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TMI Blog2019 (11) TMI 1812X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 40(a)(ia) of the Act for not deducting the tax at source on the commission payment made to M/s. S. Chand & Company Pvt. Ltd. under the guise of "Trade Discount"? 3. Whether on the facts and circumstances of the case and in law, the CIT(A) is justified in holding that the employee's contribution to the ESI and Employees Provident Fund (EPF) which is deemed as the employer's income u/s 2(24)(x) of the Act and which is subject to deduction u/s 36(l)(va) of the Act is also governed by Section 43B of the Act? 4. Whether, in facts and circumstances of the case, Ld. CIT(A) is legally justified in allowing relief to the assessee on the basis of earlier order in the assessee's own case despite the fact that principle of res-judicata is not applicable to Income Tax proceedings as each assessment year is a separate proceedings year AUTHORISATION U/S 253(2) OF THE INCOME TAX ACT 1961, ARISING OUT OF APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAD-6, NEW DELHI'S APPEAL NO. 672/14-15 DATED 05.12.2016 FOR ASSESSMENT YEAR 2012-13 IN THE CASE OF M/S NIRJA PUBLISHERS & PRINTERS PRIVATE LIMITED (PAN : AAACN4282E). 5. That the appellant craves leave to add, alter, amend or forg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etion of addition of Rs. 7,28,63,013/- u/s. 80IC is concerned, we find that the unit of the assessee is situated in a notified area for the purpose of allowing deduction u/s 80IC of the Act. The assessee is covered under Chapter 49 as it is producing 'printed books'. The Audit Report in the Form no. 10CCB is only one of the sources of information and cannot be conclusive evidence. The assessee sold entire printed books to M/s S Chand & Co. Pvt Ltd which is a publisher and not a trader of paper products. The assessee filed sales tax returns showing sales of the books and was assessed as such in Rudrapur, the notified area. This establishes beyond doubt that the assessee is a publisher of the printed books. Thus, the reporting the same not so in the Form No. 10CCB is an inadvertent error and not corroborated by any other evidences. The fact that the assessee receives printed material which are trimmed and bound to give it the shape of a saleable book shows that the business operation of the assessee is in the nature of manufacturing as per Durga Products Vs ITO (2008) 12 DTR (Chd)(Trib) 297. The assessee used various machines for finishing, binding, three side cutting o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the printer in Delhi, then printed sheets were sent from Delhi to Rudrapur where books were manufactured which were transported to Delhi. No adverse observation in respect thereof was made by the AO in the remand report. Thus, the suspicion of the AO that no manufacturing activity took place at the eligible undertaking of the assessee is not supported with any evidence and is just a surmise. The paper purchased from S. Chand & Co. Pvt Ltd was of an insignificant amount and is of no consequence. The gross profit ratio of the appellant company is 34% which is much lesser than the GP ratio of the other two group companies engaged in the same business. Thus, no adverse observation in terms of the provisions of the sub- sections (8) or (10) of the section 80IA of the Act can be drawn. The claim of the assessee in respect of carrying out publishing activity from the eligible undertaking was found genuine on the basis of relevant evidences placed on record and not refuted by the AO in the remand report and thus, assessee is eligible to deduction u/s 80IC of the Act. Once the deduction u/s 80IC of the Act is allowed in the 'initial assessment year' i.e. in the AY 2010-11 after due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. Vs DCIT (2011) 332 R 255 (Kerela) (Pages 446-454 of the PB). AO has observed that since no income-tax was deducted at source thereon as per the provisions of section 194H of the Act the same was disallowed u/s 40(a)(ia) of the Act. We note that in the decision cited by the AO in his assessment order in the case of Vodafone Cellular Ltd., the distributors were middlemen who were arranging customers for the assessee and the assessee was not paying any amount to distributors besides the discount given at the time of supply of sim cards/ recharge coupons. The assessee was carrying on its business through these distributors which acted on its behalf for procuring and retaining customers and thus, discount given to them is nothing but commission. In the case of Skol Breweries (Supra), it was held that when a purchase / sales is made at discounted price, it is called discount but when an incentive is given for undertaking task / job/ services provided or on sale of goods by one person on behalf of other, then it is commission. Since the benefit given by the assessee to M/s S. Chand Co. Ltd. was in the nature of 'trade discount' and not 'commission', therefore, the asse ..... 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