TMI Blog2021 (9) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... -09, 2009-10 and 2010-11 as claimed by the assessee has rightly been allowed by the different CIT(A)s and the documents which have been found during the course of search have successfully been rebutted before us and before the authorities below. Even the department have not rejected the books of accounts of the assessee or of any sister concern and the fact that the Assessing Officer have no basis to disallow the claim u/s 80IC is borne out from the fact that contradictory stand have been made by the different Assessing Officer for part disallowance of deduction u/s 80IC before the search and even after the search, different formulas have been adopted for making ad-hoc disallowance of deduction us 80IC on surmises and conjectures and which has rightly been deleted by the CIT(A) For the Assessment Year 2012-13, the deduction of 30% as eligible to the assessee under section 80IC had been allowed by the Assessing Officer, which was subject matter of the action u/s 263 by the PCIT and the matter was carried to the ITAT [ 2016 (9) TMI 1604 - ITAT AMRITSAR] which cancelled the order of the PCIT as passed us 263 and no further appeal was filed by the department - As issue have atta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into to test the veracity of the plea taken by the assessee. The order dated 28.12.2012 (Annexure A-III) passed by the Tribunal is not a speaking order giving the detailed reasons dismissing the appeal and affirming the findings of the CIT (A). The Tribunal being final factfinding authority was required to deal with all aspects of factual matrix and then record its conclusions based thereon. Mere concurrence with the view expressed by the CIT(A) is not sufficient and the Tribunal was required to record the reasons for dismissing the appeal. 2. Similarly, the issue was being the same, for the other assessment years in ITA No. 119 121 of 2013 for assessment year 2006-07, 120 of 2013 for assessment year 2007-08, 118 of 2013 for assessment year 2008-09, 117 of 2013 for assessment year 2009-10 and ITA No. 15 of 2017for assessment year 2010-11 of the Hon ble Punjab High Court have totaling the order in ITA No. 122 of 2013 have remanded the case to the ITAT Amritsar Bench, Amritsar with the following remarks for the different years: i. ITA No. 119 121 of 2013 Assessment Year 2006-07 For orders, see ITA No. 122 of 2013 [Commissioner of Income (Central), Ludhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er had travelled to the worthy CIT(A)/ITAT and both the appellate authorities, had allowed the appeal of the Assessee substantially, except on Sale of Paper and interest received , the deduction 80IC on the other items i.e. on Sale of Raddi and Printing and Binding got done from outside parties, had been allowed and the matter had attained finality. Both the orders of CIT(A)/ITAT were passed after the search was conducted on the assessee group on 22.01.2009 and copy of the order of the ITAT, dated 8.06.2011 being filed for Assessment Year 2005-2006 originally. The CIT(A) s Jalandhar order is filed at pages 4 to 17 of the assessee s original paper book. III. For the Assessment Year 2006-2007 originally, the Department allowed the deduction u/s 80IC originally @3.15% of the profits on the basis of net profit of sister concern of M/s MBD Enterprises Pvt. Ltd. based at Jalandhar, which is carrying on the business of Printing only. Copy of the AO order was at pages 18 to 39 of the original paper book. The matter was carried to the CIT(A), Jalandhar, who allowed the appeal of the Assessee, copy at Pages 40 to 73 of the original Paper Book. IV. After the search, witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el of the assessee at pages 1-6. X. Similarly, for the Assessment Year 2013-2014, no disallowance has been made of the claim made by the Assessee u/s 80IC to the extent of 30% of the eligible profit by the Assessing Officer and stands allowed U/s 143(3) of the Act as claimed by the assessee. Copy of the order of the AO for the assessment year 2013-14 is placed in paper book (iv) as filed by the counsel of the assessee at pages 7 to 15. XI. Similarly, for the Assessment Year 2014-15, no disallowance has been made of the claim made by the Assessee u/s 80IC to the extent of 30% of the eligible profit by the Assessing Officer and stands allowed U/s 143(3) of the Act as claimed by the assessee. Copy of the order of the AO for the assessment year 2013-14 Is placed in paper book (iv) as filed by the counsel of the assessee at pages 16 to 25. 6. Thus, to summarize the above, the following year-wise detail of deduction claimed us 80IC and allowed/disallowed by the AO in the assessment us 143(3) for assessment year 2005-06 2006-07 (before the search on 22th January, 2009) and in the assessments completed us 153C r.w.s. 143(3) after search, is reproduced in tabular form as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed by the AO. Further CIT(A) ITAT has allowed the full claim of 80IC. 2010-11 143(3) 121/2014 72,263,404 4,470,601 72,263,404 Disallowance of deduction u/s 80IC to the tune of ₹ 44,70,601/- out of total deduction of ₹ 7,22,63,404/-. (During this year department had changed its method of disallowance and disallowed the deduction u/s 80IC, proportionately on the expenses incurred on printing binding outside . 2011-12 143(3) Not Claimed N.A. N.A. Returned Loss: ₹ 1,64,95,079/- 2012-13 143(3) 2,249,568 Nil N.A. Originally, the whole of 80IC deduction @30% eligible was allowed by the AO. But, later on, the Principal CIT u/s 263 has directed to disallow the deduction u/s 80IC as per the Asstt. Year 2010-11. But the ITAT cancelled the order of the Principal CIT passed u/s 263 and no appeal by the department has been filed bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charged thereverse ratio of rate and that the assessee was inflating itssale price charged from its sister concerns. (d) that the lamination did not affect the cost of bookssignificantly. (e) that in the absence of quantitative records, that lowexpenses indicated low expenses indicated lowproduction and inflation of sale price. (f) that merely because the assessee had claimed to haveemployed a large number of workers and had incurredlarge expenses on electricity, freight and fuel/oil did not imply that the assessee had undertaken production activity to such a magnitude that there was sales/turnoverof ₹ 17.19 crore. 2. The appellant craves leave to add or amend the grounds of appeal on or before the appeal is heard and disposed-off. 3. It is prayed that the order of the CIT(A) be set-aside and that of the A.O. be restored. 3. The Revenue in ITA No.507(Asr)/2010 for the A.Y. 2006-07 has raised following grounds of appeal: 1. That the Ld. CIT(A) has erred both in law and on facts inallowing deduction @ 100% of profit u/s 80IC of the Actignoring the facts that the assessee did not have sufficient infrastructure and man power to man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-aside and that of the AO be restored. 7. The Revenue in ITA No.534(Asr)/2011 for the A.Y. 2009-10 has raised following grounds of appeal: 1. That the Ld. CIT(A) has erred both in law and on facts in allowing deduction @ 100% of profit u/s 80IC of the Act ignoring the facts that the assessee did not have sufficient infrastructure and man power to manufacture the entireproducts on its own and getting it done as job work as is evident from the order of A.O. as also from the seized material. 2. The appellant craves leave to add or amend the grounds ofappeal on or before the appeal is heard and disposed-off. 3. It is prayed that the order of the CIT(A) be set-aside and that ofthe AO be restored. The Revenue in ITA No.621(Asr)/2014 for the A.Y. 2010-11 has raised following grounds of appeal: 1. Whether the ld. CIT(A) was correct in law and facts inallowing deduction of profit u/s 80IC of the Act, ignoring thefacts that the assessee didn t have sufficient infrastructureand main power to manufacture the entire products on itsown in its exempt unit and got it done as job work fromunits outside specified areas, as is evident from the order ofthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso observations of the AO at page no. 11 to 12 of the order and also referred to the certain statements of concerned person, recorded during the survey, in which, they had accepted the fact that some job of printing and binding of Gagret Unit was carried out at Jalandhar by the sister concern on job work basis. Ld. CIT (DR)also stated that the expenses claimed at the Gagret Unit were less as compared to the expenses claimed at Jalandhar and the rates of the printing by the MBD Enterprises Pvt. Ltd. in respect of printing charge, the assessee were less as compared to the other sister concerns outside parties. Further, it was argued that certain evidences were found that lesser stock of paper reels were found at Gagret Unit, than at the sister concern unit at Jalandhar as per page no. 3 of the assessment order. It was contended that there was variation in the rates, of job work coupled with the other fact led to inflation of the profits by the Gagret Unit and, therefore, in view of the above said arguments, it was prayed that the Ld. Assessing Officer has rightly disallowed 80% of the claim made by the assessee u/s 80IC and relied upon the arguments as advanced by the Ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s engaged in the business of printing and publishing of the books and the manufacturing activities of industrial undertaking at Gagret start with the purchase of paper and chemical which are fed in various state of Art OFF-Set Printer . The printed reels along with the printed titles, are then cut as per specification of the books and these books are then binded with the title page and, thereafter, given for lamination. After lamination, the books are packed and dispatched and the complete record is maintained by the assessee to prove the movement of paper to Gagret, publishing and printing work carried out at the premises and, it was noticed and accepted by the assessing officer in his assessment order at page no. 3 that there were 139 employees working at Gagret unit, and the total turnover for various years as declared in the audited books of accounts of the assessee is as under: Assessment Year Total Turnover 2005-2006 12.65 Crores 2006-2007 16.76 Crores 2007-2008 46.11 Crores 2008- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It s order size is stated to be much smaller than the PSEB text book for the same class and subject which had 96 pages, none of which are colored. While the data of the number and quality of pages differs from that in the asst order, no comments have been made in the remand report on the appellant s submissions on this issue or on the factual discrepancies. These differences can well explain the difference in rates mentioned in para 13(ii). It is obvious that the rate charged to PSEB at ₹ 0.27 per book of 96 pages is extremely low and would be even below the cost price since the AO has herself noted in the asstt order that binding charges itself were higher. This supports the appellant s contention that orders from Govt. agencies were booked at low margins or even loss so as to increase visibility of the brands. 14. Further, it has been argued that only very nominal work of printing and binding was got done from outside viz-a-viz, percentage of turnover which is as per the following chart and as also printing and binding got done from outside as percentage of expenses is very much negligible, which is proved by the following chart: Printing Binding got done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on note. The AO has failed to understand that the so-called incriminating documents, which find placed in the satisfaction note (produced during the course of appellate proceedings)were duly recorded in the books of accounts and no adverse view was taken on the basis of these documents. Therefore, these documents cannot be called incriminating material . The assessing officer has not pointed out any defect in the books of accounts maintained by the assessee, which were supported by the statutory audit report and further no single instance of indicating inflation in purchase suppression of expenses to show higher inflated profit for the purpose of deduction u/s 80IC have been pointed out. The assessing officer have not rejected the method of accounting followed by the assessee and there is no case of estimation of profit either, made by the assessing officer. Even the AO had not rejected the book results in the case of the sister concerns from whom, part of the work of printing and binding have been got done. 16. TheLd. counsel for the assessee, Sh. Sudhir Sehgal, has relied upon the various judgement of the different benches of the ITAT that the assessee is a liberty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gagret unit, only is wholly misconceived because, one unit cannot expected to match with the five concern put together. 19. It was also argued by the ld. counsel on the strength of the chart which have been submitted during the course of hearing, wherein each every objection by the assessing officer as per the assessment order page no. 3 to 6 pages 11 12including the statements of the employees have been dealt with and the same issue was also explained by way of written submission before the worthy CIT(A),which have been mentioned at page no. 39 40 of the order of the CIT(A) and, thereafter, it has been explained by way of detailed submission, starting from page no. 40 onwards with the help of case laws wherein, each every objection of the AO had been met and the worthy CIT(A) has given these findings starting from page no. 52, para no.11 and elaborately discussed and met each and every objection of the assessing officer at page no. 53 to 55 onwards and which is being relied upon the assessee. 20. It has further been argued that there has been huge/latest installation of machinery at Gagret unit as compared with the MBD Enterprises Pvt. Ltd., the block of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012 dismissing the appeals of the department and confirmed the order of the CIT(A). 22. It has further been argued that all the employees are registered with the EPF Scheme of Central Government and even the AO has acknowledged the fact in the assessment order and which fact was also verified during the course of assessment proceedings and further, it has been argued that even the turnover of the assessee as compared to MBD Enterprises is much more and, further it has been argued that processing overheads/raw material consumed in respect of the MBD Printographics Pvt. Ltd. as compared to MBD Enterprises Pvt. Ltd. was much more as per the following details: MBD Printographics Pvt. Ltd. Comparative Chart of Turnover A Year MBD Enterprises Pvt. Ltd. MBD Printographics Pvt. Ltd. 2005-06 39,387,344 126,462,245 2006-07 41,724,423 167,660,633 2007-08 40,491,485 461,131,149 2008-09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IC after the search conducted on 22.03.2009 was changed on the basis of the seized annexures as found during the search survey operations, since new facts had emerged and therefore, it is not a case for the contradictory stand of allowing the deduction u/s 80IC as been alleged by the counsel of the assessee in his arguments. 25. We have heard the rival contentions and gone through the orders of the assessing officer for all the years and of the different CIT(A)s, including the orders of CIT(A) passed for the assessment years 2005-06 and 2006-07 vide order dated 27.03.2009 and 28.10.2009 respectively, placed in the paper book, as furnished by the assessee at pages 4 to 17 and from 40 to 73. We have also gone through the order of the assessing officer as passed u/s 153C r.w.s. 143(3) for all the years under consideration and orders of the CIT(A), particularly the order for the assessment year 2005-06 dated 29.07.2011. We have also gone through the order of the Hon ble ITAT dated 28.12.2012 and also the order of the ITAT for assessment year 2010-11, vide order dated 13.06.2016,wherein, the earlier order of the ITAT dated 28.12.2012 have been followed. We have also gone throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 006-07 in a detailed order vide order dated 28.10.2009 after calling a remand report from the Assessing Officer allowed the deduction u/s 80IC as claimed by the assessee and the department is in appeal before the ITAT Amritsar Bench, Amritsar bearing ITA No. 27/Asr/2010. Thereafter, orders were passed u/s 153C r.w.s. 143(3) on the basis of the search survey operation conducted on 22.01.2009and in all such orders, the assessing officer had allowed the deduction only to the extent to the 20% as claimed by the assessee for the assessment years 2005-06 to 2009-10 and for the assessment year 2010-11, the AO has restricted the deduction u/s 80IC, on the basis of the expenses incurred on printing and binding outside. 28. It is an undisputed fact that the assessee had installed a unit of printing and publishing at Gagret with latest technique and machinery and at the time of surveycarried out by the department, the unit was found to be working and actively engaged in the manufacturing activities. It was also noticed by the department, which is borne out from the assessment order that 139 employees were found to be working at the time of survey as per the page no. 3 of the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerns working at Focal Point, Jalandhar which AO has himself mentioned at page no. 3 of the order and MP refers to Modern Publishers and not MBD Printographics Pvt. Ltd. which is easily verifiable by cross-verifying from the receipt of the paper with record of the purchase of paper in the books of accounts of the particular concern and, thus, no adverse inference could be drawn. 2. The AO has relied upon annexure A-15 from Focal Point, Jalandhar which is a register containing record of printing the books for Gagret for December, 2008 and for January, 2009 and the AO has recorded the details of the books printed as per Annexure A-6 at Gagret and as per Annexure A-21 at Focal Point to conclude that the number of books for Focal Point far exceeded the books at Gagret and this year drawn the conclusion from page no. 4 5 of AO s order. The AO has wrongly compared the two as comparable items since the register at A- 21 is for printing of form which end up as a book, when binding is done and register A-6 is a binding register maintained at Gagret, which records the number of books bound as against number of forms printed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The AO at para no. 3.6 page no. 12 has referred to the statement of Sh. Ashwani Kumar Sharma GM of the MBD Enterprises to highlight that MBD Printographics Pvt. Ltd. have charged ₹ 35 per rim and whereas charges from another concern/sister concern were from ₹ 100 to 600 per rim. This issue have already been examined and decided by the CIT(A) Jalandhar for AY 2006-07in favor of the assessee and the difference of rates is on account of the fact that the rates from other than the assessee concern is for entire processing of the book and printing whereas, the rates charged from MBD Printographics Pvt. Ltd. are without processing charges i.e.; only for printing and processing involved lot of skilled and technical input and further the charges varies because different kind of binding and different kinds of printing and, thus, the inference drawn by the AO is totally misconceived. This issue has been dealt with in para no. 6.6 by the CIT(A) for the Assessment Year 2006-07also. Further, no comparable cases have been referred to by the AO on the same facts circumstances. 7. The AO has relied upon the Anne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring it to the stock of five concern located at Focal Point, Jalandhar is also misleading, because stock of at Jalandhar belonged to five concern which have also been carrying on the same business. Even otherwise, the stock situation on any particular date cannot be taken a basisto judge the production capacity of any unit. This chart is self-explanatory and the issue therefore, stands explained on the basis of the wrong inferences drawn by the Assessing Officer on the basis of the seized material during the course of search/survey operations. 30. There is no evidence brought on record by the Assessing Officer that any work in addition to the work recorded in the books of accounts have been outsourced to the sister concern at Jalandhar and only some negligible work of printing and binding was got done from the sister concern and even the judicial pronouncements as relied upon by the assessee on this issue are quite apt and particularly the judgements relied upon and taken note-off by the CIT(A) also at page no. 56 57 of his order. The argument of the ld. counsel about the negligible job work in respect of printing and binding viz-a-viz percentage of turnover and the expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een followed and no adverse view have been drawn by the AO and no case of inflation of receipts or expenses have been made out, by the department and the most important issue is that the rates as charged by the assessee for job work were not designed to boost the profits of the company. Even the statements of the various employees, which have been recorded as reproduced in the assessment order they have never denied about the small percentage of work being carried out at Jalandhar for the Gagret unit. Thus, no adverse inference could be drawn on account of printing and binding of small portion from the sister concern and no case can be made out for part disallowance of deduction u/s 80IC. It was further explained that printing charges, charged by the sister concern from the other parties are inclusive of printing processing charges.The difference in the rates as mentioned by the AO in para no. 3.6 on para no. 12 of the assessment order, has been explained adequately that the processing includes highly skilled, technical and manual method of scrutinizing and arranging of pages of a particular book in a desired order and then they are checked and rechecked in proper order. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereby rely on the finding given by the ITAT in his order in ITA No. 426/Asr/2009 vide order dated 08.06.2011 for the Assessment Year 2005- 2006 wherein, in para no. 5.1, the following findings have been recorded and which have attained finality: 5.1 The assessee claimed deduction in respect of amount of ₹ 1,17,180/-being printing got done from outside. It is claimed that the assessee has got printing done from outside under its supervision. While deciding this issue, the learned CIT(A) has correctly observed that the assessee has got a smallportion of its printing work done from outside, it should not be disentitled to deduction u/s.80-IC of the Act in respect of such amount. While holding so, we are fortified by the decision of the Hon ble Calcutta High Court in the case of CIT(Central), Calcutta Vs. W.H. Hart on and Co. Ltd.(1978) 113 ITR708 (Cal), wherein it has been held that a publisher got its books printed outside from any printer under its supervision and it can be said that the assessee had taken an active role by coordinating its activities as well as activities of the printer in a business like a manner. Considering the entire facts and the circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue have attained finality and further for Assessment Year 2013-14 2014- 15, the Assessing Officer had allowed the deduction as claimed by the assessee @30% as eligible deduction for that year in the order passed us 143(3) and since the facts and circumstances, for these years are the same as in the earlier years and, therefore, when on an issue, a particular claim has been settled one way or the other, then the consistency has to be maintained as per the binding judgment of the jurisdictional High Court in the case of Leader Valves Ltd. reported in 295 ITR 273 P H (HC) and Berger Paint 266 ITR 99 Apex Court. 36. In view of the above factual matrix and Judicial pronouncement, we find no merit in the argument of the department, and that the claim of the assessee for deduction u/s 80IC is hereby held to be legally justified and therefore, all the appeals of the department are dismissed. 37. I n I.T.A. No. 534/Asr/2014for Assessment Year 2010-11,the ITAT, Amritsar Bench, Amritsar had allowed the appeal of the assessee with regards to disallowance of the interest. The department filed appeal before the Hon ble Punjab and Haryana High Court, wherein the Hon ble Jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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