Mumbai High Court Held Reopening Of Assessment Based On “change In Opinion” TO BECOME Invalid

The Hon‟ble Mumbai High Court (“HC”) recently pronounced its judgment in the case of Rabo India Finance Limited (“the taxpayer”), wherein the HC kept that reopening of the evaluation proceedings predicated on mere “change of opinion” is not valid. HC also noticed that whenever any materials / information is furnished by the taxpayer, it is acceptable to presume that an Assessing Officer (“AO”) has considered all such materials prior to making the assessment order.

The taxpayer, a non-banking lender, is involved in providing investments, financial, and proper advisory services. The taxpayer entered into various agreements with its Netherland based parent company to avail business support services on a cost sharing basis (“support services”). Through the Assessment Year (“AY”) 2004-05, the taxpayer entered into international transactions of availing support services pursuant to the continuing business support services contract.

The AO known the situation to the Transfer Pricing Officer (“TPO”) under section 92CA of the Income-tax Act, 1961 (“the Act”). During the assessment proceedings for AY 2004-05, the taxpayer posted various material including the inter-company agreements, character of basis, and services of the charge in respect of support services. Based on the documents and submissions furnished by the taxpayer, the TPO accepted arm‟s length price of the payment made by the taxpayer for availing support services no adjustment was created by the TPO.

The taxpayer joined into identical international transactions in AY 2007-08 as well. During the evaluation proceedings for AY 2007-08, the taxpayer was asked to substantiate arm‟s length character of payment for support services availed and to produce relevant details. Predicated on the details equipped by the taxpayer, the TPO contended that the details submitted by the taxpayer were not adequate to substantiate the receipt of services by the taxpayer and the expenditure had not been for business expediency. Notably, although known facts of the situation being the same, stand used by the TPO in AY 2007-08 was contrary to that of AY 2004-05 wherein payment for support services by the taxpayer was accepted to be at arm‟s duration.

Aggrieved by the action of the AO, the taxpayer challenged the re-opening notice as well as the reassessment order handed down by the AO and submitted write petition before HC. HC observed that the material and details relied upon by the AO during AY 2007-08 and AY 2004-05 were same and there is no talk about in the order about inadequate disclosure by the taxpayer.

Further, that the AO has not specified the type of inadequate disclosure. Further, HC also mentioned that considering facts of the situation, it is fair to presume that the AO experienced considered the materials filed before him as well as the materials called for by him before making the assessment order. HC also observed that it is affordable therefore, to presume that the AO experienced applied his brain to the contracts and matters connected therewith associated with the contract. HC therefore held that reopening of evaluation in case there is the taxpayer is obviously an incident of difference of opinion and quashed the notice and order of reassessment issued by the AO.

The decision holds importance in today’s period of transfer prices litigation in India wherein the taxpayers could face undesirable audit outcome credited to a different opinion for different years by taxes authorities. The situation cannot be re-opened merely due to improve of opinion which happened in assessment proceedings of one year resulting in the re-opening of evaluation in another season. Source: M/s Rabo India Finance Limited, Mumbai vs.

  • Delivery fees
  • About Deustche Bank or investment company
  • Depth of buyer base
  • An agreement by the bank to reduce the loan rate (by say 0.5% as above)
  • Assumed “longevity risk” (the necessity to fund your bills for the others you will ever have)
  • Whether you are paid interest daily, regular or yearly
  • 2 Classification of Nateglinide

Related to the debate above there are often situations when implied or may be used to give a much better estimation of future you than realized all by itself. A good example would be before a huge event, as an election or non-plantation payroll, when realized or is often subdued whilst implied vols are very rich.

Ideally you’d do that endogenously: build an automatic system which captured and computed the options implied or surface and tied this in with realized for information based on daily profits (you could also throw in recent intraday data). But this is a complete great deal of work and very painful. All risk managers at systematic money could now be fired Ideally or at least redeployed to more useful jobs. Risk manager focusing on a new career.

But is it practical to do all risk management solely systematically, either inside or outside a system? 1. Identify some important risks. 3. Set levels of which action should be studied, and identify an action to take. Secondly there are always a bunch of situations in which I think it is alright to override the trading system, due to circumstances that your trading system (or predetermined exogenous process) just won’t find out about.