Reassessment on Foreign Remittances Quashed as Change of Opinion: ITAT Bangalore Rules in Favour of Eurofins Peenya Resources Pvt. Ltd.

Case Background

Case Name: Eurofins Peenya Resources Private Limited (Formerly Known As Eurofins Advinus Limited) Vs DCIT (ITAT Bangalore)
Appeal Number: ITA No. 1116/Bang/2023
Assessment Year: 2016-17
Date of Order: 28/09/2026

Overview

A fundamental question in Indian income tax law has repeatedly come before the courts: when an Assessing Officer scrutinises a particular issue during original assessment proceedings, calls for detailed information, receives a comprehensive response from the assessee, and then completes the assessment without making any disallowance — can the same issue be reopened under Section 147 merely because a different officer subsequently arrives at a different conclusion on the same material?

The ITAT Bangalore, in this significant ruling, answered that question with a clear negative. The Tribunal quashed a reassessment order that sought to disallow ₹16,92,52,509 on account of alleged non-deduction of tax at source on foreign remittances, holding that the reopening was nothing more than an impermissible change of opinion.

Profile of the Assessee

Eurofins Peenya Resources Private Limited, previously operating under the name Eurofins Advinus Limited, is a company engaged in contract research and preclinical development services for global pharmaceutical, biotechnology, and related industries. Its service portfolio encompasses process development, drug metabolism and pharmacokinetics, clinical pharmacology, and safety assessment — providing clients with an integrated platform to optimise cost efficiency across drug development cycles.

For assessment year 2016-17, the assessee filed its return of income on 30 November 2016, declaring a loss of ₹22,33,87,440. A revised return was subsequently filed on 31 March 2017, declaring a loss of ₹75,08,37,277.

The Original Scrutiny Assessment

The case was selected for scrutiny under Section 143(2) of the Income Tax Act, 1961. In the course of those proceedings, the Assessing Officer raised specific queries through a notice under Section 142(1), which included a detailed requisition for:

  • Transaction-wise particulars of remittances made to non-residents and foreign companies
  • Notes explaining the nature of the transactions and services received
  • Details of tax deducted at source on each such remittance
  • Reconciliations and copies of Forms 15CA

The assessee responded comprehensively, furnishing over 200 entries covering each foreign payment. The information submitted identified:

  • The name and country of residence of each recipient
  • Whether the recipient was a related party or associated enterprise
  • The amount of remittance in foreign currency and Indian rupees
  • Permanent Account Numbers of non-resident entities, where available
  • The nature of each remittance
  • Applicable TDS rates under both the Income Tax Act, 1961 and the relevant Double Taxation Avoidance Agreement
  • The actual amount of tax deducted at source, wherever applicable

Following examination of this material, the Assessing Officer completed the assessment on 12 December 2018 under Section 143(3) of the Income Tax Act, 1961, making only one disallowance — a sum of ₹36,06,228 on account of late payment of provident fund and ESI contributions. The foreign remittances attracted no disallowance whatsoever. The assessed loss was determined at ₹74,72,31,049 as against the returned loss of ₹75,08,37,277.

The assessee appealed against that assessment order, and by order dated 7 May 2019, the CIT(A) disposed of the appeal in the assessee's favour.

The Reopening and Reassessment

Subsequently, the International Taxation Officer furnished a report indicating that the assessee had made payments of approximately ₹16,92,52,509 to non-resident service providers for annual maintenance contracts and related maintenance services, without deduction of tax at source. Treating these payments as fees for technical services, the Assessing Officer formed the belief that income had escaped assessment under Section 147 of the Income Tax Act, 1961.

A notice under Section 148 of the Act was issued on 31 March 2021. The assessee was called upon to explain why payments made to non-residents for the following categories of expenditure should not be disallowed under Section 40(a)(i):

  • AMC and maintenance charges: ₹1,04,37,320
  • Legal and professional charges: ₹7,97,400
  • Membership and subscription charges: ₹65,18,302
  • Testing charges: ₹15,14,99,488

Total proposed disallowance: ₹16,92,52,509

The Assessee's Defence

The assessee raised several substantive objections during reassessment proceedings: