Law:

Section:

Section 147(a) of the Income-tax Act, 1961 - Reassessment - Non-disclosure of primary facts - Assessee, a subsidiary of B Co., incorporated in the UK, and laving its principal place of business in India, claimed deduction of a sum as administrative charges incurred by B Co. of London for management and secretarial work carried on on behalf of the assessee in London - From assessment years 1951-52 onwards successor ITOs made enquiries about these administrative charges and had accepted assessee's explanation regarding reasonableness of impugned claim -Subsequent in light of opinion of auditors for assessment year 1963-64 that administrative charges were not reasonable ITO reopened assessee's assessment for earlier assessment years 1957-58 to 1959-60 under section 147(a) - Whether assessee had disclosed all primary facts and, hence, reopening of assessment under section 147(a) was not justified - Held, on facts, yes Facts The assessee at the relevant time was a subsidiary of B Co. incorporated under the appropriate laws of the UK and had its principal place of business at the relevant time In India in the State of Assam. In Its assessment under the Indian Income-tax Act, 1922, the assessee had claimed deductions every year of certain expenses amounting to £1,00,000 or over as administrative charges incurred by the company of London for management and secretarial work carried on on behalf of the assessee in London. For the assessment year 1951-52, the ITO wrote a letter to the assessee asking, inter alia, for information regarding London charges. The assessee by its letter replied to that query where It informed the ITO that as advised in connection with the 1950-51 assessment, London charges being about £1,00,000 represented approximately 40 per cent of the head office expenses of the London company, being the charges made by the B Co. for management and secretarial work carried out on behalf of the assessee-company in London, covering stores purchasing, accounting, staff, geological and other departments. The assessee further informed the taxing authorities that it had been advised by its London office that the amount represented a reasonable allocation having…

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