HC quashes reassessment initiated after 6 years to disallow deduction of programme rights claimed by ‘Asianet

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HC quashes reassessment initiated after 6 years to disallow deduction of programme rights claimed by ‘Asianet

[2019] 106 taxmann.com 293 (Madras)
IT : Where assessee-company, engaged in business of production, procurement and broadcasting of movies and programmes over satellite channels, filed return accompanied by audited financials amortising certain expenditure incurred on programme costs and film rights and upon consideration of voluminous and detailed material filed by assessee, order of assessment was passed, but reassessment notice was issued to assessee after elapse of six years period on ground that programme/film rights were claimed by assessee under head – ‘Operating and Other expenses’ but same was required to be capitalized and, therefore, there was escapement of income within the meaning of section 147, since assessee had been regularly amortising expenditures incurred on programme and movies costs and a consistent method of accounting was being followed in this regard over years and all details of claims, such as break-up of amounts of specific programmes/events/movies had been provided along with returns of income and at time of original assessment and aforesaid information had been duly noted by Assessing Officer, a full and true disclosure had been made by assessee in present case and, thus, statutory condition imposed for availment of extended period of limitation had not been satisfied and as such, proceedings for re-assessment were barred by limitation
• Further it was held that even in cases where there is no discussion in regard to specific issues, if it is established by assessee that all material relevant and germane to that issue were available before Assessing Officer, easily discernible and part of record, reassessment is impermissible. Legitimate and reasonable expectation is that a detailed and speaking order is passed in cases where he differs and dissents from stand of assessee; placement of Explanation, after proviso to section 147 is also relevant as this indicates scheme of section and interplay of components thereof. Application of Explanation would be subject to, and post the application of proviso itself. Thus, in cases, where the benefit of the proviso is claimed by revenue, it would first have to satisfy the condition under the proviso and validate assumption of jurisdiction beyond four years. Only thereafter revenue can seek application of the Explanation to section 147. In order of sequence, proviso comes first and only thereafter, does the Explanation. Where the revenue has not satisfied the statutory condition imposed by proviso, door to re-assessment remains conclusively shut. There is no occasion left for revenue to look any further, either at the Explanation or otherwise, to justify proceedings for re-assessment, and assumption of jurisdiction falls, at very threshold.
Asianet Star Communications (P.) Ltd.

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