M/S.doosan Infracore Indiaprivate Limited,(Amalgamated Company Of Doosan Internationalindia Private Limited) v. The Deputy Commissioner Of Income-Tax Corporate Circle 1(1), 6[Th] Floor, Wanaparthy Block

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HON'BLE MR.JUSTICE C.SARAVANAN (THROUGH VIDEO CONFERENCING) M/s.Doosan Infracore IndiaPrivate Limited,(Amalgamated Company of Doosan InternationalIndia Private Limited),Represented by its General ManagerMr.Krishnakumar N3[rd] Floor, TNPL Building, No.67, Mount Road, Guindy, Chennai 600 032.... Petitioner Vs. 1. The Deputy Commissioner of Income-tax Corporate Circle 1(1), 6[th] Floor, Wanaparthy Block, 121, Mahatma Gandhi Road, Chennai – 600 034. 2. The Assistant Commissioner of Income-tax (OSD) Corporate Range 1, 6[th] Floor, Wanaparthy Block, 121, Mahatma Gandhi Road, Chennai – 600 034. Corporate Range 1, 6[th] Floor, Wanaparthy Block, 121, Mahatma Gandhi Road, Chennai – 600 034. 3. The Principal Commissioner of Income-tax – 1, 7[th] Floor, New Block, 121, Mahatma Gandhi Road, Chennai – 600 034.... Respondent Writ Petition filed under Article 226 of the Constitutionof India, to issue a Writ of Certiorari, to call for the recordson the file of the second respondent and quash the impugnedorder in /2009-10 dated 25.10.2016 along with noticein PAN : dated 31.03.2016 issued under Section 148 ofthe Income Tax Act. https://hcservices.ecourts.gov.in/hcservices/ For Petitioner : Mr.N.V.Balaji For Respondents: M/s.Hema Muralikrishnan Senior Standing Counsel O R D E R The petitioner is aggrieved by the impugned order dated25.10.2016 passed by the second respondent in AACCD6947L/2009-2010 disposing the objections dated 31.05.2016 filed by thepetitioner against the invocation of Section 148 of the IncomeTax Act, 1961 seeking to reopen the assessment for theAssessment Year 2009-2010 vide notice dated 31.03.2016. Theoperative portion of the impugned order overruling the objectionof the petitioner is reproduced below:- AO’s Observations There has been no discussion about the reasonsfor which the case has been reopened now in theoriginal assessment order; while examining theintangible assets, the assessing officer, hasexamined the issue of non-compete fee alone whichwas taken into consideration in the order as wellwhile the other components had been overlooked.Hence it cannot be said that an opinion has beenformed in this regard which may amount to changeof opinion. Therefore, the case laws quoted by theassessee are neither relevant nor applicable inthis when there is no discussion on the issue inthe assessment order and no details were calledfor by the Assessing Officer or filed by theassessee on the issue, no finding either positiveor negative was arrived at during the course ofthe original assessment proceedings. Hence thereis no question of change of opinion. This point ofview is ascertained by the decisions in thefollowing cases – A.L.A. Firms Vs. CIT (Mad) 102ITR 622, Ess Kay Engineering Co. (P.) Ltd. Vs.CIT(SC) 247 ITR 818, Revathy C.P. Equipments Ltd. Vs.DCIT & Ors. (Mad) 241 ITR 856, and EMA India Ltd.Vs. ACIT (All) 30 DTR 82. In the case of Asst. CIT v. Rajesh JhaveriStock Brokers (P) Ltd. [2007] 291 ITR 500/161Taxman 316 (SC), the Apex Court observed that theexpression ‘reason to believe’ in section 147 would mean ‘cause or justification to know’ and ifthe Assessing Officer has cause or justificationto know or suppose that income has escapedassessment, he can be said to have reason tobelieve that income has escaped assessment. It isadded that the expression cannot be read to meanthat the Assessing Officer should have finallyascertained the fact by legal evidence orconclusion and what is required is ‘reason tobelieve’ but not the established fact ofescapement of income and at the stage of issuanceof notice, the only question is whether there wasrelevant material on which a reasonable personcould have formed a requisite belief. would mean ‘cause or justification to know’ and ifthe Assessing Officer has cause or justificationto know or suppose that income has escapedassessment, he can be said to have reason tobelieve that income has escaped assessment. It isadded that the expression cannot be read to meanthat the Assessing Officer should have finallyascertained the fact by legal evidence orconclusion and what is required is ‘reason tobelieve’ but not the established fact ofescapement of income and at the stage of issuanceof notice, the only question is whether there wasrelevant material on which a reasonable personcould have formed a requisite belief. It is explicitly clear that where the reasongiven for effecting reassessment were not thematters considered by the assessing authoritywhile passing assessment order and no opinion wasformed in this regard, the contention that no newmaterial have been brought to light to invoke thepower and proceedings under section 147 or that itis proposed by way of ‘change of opinion’ does notcontain any pith or substance. So long as the conditions of section 147 arefulfilled, the Assessing Officer is free toinitiate proceedings under section 147 and failureto take steps under section 143(3) will not renderthe Assessing Officer powerless to initiatereassessment proceedings, even when intimationunder section 143(1) has been issued as held byHon’ble Supreme Court – Shri Krishnan Pvt. Ltd.Vs. Income Tax Officer – Civil Appeal No.1562 of1977 and Civil appeal No’s 2101-03 of 1980 B July16, 1996. Moreover the mere production of books ofaccount by assessee before Assessing Officer,there should be no presumption that all books seenby the Assessing Officer. It is duty of assesseeto show all relevant particulars in books ofaccounts, not mere production of books, argumentsthat Assessing Officer could have been discoveredis not correct as held in the case of KantamaneniVenkatnarayana by Hon’ble Supreme Court 63 ITR 638. The principles have also been well settled andreiterated in numerous decisions of the SupremeCourt. As observed in Calcutta Discount Co. Ltd. https://hcservices.ecourts.gov.in/hcservices/ v. ITO [1961] 41 ITR 191 (SC) mere production ofevidence before the ITO would not enough and thatif some material for the assessment embedded inthe evidence which the revenue could haveuncovered but did not do so, it is the duty of theassessee to bring it to the notice of theassessing authority. The assessee knows all thematerial and relevant facts, the assessingauthority might not. In respect of the materialfailure, the omission to disclose may bedeliberate or inadvertent. That was immaterial.But if there is omission to disclose materialfacts, then subject to the other conditions,jurisdiction to reopen is attracted. If there aresome primary facts from which reasonable beliefcould be formed that there was some nondisclosureor failure to disclose fully and truly allmaterial facts, the ITO has jurisdiction to reopenthe assessment. In the instant case, the officer has appliedmind and has recorded the opinion with the beliefthat there lies an income that has escaped theassessment. The mere fact that the same could havebeen pointed out by the Audit Party may not makethe Assessing Officer to entertain the duejurisdiction and power/duty vested upon him by theIT Act. It was also held by the Hon’ble SupremeCourt in various judicial forums, few of which arequoted below: 1. CIT vs. P.V.S.Beedies (P) Ltd. /237 ITR 13.2. Assistant Commissioner of Income-tax vs. RajeshJhaveri Stock Brokers (P) Ltd./291 ITR 500. In the instant case, the officer has appliedmind and has recorded the opinion with the beliefthat there lies an income that has escaped theassessment. The mere fact that the same could havebeen pointed out by the Audit Party may not makethe Assessing Officer to entertain the duejurisdiction and power/duty vested upon him by theIT Act. It was also held by the Hon’ble SupremeCourt in various judicial forums, few of which arequoted below: 1. CIT vs. P.V.S.Beedies (P) Ltd. /237 ITR 13.2. Assistant Commissioner of Income-tax vs. RajeshJhaveri Stock Brokers (P) Ltd./291 ITR 500. Even otherwise, in the case of SomDuttBuilders (P) Ltd. Vs. DCIT (ITAT, Kol) 98 ITD 78,the reopening was held valid with the followingfinding – ‘Change of opinion comes to rescue ofassessee only when Assessing officer has taken oneof permissible views at the time of originalproceedings – A wrong application of law cannot beheld as permissible view and that can always bechanged for appreciating law. The merits of the case will be analyzed in thelight of various case laws and the facts whichwill be done during the proceedings by giving dueopportunity for hearing for the assessee. The samewill be addressed in the assessment order after https://hcservices.ecourts.gov.in/hcservices/ finalization of discussions. Thus, it is very clear that the reopeninginitiated by issue of notice u/s 148 is valid inlaw and therefore, the objections raised toreopening is hereby disposed off. The proceedings u/s 147 will be resumed. 2. It is case of the petitioner that a company by name ofDoosan International India Private Limited, having itsregistered office in Bangalore, Karnataka, had entered aBusiness Transfer (Slump Sale) Agreement dated 29.11.2007 withIngersoll – Rand (India) Limited for a total sale considerationof Rs.1,031.00 Millions as a going concern. 3. The said company filed its income tax returns for theAssessment Year 2009-2010 on 30.09.2009. The scrutiny assessmentwas completed on 01.03.2013. During the interregnum, the saidDoosan International India Private Limited merged with thepetitioner herein pursuant to an order passed by this Court inC.P.No.158 of 2011 on 25.11.2011 and an order passed by theKarnataka High Court in C.P.No.201 of 2011 on 17.02.2012. 4. Earlier, returns were filed in the name of amalgamatedtransferor company of Doosan International India Private Limitedfor the Assessment Year 2009-2010 and an assessment order cameto be passed on 01.03.2013 in the original name of the mergedcompany, i.e, Doodsan International India Private Limited, whichhad by them ceased to exist with the merger with effect from01.04.2011. 5. After the assessment order dated 01.03.2013 came to bepassed for the Assessment Year 2009-2010, an intimation wasgiven both to the Income Tax officer, namely, the AssistantCommissioner of Income Tax at Chennai and Bangalore videcommunication dated 08.08.2013 about the merger of the saidDoosan International India Private Limited. 6. It is submitted that the second respondent issued noticedated 31.03.2016 under Section 148 of the Income Tax Act, 1961for reopening the assessment of the Assessment Year 2009-2010 inthe name of Doosan International India Private Limited, adefunct company, which has culminated in impugned order dated25.10.2016 in the name of the aforesaid company. It is noticedthat the notice dated 31.03.2016 was issued under Section 148 ofthe Income Tax Act, 1961. 6. It is submitted that the second respondent issued noticedated 31.03.2016 under Section 148 of the Income Tax Act, 1961for reopening the assessment of the Assessment Year 2009-2010 inthe name of Doosan International India Private Limited, adefunct company, which has culminated in impugned order dated25.10.2016 in the name of the aforesaid company. It is noticedthat the notice dated 31.03.2016 was issued under Section 148 ofthe Income Tax Act, 1961. 7. The petitioner sent a letter to the first respondentasking the reasons for reopening the assessment. The firstrespondent gave its reasons for reopening the assessmentproceedings vide communication dated 29.04.2016. In response tothe same, the petitioner also filed its objection dated01.06.2016. The first respondent thereafter passed the impugnedorder dated 25.10.2016 and rejected the objection filed by thepetitioner. Aggrieved by the same, this Writ Petition has beenfiled by the petitioner. 8. In this writ petition, the petitioner has challenged theinvocation of Section 148 of the Income Tax Act, 1961 for thepurpose of re-opening the assessment and for passing freshassessment order under the provision of Section 147 of theIncome Tax Act, 1961 which culminated in impugned order dated25.10.2016. 9. Reliance was placed on the decision of the Hon’bleSupreme Court in Principal Commissioner of Income Tax Vs. MarutiSuzuki India Ltd., 2019 SCC Online SC 928. It is submitted thatthe impugned order has been passed in the name of the M/s.DoosanInternational India Private Limited (amalgamated withpetitioner) which ceased to exist with the merger. It issubmitted that as per the decision of the Hon’ble Supreme Courtin Maruti Suzuki India Ltd. case referred to supra, the impugnedorder passed by the second respondent overruling the objectionsof the petitioner against the invocation of Section 148 of theIncome Tax Act, 1961 for passing fresh assessment order underthe provision of Section 147 of the Income Tax Act, 1961, wasliable to be quashed on merits. 10. On merits, it is the contention of the learned counselfor the petitioner that the said company, i.e. DoosanInternational India Private Limited, had purchased the Utilityequipment and attachment of business (including portablecompressors and light towers) and Bobcat business (includingskid steer loaders) from Ingersoll-Rand Limited pursuant to theBusiness Transfer (Slump Sale) Agreement dated 29.11.2007 andclaimed depreciation over both the tangible and intangibleassets under Section 32 of the Act. As far as the intangibleassets are concerned, the said Doosan International IndiaPrivate Limited had claimed depreciation under the followingheads:- i. Intellectual Propertyii.Customer / Dealer and Vendor listsiii.Trained employee baseiv.Trademarksv. Non-compete fees 11. In the scrutiny assessment, the petitioner by itsletter/representation dated 21.09.2012 had clearly stated thatin the return filed by said Doosan International India PrivateLimited, the value of intangible assets were as above and thatthe said company was claiming depreciation under Section 32 ofthe Income Tax Act, 1961. i. Intellectual Propertyii.Customer / Dealer and Vendor listsiii.Trained employee baseiv.Trademarksv. Non-compete fees 11. In the scrutiny assessment, the petitioner by itsletter/representation dated 21.09.2012 had clearly stated thatin the return filed by said Doosan International India PrivateLimited, the value of intangible assets were as above and thatthe said company was claiming depreciation under Section 32 ofthe Income Tax Act, 1961. 12. It is noticed that though the notice dated 11.07.2012was issued to the said Doosan International India PrivateLimited, the reply was filed on the letter head of thepetitioner company, namely Doosan Infracore India PrivateLimited. This was perhaps on account of the fact that the saidcompany had already been merged with the petitioner and stooddissolved without being merged in terms of the order dated17.02.2021 of the Karnataka High Court in C.P.No.201 of 2011.However, no intimation was given about the same by thepetitioner until 08.08.2013. Thus, the jurisdictional officer,within whose jurisdiction the said transfer company, namelyDoosan International India Private Limited, was registered,passed an order of assessment on 01.03.2013 in the name of thesaid company with the PAN No. of the said company. It was arguedthat the Assessing Officer disallowed only the depreciationclaimed on account of the non-compete fees which implied thedepreciation claimed under the other head was considered andallowed in the light of the fact that a proper explanation wasgiven for the same. 13. It is submitted that in the reasoning given in thereopening assessment vide communication dated 29.04.2016, theJoint Commissioner of Income Tax (OSD) has merely stated thatthe said company had acquired the business of M/s.Ingersoll Rand(India) Limited for a consideration of Rs.1,031 millions inNovember, 2007 and thus, from 2008-2009 (relevant previous year2007-2008), the said company has claimed and allowed thedepreciation on tangible as well as intangible assets. In thesaid notice, it has been stated that the said company hastreated the Customer / Vendor and Dealer List procured duringthe course of slump sale / purchase of M/s.Ingersoll Rand(India) Limited as an intangible asset and claimed depreciationat 25%. 14. In the reasons, it was stated that there was novaluation of Customer / Vendor and Dealer List conducted by anapproved valuer as this was a slump sale and that as per thebusiness transfer agreement, M/s.Ingersoll Rand (India) Limitedhas merely transferred the list of Customer / Vendor and Dealeronly and business or commercial right has not been transferred. 15. It was stated that there was no stipulation in thebusiness transfer agreement that the said company had to conduct the business or commercial transaction only with the listprovided by the M/s.Ingersoll Rand (India) Limited. The saidcompany was not having an absolute right over the list of suchCustomer / Vendor and Dealer. It has been concluded that therewas wrong claim for depreciation under the Customer / Vendor andDealer list which was not disclosed truly and fully during thecourse of assessment proceedings. 16. The learned counsel for the petitioner further submitsthat the reopening of the assessment vide notice dated31.03.2016 based on the reasons communicated vide communicationdated 29.04.2016 was on account of change of opinion ignoringthe fact that there was full and true disclosure by thepetitioner when the petitioner participated in the proceedingswhich has culminated in the assessment order dated 01.03.2013under Section 143(3) of the Income Tax Act, 1961. 16. The learned counsel for the petitioner further submitsthat the reopening of the assessment vide notice dated31.03.2016 based on the reasons communicated vide communicationdated 29.04.2016 was on account of change of opinion ignoringthe fact that there was full and true disclosure by thepetitioner when the petitioner participated in the proceedingswhich has culminated in the assessment order dated 01.03.2013under Section 143(3) of the Income Tax Act, 1961. 17. It is further submitted that no new facts have come tolight before the Authority to conclude that there wassuppression of facts or failure to make full and true disclosurewarranting invocation of proviso to Section 147 of the Act. Thelearned counsel for the petitioner places reliance on thefollowing decisions:- Change of Opinion:-i. Commissioner of Income Tax Vs. Elgi FinanceLimited, (2006) 286 ITR 674 (Madras) : (2006) 155Taxman 124 (Madras).ii.Fenner (India) Limited Vs. Deputy Commissioner ofIncome-tax, (2000) 241 ITR 672 (Madras) : (1999)107 Taxman 53 (Madras).iii.Commissioner of Income Tax Vs. Foramer France,(2003) 264 ITR 566 (SC) : (2003) 129 Taxman 72(SC).iv.Foramer Vs. Commissioner of Income-tax, (2001) 247ITR 436 (Allahabad) : (2001) 119 Taxman 61(Allahabad).v. Commissioner of Income-tax, Delhi Vs. Kelvinatorof India Ltd., (2010) 320 ITR 561 (SC) : (2010)187 Taxman 312 (SC).vi.Commissioner of Income Tax Vs. Kelvinator of IndiaLtd., (2002) 256 ITR 1 (Delhi) : (2002) 123 Taxman433 (Delhi).vii.PVP Ventures Ltd. Vs. Assistant Commissioner ofIncome-tax, Corporate Circle 5(2), Chennai, (2016)65 taxmann.com 221 (Madras).viii.Karti P.Chidambaram Vs. Assistant Commissionerof Income-tax, Chennai, (2018) 402 ITR 488(Madras) : (2017) 88 taxmann.com 27 (Madras).ix.Income Tax Officer, Ward No.16 (2) Vs. TechSpan India (P.) Ltd., (2018) 404 ITR 10 (SC) : (2018)92 taxmann.com 361 (SC).x. Asianet Star Communications (P.) Ltd. Vs.Assistant Commissioner of Income-tax, Non-Corporate Circle 20(1), (2020) 422 ITR 47 (Madras): (2019) 106 taxmann.com 293 (Madras).xi.Commissioner of Income-tax, Chennai Vs. SchwingStetter India (P.) Ltd., (2015) 378 ITR 380(Madras) : (2015) 61 taxmann.com 19 (Madras).xii.Commissioner of Income-tax – VI, New Delhi Vs.Usha International Ltd., (2012) 21 taxmann.com 454(Delhi). Non existent Company:- i. C.I.T. New Delhi Vs. M/s.Spice Enfotainment Ltd.,passed by the Hon’ble Supreme Court in CivilAppeal No.285 of 2014 and batch of cases, dated02.11.2017.ii.Spice Entertainment Ltd. Vs. Commissioner ofService Tax, 2011 SCC OnLine Del 3210 : (2012) 280ELT 43. iii.Principal Commissioner of Income-tax Vs. BMACapfin Ltd., (2018) 100 taxmann.com 330 (SC).iv.Commissioner of Income-tax-III Vs. DimensionApparels (P.) Ltd., (2015) 370 ITR 288 (Delhi) :(2014) 52 taxmann.com 356 (Delhi).v. Commissioner of Income-tax (C)-II Vs. Micra India(P.) Ltd., (2015) 57 taxmann.com 163 (Delhi).vi.Marshall Sons & Co. (India) Ltd. Vs. Income TaxOfficer, (1997) 223 ITR 809 (SC) : (1996) 89Taxman 619 (SC). vii.Rustagi Engineering Udyog (P.) Ltd. Vs. DeputyCommissioner of Income-tax, (2016) 382 ITR 443 (Delhi) : (2016) 67 taxmann.com 284 (Delhi). 18. The learned counsel further submits that the concept ofblock assessment was introduced in the year 1986. Intangibleasset was recognized as an asset which could be subject todepreciation of purpose of computation of income with effectfrom 1999 and since the assessee had claimed the depreciation onthe Customer / Vendor and Dealer list during the Assessment Year2008-2009, the depreciation claimed during the subsequent yearscannot be denied. 19. The learned counsel for the petitioner also attempted todistinguish the recent order of this Court in M/s. MandoAutomotive India Private Limited Vs. The Deputy Commissioner ofIncome-tax, in W.P.No.2779 of 2017, dated 12.02.2021. He furthersubmitted that the assessment order dated 01.03.2013 had been 18. The learned counsel further submits that the concept ofblock assessment was introduced in the year 1986. Intangibleasset was recognized as an asset which could be subject todepreciation of purpose of computation of income with effectfrom 1999 and since the assessee had claimed the depreciation onthe Customer / Vendor and Dealer list during the Assessment Year2008-2009, the depreciation claimed during the subsequent yearscannot be denied. 19. The learned counsel for the petitioner also attempted todistinguish the recent order of this Court in M/s. MandoAutomotive India Private Limited Vs. The Deputy Commissioner ofIncome-tax, in W.P.No.2779 of 2017, dated 12.02.2021. He furthersubmitted that the assessment order dated 01.03.2013 had been appealed by the petitioner though the Assessment pertains to thetransferred company. 20. Defending the impugned order passed by the secondrespondent, the learned senior standing counsel for therespondents submits that the impugned order itself is very clearand that the merits of the case will be analyzed in the light ofthe various particulars by giving an opportunity to thepetitioner for personal hearing and therefore, this WritPetition was premature. 21. The learned senior standing counsel further submits thatthe arguments of the learned counsel for the petitioner thatsince the depreciation was allowed on Customer / Vendor andDealer list during the Assessment Year 2008-2009, ipso factowill not mean that for the subsequent Assessment Years, the samecannot be rejected. It is further submitted that the petitionerhad wrongly claimed the depreciation on four items during theAssessment Year, i.e 2008-2009. The Original Authority haddenied the depreciation on non-compete fees. She further submitsthat each of the other Assessment Year is different and there isno estoppels under law against the reopening the assessment. 22. The learned senior standing counsel for the respondentsfurther submits that the transferred company which got mergedwith the petitioner has made internal allocation of the assetswithout any valuation and has wrongly claimed depreciation onthe value allocated for the Customer / Vendor and Dealer list.She further submitted that the claim for depreciation under theheads of Customer / Vendor and Dealer list goes to the very rootand it would be require a proper determination as to whetherthere is intangible asset on such Customer / Vendor and Dealerlist. She places reliance on the decision of the Hon’ble SupremeCourt in Girilal & Co. Vs. Income-tax Officer, Mumbai, (2016) 9SCC 510 : (2016) SCC OnLine SC 1035, wherein, it has held asfollows:- 3.It is clear from the above that thisinformation was supplied as there was some queryabout the value of the land. Obviously, whilegoing through this document, the assessingofficer would examine the value of the land.However, the reason for issuing notice underSection 148 of the Income Tax Act was that theappellant had not correctly disclosed the actualassets of the plot and hence, it was notentitled for deduction under Section 80-IB(10)of the Act. The Income Tax Authority itself hasmentioned in the notice under Section 148 of the Act that such information was available only inthe valuation report. Giving the information inthis manner shall be of no help to the appellantas the assessing officer was not expected to gothrough the said information available in thevaluation report for the purpose of ascertainingthe actual construction of the plot. 23. The learned senior counsel for the respondents submitsthat there is no change of opinion and therefore prays fordismissal of this writ petition. 24. I have considered the arguments advanced on behalf ofthe petitioner and the respondents Income Tax Department. Act that such information was available only inthe valuation report. Giving the information inthis manner shall be of no help to the appellantas the assessing officer was not expected to gothrough the said information available in thevaluation report for the purpose of ascertainingthe actual construction of the plot. 23. The learned senior counsel for the respondents submitsthat there is no change of opinion and therefore prays fordismissal of this writ petition. 24. I have considered the arguments advanced on behalf ofthe petitioner and the respondents Income Tax Department. 25. Before proceeding further, I shall first deal with thepreliminary submission of the learned counsel for the petitionerthat the entire re-assessment proceeding was withoutjurisdiction on the ground that the re-assessment order was madein the name of Doosan International India Private Limited, adefunct company which has since merged with the petitioner.Reliance was placed on the decision of the Hon’ble Supreme Courtin Principal Commissioner of Income Tax Vs. Maruti Suzuki IndiaLtd., 2019 SCC Online SC 928. The facts are distinguishable inthe present case. The said decision is not applicable to thefacts of the present case. In the present case, the transferorcompany Doosan International India Private Limited had filed aregular return on 30.09.2009 under Section 139 of the Income TaxAct, 1961. 26. Later, the transferor company Doosan International IndiaPrivate Limited was merged/amalgamated with the petitioner andwas ordered to be liquidated without being wound up by an orderdated 25.11.2011 of this Court and an order dated 17.02.2012 ofthe Karnataka High Court. 27. As a result of the amalgamation/merger, the said DoosanInternational India Private Limited, assessee company stoodmerged with the petitioner company from the effective date asper the sanctioned scheme of amalgamation. 28. Though the assessee company Doosan International IndiaPrivate Limited stood merged/amalgamated with the petitionercompany, no information was given about the merger to thejurisdictional Income Tax Officer or the Asst. Commissioner ofIncome Tax at Bangalore by the petitioner. 29. In the assessment proceeding, the petitioner replied tothe notice issued under Section 142(1) of the Income Tax Act, https://hcservices.ecourts.gov.in/hcservices/ 1961 in the name of Doosan International India Private Limitedthough on its letter head. The petitioner participated in theproceedings before the jurisdictional Asst. Commissioner ofIncome Tax, Bangalore and made submissions on 21.09.2012 and on07.01.2013 without any demur. 30. Thus, the assessment order dated 01.03.2013 also came tobe passed in the name of the said Doosan International IndiaPrivate Limited even the said company ceased to exist and stoodmerged/amalgamated with the petitioner. 31. If the petitioner felt that the assessment order wasmade in the wrong name of the merged transferred company whichhad ceased to exist, it should have filed a suitable applicationfor rectification of mistake before the Asst Commissioner ofIncome Tax Bangalore for effecting the name change in theassessment order dated 01.03.2013. 32. In fact, it was incumbent on the part of the petitionerto have informed the Asst. Commissioner of Income Tax atBangalore about the merger/amalgamation. In any event, it wasfor the petitioner to have taken step to correct the name in theassessment order or in the alternative file a composite returnfor the Assessment Year 2009-10 with the petitioner’s PAN Numberfor both the petitioner and Doosan International India PrivateLimited and regularized the changes in accordance with the Act. 33. Mere intimation under Section 127 of the Income Tax Act,1961 for transfer the file to the jurisdictional Income TaxOffice at Chennai was not sufficient. 32. In fact, it was incumbent on the part of the petitionerto have informed the Asst. Commissioner of Income Tax atBangalore about the merger/amalgamation. In any event, it wasfor the petitioner to have taken step to correct the name in theassessment order or in the alternative file a composite returnfor the Assessment Year 2009-10 with the petitioner’s PAN Numberfor both the petitioner and Doosan International India PrivateLimited and regularized the changes in accordance with the Act. 33. Mere intimation under Section 127 of the Income Tax Act,1961 for transfer the file to the jurisdictional Income TaxOffice at Chennai was not sufficient. 34. In the communication addressed to the DeputyCommissioner of Income Tax, Bangalore on 08.08.2013, thepetitioner merely asked for transfer of the file to therespondents but did not take any steps for rectifying themistake. 35. Even during the re-assessment proceeding, the petitioneractively participated in the said proceedings on theunderstanding that the assets and liabilities of DoosanInternational India Private Limited stood vested with thepetitioner and that the petitioner was representing its interestby defending the proceedings seeking to reopening of theassessment vide notice dated 30.03.2016 issued under Section 148of the Income Tax Act, 1961. 36. Therefore, it would be absurd to hold that the order hasbeen passed in the name of a defunct company to scuttle the re-assessment proceeding. Amalgamation cannot be used as a tool todefeat assessment and re-assessment proceedings as the https://hcservices.ecourts.gov.in/hcservices/ sanctioned scheme of amalgamation itself takes care of sucheventualities. It cannot be used to subvert assessmentproceedings. 37. Clause 4.6 of the sanctioned Scheme of Amalgamationmakes it clear that scheme was drawn up to comply with theconditions relating to “Amalgamation” as specified in Section 2(1B) of the Income Tax Act, 1961. It also states that any termsor provisions of the Scheme which are found or interpreted to beinconsistent with the provisions of the said Section at a laterdate including resulting for an amendment of law or for anyreason whatsoever after the effective date, the provisions ofthe said section of the Income Tax Act, 1961 shall prevail andthe scheme shall stand modified to the extent determinednecessary to comply with the aforesaid Section of the Income TaxAct, 1961 and such modification shall however not affect otherparts of the scheme. The definition in Section 2(1B) of theIncome Tax Act, 1961 makes it clear that all the liabilities ofthe amalgamating company or companies immediately before theamalgamation becomes the property of the amalgamated company byvirtue of the amalgamation. 38. Facts also do not indicate that the petitioner hadquestioned the jurisdiction of the respondent when the noticedated 31.03.2016 was issued in the name of transferor companyDoosan international Private Limited. Therefore, the preliminaryobjection of the petitioner regarding the jurisdiction of therespondent to reopen the assessment stands overruled. 39. Coming to the merits of the case, it is evident that themerged/transferor company, namely Doosan International PrivateLimited, had entered into a Business Transfer (Slump Sale)Agreement dated 29.11.2008 with M/s.Ingersoll - Rand IndiaPrivate Limited and purchased a Division of the said company asa going concern. 40. While filing the income tax return under Section 139 ofthe Income Tax Act, 1961, M/s.Doosan International PrivateLimited, the transferor company which had subsequently beenmerged with the petitioner had claimed depreciation on thefollowing headings:- i. Intellectual Property: Rs. 382.13 millionii.Right to Use Trademark:140.10 million iii.Customers database and relationship - 124.19 millioniv.Vendor relationship-31.23 millionv. Dealer Network-27.06 million 40. While filing the income tax return under Section 139 ofthe Income Tax Act, 1961, M/s.Doosan International PrivateLimited, the transferor company which had subsequently beenmerged with the petitioner had claimed depreciation on thefollowing headings:- i. Intellectual Property: Rs. 382.13 millionii.Right to Use Trademark:140.10 million iii.Customers database and relationship - 124.19 millioniv.Vendor relationship-31.23 millionv. Dealer Network-27.06 million vi.Trained Employee Base-43.58 Millionvii.Non-Compete Fees-27.62viii.Goodwill-156.08 41. The above allocation of the amounts towards variousitems under the category of “intangible goods” was made by thesaid company internally. There is no valuation. In theAssessment order dated 01.03.2013, the Assessing Officer hasmerely disallowed the depreciation on non-compete fees on theground that depreciation on non-compete fees cannot be claimedin the light of the few decision cited therein. 42. In the reasons given for reopening of the assessmentvide communication dated 29.04.2016, it has been mentioned thatCustomers/Vendor and Dealer List was not an intangible asset toclaim depreciation and that mere list of Customers/Vendor andDealer would not entitle the company to claim depreciation. 43. Since the notice has been issued for reopening theassessment on the last day of the limitation under proviso toSection 147 of the Income Tax Act, 1961, it is incumbent on thepart of the respondents to have reasons to believe that therewas a failure on the part of the said company to truly and fullydisclose all material required for assessment. 44. From a reading of the reply filed by the petitioner onbehalf of the said company at the time of assessment, it isevident that there was no explanation offered for claimingdepreciation on the amount claimed and allocated towards thepurported Customers/Dealer and Vendor List. 45. In the reply to notice dated 11.7.2012 issue underSection 142(1) of the Income Tax Act, 1961, the petitioner hasmerely given a breakup. It did not give any document tosubstantiate the depreciation on the Customer/Dealer and Vendorlists. Thus, it cannot be said that the petitioner had truly andfully disclosed all material that was required for assessment.Therefore, there can be no interference at this stage of re-assessment. 46. In any event, the claim for depreciation on theCustomer/Dealer and Vendor lists goes to the very root of theassessment inasmuch as not only there was no valuation but alsoit is also questionable whether depreciation can be allowedtowards Customer/Dealer and Vendor lists based on an internalallocation made by the said company. It is therefore for thepetitioner to explain before the respondent that it wasindeed entitled to claim depreciation on the Customer/Dealer and Vendor lists. 47. Therefore, I find no merits in quashing the impugnedorder in the light of the above reasonings. Therefore, thesecond respondent is directed to complete the re-assessment inaccordance with law. It is however made clear that during re-assessment proceeding, the respondent shall confine to the issuerelating to the claim of the petitioner for depreciation on theCustomer/Dealer and Vendor lists alone which is sought to bequestioned and denied in the re-assessment proceeding. 48. It is also made clear that the respondent shall passappropriate order in accordance with law uninfluenced by thereasonings given in the impugned communication and theobservations contained herein touching on the merits of the caseof the petitioner. 49. It is for the petitioner to substantiate its claim fordepreciation on the Customer/Dealer and Vendor lists with properdocuments regarding its valuation within a period of thirty daysfrom the date of receipt of a copy of this order before thesecond respondent. 48. It is also made clear that the respondent shall passappropriate order in accordance with law uninfluenced by thereasonings given in the impugned communication and theobservations contained herein touching on the merits of the caseof the petitioner. 49. It is for the petitioner to substantiate its claim fordepreciation on the Customer/Dealer and Vendor lists with properdocuments regarding its valuation within a period of thirty daysfrom the date of receipt of a copy of this order before thesecond respondent. 50. The second respondent shall pass appropriate order inaccordance with law within a period of three months from date ofreceipt of a copy of this order since the dispute pertains tothe Assessment Year 2009-10. 51. Writ petition stands disposed of with the aboveobservation. No costs. Consequently, connected MiscellaneousPetitions are closed. Sd/- Assistant Registrar(CS VIII) //True Copy// jen Sub Assistant Registrar To 1. The Deputy Commissioner of Income-tax Corporate Circle 1(1), 6[th] Floor, Wanaparthy Block, 121, Mahatma Gandhi Road, Chennai – 600 034. 121, Mahatma Gandhi Road, Chennai – 600 034. 2. The Assistant Commissioner of Income-tax (OSD) Corporate Range 1, 6[th] Floor, Wanaparthy Block, 121, Mahatma Gandhi Road, Chennai – 600 034. Corporate Range 1, 6[th] Floor, Wanaparthy Block, 121, Mahatma Gandhi Road, Chennai – 600 034. 3. The Principal Commissioner of Income-tax – 1, 7[th] Floor, New Block, 121, Mahatma Gandhi Road, Chennai – 600 034. 7[th] Floor, New Block, 121, Mahatma Gandhi Road, Chennai – 600 034. +1cc to M/s.N.V.Balaji, Advocate, S.R.No.13787+1cc to M/s.Hema Muralikrishnan, Advocate, S.R.No.12743+1cc to M/s.Hema Muralikrishnan, Advocate, S.R.No.12743 W.P.No.41473 of 2016andW.M.P.Nos.35449 of 2016& 21889 of 2020SSN(CO)CS/26/03/2021