TaxTMI 
TaxTMI 
2006 (3) TMI 225
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....t Jan., 2001 and 23rd Aug., 2001 for asst. yrs. 1997-98 and 1998-99, respectively, whereas ITA No. 3665/Del/2002, is directed against the order of the learned CIT(A)-XIII, dt. 28th June, 2002 for asst. yr. 1999-2000. 2. In the solitary ground originally raised, which is common in all these three appeals, the Revenue has challenged the action of the learned CIT(A) in directing the AO to allow deduction under s. 80-IA of the IT Act on the basis of book results of unit 4. 2.1 The facts which are material and relevant to decide the common issue involved in the present appeal are as follows: The assessee is a company, which is engaged in the business of printing and publication of a number of magazines. In its return of income filed for....
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....he expenses of unit No. 1 relating to marketing and distribution ought to have been taken into account while determining the profit of unit 4. He also observed that the line of business of both the units being similar, there was no reason to have such huge difference/variation in the profit margin of both the units. He, therefore, applied the profit rate of 10 per cent to the sales made by the said unit No. 4 to unit No. 1 as against 62 per cent shown by the assessee and recomputed the profit of the said unit as follows, placing reliance on the provisions of sub-s. (10) of s. 80-IA of the Act: "Sales of unit No. 4 to unit No. 1 6,49,55,986 Profit on sa....
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....e in the assessment completed under s. 143(3) of the Act. 3. Aggrieved by the aforesaid assessment made by the AO, the assessee-company preferred an appeal before the learned CIT(A) and it was submitted on its behalf before her that unit No. 4 was set up in Hyderabad (Faridabad) by it in the year 1995 as a complete independent industrial manufacturing unit. It was also submitted that the said unit was set up in a newly constructed building and even the plant and machinery installed therein was entirely new. It was pointed out that separate books of account were maintained in respect of the said unit and the same were also produced before the AO for verification during the course of assessment proceedings. It was pointed out that no defec....
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....ned order for asst. yr. 1997-98: "9. The submissions of the appellant are considered. The first issue is whether sub-s. (10) of s. 80-IA can be applied in a case where there is a close connection between the assessee carrying on the eligible business and an undertaking belonging to the same company. As per the provisions of the Act, this sub-section would apply in the case of close connection between the assessee and "any other person". The phrase 'any other person' is a wide phrase and would cover any undertaking whether run by the same industrial house or whether rune by separate industrial house. The contention of the appellant that this sub-section would not apply to a case where the industrial undertaking is run by same house is wit....
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....of the operating result of different units run by the assessee. The AO is directed to allow the deduction claimed under s. 80-IA on the basis of book results of unit 4." 4.1 The aforesaid decision rendered in asst. yr. 1997-98 was subsequently followed by the learned CIT(A) while deciding the similar issue in favour of the assessee in their appellate order for asst. yrs. 1998-99 and 1999-2000, which are impugned in the appeals of the Revenue for these years. 5. We have heard the arguments of both the sides and also perused the relevant material on record. As has been pointed out on behalf of the assessee-company before the authorities below as well as before us, unit 1 was its publishing house whereas units 3 and 4 were its printing h....
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.... the AO was not sustainable in law in the facts and circumstances of the present case including especially the fact that no material or specific defects were pointed out by him in the books of account maintained by the assessee in respect of unit 4 and there was nothing brought on record by him to show that the profit margin of 62 per cent shown in the said books was actually lower. On the other hand, such higher profit margin in respect of unit 4 was satisfactorily explained by the assessee-company and having satisfied with such explanation, the AO was directed by the learned CIT(A) to allow the deduction claimed by the assessee under s. 80-IA of the Act on the book results of unit 4. As such, considering all the facts and circumstances of....