assessment was completed under section 143(3) of Income Tax Act assessing total income at Rs.2,41,81,079 on 9/12/2011. It is submitted that it was noticed that income of Rs.22,56,752/- and Rs.4,69,56,816/- chargeable to tax has been under-assessed and therefore, aforesaid amount had escaped assessment. It is submitted that thereafter recording reasons for reopening and after taking necessary administrative approval, notice under Page 7 of 20 HC-NIC Page 7 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT section 148 of Income Tax Act has been lawfully issued. 4.05. Mr.M.R. Bhatt, learned counsel appearing on behalf of revenue has further submitted that even with respect to deduction claimed under section 10(B) to tune of Rs.4,69,56,816/- , it was found that assessee Company had not obtained approval of Board as hundred per cent export oriented for deduction under section 10(B) of Income Tax Act and despite same, claimed deduction under section 10(B) of Income Tax Act and therefore, assessee did not disclose fully and truly all material facts necessary for assessment which resulted into excess allowance and therefore, notice under section 148 of Income Tax is legally issued. 4.06. Mr.M.R. Bhatt, learned counsel appearing on behalf of revenue has further submitted that mere production of Balancesheet and P&L Account Books will not amount to disclosure within meaning of proviso to section 147 of Income Tax Act. It is submitted that opinion can only be formed on issues which are disclosed and thereafter considered. It is submitted that in present case, payment in nature of royalty was not disclosed by assessee. It is submitted that though foreign remittance was in nature of royalty, on which tax was to be deducted at source, assessee failed to do so. 4.07. Mr.M.R. Bhatt, learned counsel appearing on behalf of revenue has further submitted that in present case deduction of TDS under section 195 of Income Tax Act on Page 8 of 20 HC-NIC Page 8 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT foreign remittance on Software License Fees was not scrutinized during assessment proceedings under section 143(3) of Income Tax Act. It is submitted that Assessing Officer in assessment proceedings under section 143(3) did not gave any opinion regarding non- deduction of TDS under section 195 of Income Tax Act on foreign remittance on Software License Fees . It is submitted that assessee had incurred expenditure on Software License Fees for amount of Rs.22,56,752/- and claimed same as revenue expenditure. It is submitted that payment was made to foreign companies without withholding tax at source though payment was exclusively in nature of Royalty . 4.08. Mr.M.R. Bhatt, learned counsel appearing on behalf of revenue has further submitted that assessee company simply availed Software Services from foreign companies and these Companies granted assessee company only right to use Software License , as the Software was owned by parent Company itself. It is submitted that it is admitted fact that payment made by assessee as Software License Fees is in nature of Royalty and same was not disclosed in original return filed. It is submitted that nature of foreign remittance attracts provisions of section 95 read with section 40(A)(i) of Act and therefore, income had escaped assessment on account of assessee not disclosing full facts. It is submitted that therefore initiation of opening of assessment and initiation of reassessment proceedings are absolutely just and proper and in accordance with provisions of law, more particularly section 147 read with Page 9 of 20 HC-NIC Page 9 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT section 148 of Income Tax Act. Submitting accordingly it is requested to dismiss present Special Civil Application. 5.00. Heard learned advocates appearing on behalf of respective parties at length. 5.01. At outset, it is required to be noted that what is challenged in present Special Civil Application by petitioner - assessee is reopening of assessment for A.Y. 2008-2009 and initiation of reassessment proceedings for A.Y. 2008-2009, in exercise of powers under section 147 read with section 148 of Income Tax Act. It is required to be noted that in present case initiation of reassessment proceedings is beyond 4 years from assessment year. Therefore, unless and until it is observed and found that income has escaped assessment due to failure on part of assessee to disclose truly and fully all material facts for assessment, Assessing Officer is not authorized to make reassessment even in event of his having reasonable belief that any income chargeable to tax has escaped assessment for any assessment year. As per first proviso to section 147, assessment can be reopened under section 147 after expiry of 4 years only if (1) assessee failed to make return under section 139 or in response to notice under section 142(1) or under section 148 and he failed to disclose truly and fully all material facts necessary for assessment. Once case of assessee is not covered by first proviso to section 147, reassessment proceedings Page 10 of 20 HC-NIC Page 10 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT beyond period of four years from end of relevant assessment year would be without jurisdiction and bad in law. If all material facts are furnished by assessee and there remained no omission or failure on part of assessee to disclose truly and fully all material facts, initiation of reassessment proceedings beyond period of 4 years is not permission and shall be wholly without jurisdiction. 5.02. Now, in backdrop of above legal provisions, challenge to impugned reassessment proceedings are required to be considered. 5.03. In present case, reassessment proceedings under section 147 of Income Tax for A.Y. 2008-2009 are initiated beyond period of 4 years. reasons recorded for reopening of assessment for A.Y. 2008-2009, which are communicated to petitioner - assessee vide communication dated 20/5/2014 are as follows :- As desired by you, relevant extract of reasons recorded for initiating re-assessment proceedings under section 147 of Act is reproduced, as under for your reference; ...It has been observed that assessee has incurred expenditure of Rs.22,56,752/ on account of software license fee . Assessee s contention of being consideration of expenditure as revenue , has been accepted. It has been noted that payment was made without withholding of tax at source though payment is exclusively in nature of royalty . Assessee Page 11 of 20 HC-NIC Page 11 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT Company has simply availed software services from M/s.Megrna Design Automation Inc, USA. Magma has granted company only right to use software license purchased from Magma software was owned by Magma Design and is protected by Copyright laws of USA. 2.1. In view of above, though nature of foreign remittance clearly attracts provisions of Section 195 of Act, nor deduction of tax seems to have been made before payment credit of Rs. 22, 56, 752/ - to foreign companies, on account of software services . Hence. by not making disallowace u/s 40(A)(i) of Act, order passed is tantamount to under-assessment to extent of Rs.22,56,752/- under Act. It is further to be noted that, in assessee s own case for A.Y. 2008-09 order u/s.201(1) & 201(1A) r.w.s.195 of Act dated :2/12/2011 was passed wherein remittance to tune of Rs.23,07,240/- to one M/s. Magma Design Automation Inc., USA was considered. This resulted into demand of Rs.3,61,463/-, which is paid by assessee company and even its appeal was dismissed by C1T(A). 3. Further, to state that deduction u/s 108 of IT Act, 1961 is available to newly established hundred percent export-oriented undertakings subject to fulfillment of certain conditions mentioned in said section. As per definition given under section 10-8, hundred per cent export-oriented undertaking means undertaking which has been approved as hundred per cent export-oriented undertaking by Page 12 of 20 HC-NIC Page 12 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT Board appointed in this behalf by Central Government in exercise of powers conferred by section 14 of Industries (Development and Regulation) Act, 1951 (65 of 1951), and rules made under that Act". Thus approval of undertaking from Board appointed in this behalf by Central Government is first and foremost condition for eligibility u/s 10B of Act. 3.1. Verification of assessment records revealed that assessee had not received approval of Board for above units. For KASEZ unit, approval had been obtained from Development Commissioner, Kandla Special Economic Zone and in respect of Pune Unit, approval had been obtained from, Director, Software Technology Park of lndta, Pune Infotech Park, Hinjawadi, Pane. These approvals may suf ce for setting up unit in Special Economic Zone or in Software Technology Park, but for purpose of eligibility of deduction u/ s 10B of IT Act, competent authority for approval is Board appointed by Central Government in this behalf, In view of judgment in case of CIT V/s. Regency Creations Ltd. ET App. 59/2008, 783/2009 & 1230/2011 dtd. 4/11/08 is not allowable if 100% EOU is not recti ed by BOA. Since assessee had not fulfilled conditions for eligibility of deduction u/s 10B of Act, deduction of Rs.4,69,56,816/- was not in order. irregular deduction claimed resulted in under-assessment of Rs.4,69,56,816/- Page 13 of 20 HC-NIC Page 13 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT 4. Accordingly, I have reason to believe that income to tune of Rs.4,69,56,816/- chargeable to tax has been under- assessed in case of assessee M/s.E-Infochips Ltd. for Assessment Year 2008-09 and is required to be reassessed as there was failure on part of assessee to disclose fully and truly all material facts necessary for Assessment Year 2008-09. 5. In view of above, I have reason to believe that income to tune of Rs.4,92,13,568/- (Rs.22,56,752/- + 4,69,56,816/-) has escaped assessment..... 5.04. Thus, from aforesaid it appears that assessment for A.Y. 2008-2009 is sought to be reopened on ground that Software License Fees paid to foreign companies was in nature of Royalty and thus, Capital Expenditure and therefore, it attracts section 195 of Income Tax Act and therefore, TDS was required to be deducted. However, it is required to be noted that in original assessment, full particulars with respect to Software License Fees by assessee to foreign companies was disclosed. Not only that assessee claimed same as revenue expenditure. notice was issued under section 143(3) of Act and Assessing Officer also vide communication / notice dated 28/7/2011 called upon assessee to furnish necessary documents which include complete details of Software License Fees . assessee was also directed to furnish relevant documentary evidences to establish and prove that Software License Fees is in nature Page 14 of 20 HC-NIC Page 14 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT of revenue. assessee submitted complete details of Software License Fees and justified its claim that Software License Fees is in nature of revenue expenditure and not capital expenditure. assessee replied to said query as under:- 5. Details of proportionate Disallowance u/s.10B:- Sir, please note that amount of deduction claimed u/s 10B has been correctly worked out as per Section 10B(4). profit of each undertaking is separately worked out and accordingly as per Section 10B(4), deduction is claimed in proportion of Export turnover of undertaking vis-a-vis Total Turnover of Undertaking. deduction is claimed as per Audit Report in Form 56G. 6. Explanation for Software License Fees Debited to P & L A/c. And Capitalised : We enclose herewith explanation for Software License Fees debited to Prifit and Loss Account as expense and software charges capitalised along with copy of relevant Ledger Account Annexure- D. Only thereafter Assessing Officer while framing assessment, treated payment of Software License Fees made to Foreign Companies as revenue expenditure and allowed deductions claimed and also accepted Page 15 of 20 HC-NIC Page 15 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT claim of assessee of deduction under section 10(B) of Income Tax Act. 5.05. Now, subsequently on reopening of assessment, it is case of Assessing Officer that payment of Software License Fees is in nature of royalty and thus in nature of Capital Expenditure, as assesses has simply availed Software Services from named foreign companies and said foreign companies have granted the assessee company only right to use Software License as Software was owned by parent company itself and also on ground that assessee had wrongly claimed deduction under section 10(B) of Income Tax Act of Rs.4,69,56,816/- on ground that assessee had no recent approval of Board for units for KASEZ unit. 5.06. Considering aforesaid facts and circumstances of case it cannot be said that assessee did not disclose fully and truly all material facts necessary for assessment with respect to Software License Fees paid to foreign companies and also with respect to deduction claimed under sec.10(B) of Act, and therefore, income chargeable to tax has been escaped due to failure on part of assessee to disclose fully and truly all material facts. Under circumstances, condition precedent for invoking powers under section 147 of Income Tax Act to initiate reassessment proceedings beyond period of 4 years are not at all satisfied. Page 16 of 20 HC-NIC Page 16 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT 5.07. Identical question came to be considered by Division Bench of this Court in case of Niko Resources Ltd. (supra) and while considering scope and ambit of powers to be exercised under section 147 of Income Tax Act by Assessing Officer, while reopening assessment beyond period of 4 years, Division Bench of this Court while considering its decisions in case of Gujarat Lease Financing Limited (supra), has observed and held in paragraph Nos.16, 17 and 27 as under :- 16. Assessing Officer is authorized to make reassessment in event of his having reasonable belief that any income chargeable to tax has escaped assessment for any assessment year. As per 1st proviso to section 147 of Act, assessment can be reopened under section I47 of Act after expiry of 4 years only if (1) assessee failed to make return under section I39 of Act or in response to notice issued under section 142(1) or under section 148 of Act, he failed to disclose truly and fully all material facts necessary for assessment. Once all primary facts are before assessing authority, no further assistance is required by way of disclosure. All inferences of facts and legal inference need to be drawn by Assessing Officer. It is not for any one to guide Assessing Officer in respect of inference "factual or legal", which requires to be drawn by him alone. 17. Once case of assessee is covered by 1st proviso to section 147 of Act, Page 17 of 20 HC-NIC Page 17 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT reassessment proceedings beyond period of 4 years from end of relevant assessment year would be without any jurisdiction and bad in law, if all material facts are furnished and there remained no omission or failure on part of assessee to disclose truly and fully all material facts. This Court, after extensively discussing law on issue in case of Gujarat Lease Financing Ltd. (supra), has held thus: "l0. It can be clearly noted from reasons recorded that there is no mention at all of assessee having not disclosed fully or truly material facts which were necessary for purpose of computing income of assessee. Assuming that in notice for reopening. such wordings are not specifically mentioned and they can be supplemented either while rejecting objections or by way of affidavit of Assessing Officer, then also, revenue has failed to point out as to in what manner there has been non-disclosure on part of assessee." 27. From ratio that can be culled out from all these decisions, it is amply clear that Assessing Officer, who is authorized to issue notice under section 148 of Act for reassessment. on his having reason to believe that income chargeable to tax had escaped assessment for any assessment year, can assess or reassess such income and also any such other Page 18 of 20 HC-NIC Page 18 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT income chargeable to tax, which has escaped assessment. However, no such action is permissible after lapse of 4 years from end of relevant assessment year unless income chargeable to tax has escaped assessment on account of failure on part of assessee to disclose fully and truly all material facts necessary for purpose of such assessment. onus is on assessee to reveal primary facts and to draw inferential facts would be responsibility of Assessing Officer. Once having revealed from record that assessee disclosed full and complete facts and on scrutiny, at time of original assessment all these details are examined, no change of opinion is permissible merely because there was some error earlier on part of Assessing Officer himself or because he choose not to opine on issue or even when he changes his mind and interprets material or law otherwise than what was done by him. 5.08. Applying decision of Division Bench of this Court in case of Niko Resources Ltd. decision of this Court in case of Niko Resources Ltd. Versus Assistant Director of Income Tax, reported in (2014) 51 Taxman.com 568 (Gujarat) (supra) as well as Gujarat Lease Financing Limited (supra), to facts of case on hand and as observed hereinabove, there does not appear to be failure on part of assessee to disclose truly and fully all material facts necessary for assessment, initiation of impugned reassessment proceedings which are initiated beyond period of four years, are not permissible and Page 19 of 20 HC-NIC Page 19 of 20 Created On Fri Feb 12 16:09:48 IST 2016 C/SCA/13860/2014 JUDGMENT same cannot be sustained and on that ground alone, impugned reassessment proceedings deserve to be quashed and set aside. 6.00. In view of above and for reasons stated above, present petition succeeds. impugned notice under section 148 of Income Tax Act for A.Y. 2008-2009 is hereby quashed and set aside and impugned reassessment proceedings of reopening assessment for A.Y. 2008-2009 are hereby terminated on aforesaid ground alone. However, it is observed and made clear that this Court has not expressed any opinion on merits as to whether payment of Software License Fees to foreign companies, can be said to be revenue expenditure as claimed by assessee or in nature of capital expenditure as claimed by revenue and said question is kept open. Rule is made absolute accordingly. In facts and circumstances of case, there shall be no order as to costs. Sd/- (M.R.SHAH, J.) Sd/- (S.H.VORA, J.) Rafik. Page 20 of 20 HC-NIC Page 20 of 20 Created On Fri Feb 12 16:09:48 IST 2016 M/s E-Infochips Limited v. Deputy Commissioner of Income-tax, Circle- 4