TaxTMI 
TaxTMI 
2021 (9) TMI 20
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.... "8. According to the revenue, there was a search on the assessee's premises on 22.1.2009 and certain incriminating material was found. On the basis of the said material, the Assessing Officer had held that 100% of the work of the assessee had not been done at Gagret (Himachal Pradesh) and, therefore, allowed deduction under Section 80IC of the Act, @ 20% of the profit from manufacturing. However, the CIT(A) allowed deduction under Section 80IC of the Act @ 100% of the profit and gain. The entirety of the facts was required to be gone 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 201....
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....s into the business of 'Printing and Publication' and for that, the Unit was set up at "Gagret" in the Assessment Year 2005-2006. While filing the original return, deduction U/s 80-IC was claimed by the assessee and which was allowed by the Assessing Officer in the order dated 28.12.2007 passed U/s 143(3) substantially, except that, on the sale of "Raddi", "Sale of Paper", "Printing and Binding" the work got done from outside parties and on "interest received", the deduction U/s 80-IC was not allowed. II. The matter 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. ....
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....by, directed the Assessing Officer for disallowing the deduction u/s 80IC on the basis of order for Asstt. Year 2010-2011. However, this order of the Pr. CIT was challenged before the Hon'ble ITAT, which cancelled the order of Pr. CIT and after that, no appeal had been filed before the Hon'ble Punjab & Haryana High Court and in nutshell, the 80IC stands allowed in full as claimed by the Assessee. Copy of the order for the Assessment Year 2012-2013 of the Hon'ble ITAT in ITA No. 281/ASR/2016 has been filed in paper book (iv) as filed by the counsel 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 ....
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....n u/s 80IC to the tune of Rs. 44,70,601/- out of total deduction of Rs. 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: Rs. 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 before Hon'ble Punjab & Haryana High Court against the ITAT order. Hence complete deduction u/s 80IC as claimed stands allowed. 2013-14 143(3) 66,394,738 Nil N.A. No disallowance has been made of claim of 80IC by the AO. 2014-15 143(3) 51,938,516 Nil N.A. No disallowance has been made of claim of 80IC by the AO. 7. The revenue filed the appeals before the ITAT by raising identical grounds of appeal....
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....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." 4. The Revenue in ITA No.506(Asr)/2011 for the A.Y. 2005-06 hasraised 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 Act ignoring the facts that the assessee did not have sufficient infrastructure and man power to manufacture the entire products 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." 5. The Revenue in ITA No.508(Asr)/2011 for the A.Y. 2007-08 hasraised following grounds of appeal: 1. That the Ld. CIT(A) has erred both in law and on facts in allowing d....
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....from the seized material. 2. Whether the ld. CIT(A) was correct in law and facts in nottreating the income from sale of paper as trading income andwhether he was correct in not keeping the same outside thepurview of section 80IC of the I.T. Act, 1961. 3. That the appellant craves leave to add or amend the groundsof appeal on or before is heard and disposed-off." 8. The Tribunal decided the above ITA's in a consolidated order dated 28.12.2012 and also the order for the assessment year 2010-11 in ITA No. 621/2014 vide order dated 13.06.2016. It is worthwhile to mention here that in the order for assessment year 2010-11, the Tribunal relied upon the order for assessment years 2005-06 to 2009-10 by recording following findings: "Respectfully following the decision of this Bench of the Tribunal in assessee's own case for the assessment years 2005-06 to 2009-10, vide order dated 28.12.2012, which is squarely applicable to the facts of the issue in hand, we dismiss the appeal filed by the Revenue." 9. The department filed the appeals for the assessment years i.e., for the assessment years 2005-06 to 2010-11 before the Hon'ble Punjab & Haryana High Court, w....
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....proceedings before the Hon'ble ITAT at the time of hearing of the appeal, which was decided by the Tribunal on 28.12.2012 for the same years. 11. Sh. Sudhir Sehgal, the Ld. Counsel of the assessee at the very outset stated by referring to the "summarized chart" as filed before the Hon'ble Bench, regarding the treatment of claim of deduction u/s 80IC by the department, as contradictory standshave been taken by the different assessing officer.Further, for the assessment year 2005-06, the matter has been settled at the level of the Hon'ble ITAT, in as much as that only deduction u/s 80IC have not been allowed on 'sale of paper' and on 'interest income' and then in the assessment year 2006-07, the deduction u/s 80IC have been allowed @3.15% by the AO on the basis of the "profit as declared by the sister concern" namely MBD Enterprises Pvt. Ltd., Jalandhar without appreciating the nature of the work carried on by the sister concern and by the "Gagret unit". On an appeal by the assessee, the Ld. CIT(A),Jalandhar vide order dated28.10.2019, after seeking detailed remand report from the assessing officer, on the basis of the submissions made before him had considered each and every poin....
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....s Pvt. Ltd., Focal Point, Jalandhar. It was argued that at Jalandhar there are five units, which are located at Focal Point, as mentioned by the assessing Officer in his order at page no. 3 and the comparison of the stock of the reels, of the "one single unit located at Gagret" with the five units located at Jalandhar is not proper.Similarly, with regard to the number of employees at Jalandhar, had to be more than the Gagret Unit as there are five units at Jalandhar at common/adjoining premise and the AO has noted the figures of employees of three concerns at page no. 3 of the order. Similarly, there is no basis of comparison of books printed at common units located at Jalandhar viz-a-viz, single unit at Gagret. As regard in the difference in the printing charges of sister concern being higher than the rate charged from the PSEB, it is also submitted that, it was based on the incorrect data. It has been argued that even, while passing the order for the assessment year 2006-07, the ld. CIT(A) in his order dated 28.10.2009 has noted this fact that in para 6.4, page no. 30 of the order, placed in the paper book-I, the relevant page is 69. It has further been contended, that the rate c....
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.... 0.12% 2.73% 1.57% 1.80% 2.79% Binding Outside 946.75 54808.00 228449.00 1006516.00 192222.00 %age 0.001% 0.033% 0.050% 0.180% 0.035% Printing & Binding got done outside and %age of expenses 31/03/2005 31/03/2006 31/03/2007 31/03/2008 31/03/2009 Total Turnover 69493124.00 92401730.00 304385991.00 245456636.00 302825816.00 Printing Outside 17180.00 4574730.00 7259750.00 10032986.00 15163535.00 %age 0.17% 4.95% 3.39% 3.93% 5% Binding Outside 946.75 54808.00 228449.00 1006516.00 192222.00 %age 0.0013% 0.593% 0.10695% 0.41% 0.0634% 15. It has further been argued that the AO has merely repeated the contention that certain incriminating documents were seized during the course of search operation as mentioned in the so-called satisfaction 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 docume....
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....t only negligible amount of printing and binding work was got done from the sister concern, namely M/s. MD Enterprises Pvt. Ltd. and mainly the said job of printing and binding, was got done at Gagret unit only and it was only during peak season, that some portion of the job work of printing and binding was got done from the sister concern and even no case has been made out by the department for any inflation of the said job charges got done from the sister concern. The assessing officer though has referred in the assessment order at page no. 3 to page no. 8 and page no. 11 & 12, some of the seized annexures, which are in the shape of certain registers and also mentioned at page no. 3, that there are "five concerns" working at focal Point, Jalandhar and the comparison of the stock of the five concerns in respect of the number of paper reels, employees and publishing of books by five concerns viz-a-viz 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....
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....essments were framed for the assessment year 2005-06 and 2006-07, only 20% of deduction of 80IC had been allowed on "ad-hoc" basis on the basis of certain incorrect facts and the books of accounts of the assessee or for the other sister concerns have not been rejected u/s 145(3) and method of accounting followed by the assessee have been accepted and, thereafter, another CIT(A) after discussing all the issues as raised by the assessing officer, passed, a detailed order. It has been argued that the Hon'ble ITAT Amritsar Bench in all the appeals of the department earlier have passed an order dated 28.12.2012 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 ....
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....cts 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 through the order of Punjab & Haryana High Court in ITA No. 122 of 2013 for the assessment year 2005-06 and the other orders of the Hon'ble High Court where same d....
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....ssee 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 the Assessing Officer. It is also an undisputed fact that appellant would not be entitled to any deduction on the income other than derived from manufacturing from spec....
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....e 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 as recorded in Annexure A-21. The AO during the course of appellate proceedings has not controverted this crucial difference and, as such, the claim of the assessee is factually correct. Further comparison of books with the number of forms printed as numbers will lead to illogical conclusion. 3. The AO has observed that....
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....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 Annexure A-15 from Focal Point, Jalandhar which contains the printing of the books done for the Gagret for the month of December, 2008 and January, 2009 and said details have been mentioned at page no. 12 of the order of the AO and the AO has presumed that 100% of the work had not been done at Gagret. It is submitted that annexure A-15 was similar to the register maintain at Annexure A-21 and the difference is that Annexure a-15 relate to number of forms printed for the month of December, 2008 whereas, Annexure A-21 relates to numbers of form printed for the month of January,....
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....y 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 expenses cannot be brushed aside asunder: Printing & Binding got done outside and %age of turnover 31/03/2005 31/03/2006 31/03/2007 31/03/2008 31/03/2009 Total Turnover 126462245.00 167660631.80 461131148.87 558512038.00 543295191.00 Printing Outside 117180.00 4574730.00 7259750.00 10032986.00 15163535.00 %age 0.12% 2.73% 1.57% 1.80% 2.79% Binding Outside 946.75 54808.00 228449.00 1006516.00 192222.00 %age 0.001% 0.033% 0.050% 0.180% 0.035% Printing & Binding got done outside and %age of expenses ....
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....her concern and from the MBD Printographics is totally misplaced. 32. This issue has been dealt with by the CIT(A) in the order for the assessment year 2006-07 dated 28.10.2009 and in para 6.6, the following finding have been recorded: "6.6 In para 14 the AO has given one instance of under valuation of expenses by the assessee through its sister concern to contend that the rate charged form sister concern was half that charge to outsiders. The appellant has pointed out that the rate charged to outsider as for double color double sided printing whereas the rate for the sister concern was one sided printing: hence, the difference, it has been explained that for the same job same rate was charged for sister concern as well as from outsiders. This observation in para 14 was also made by the AO apparently without confronting the assessee of the conclusion sought to be drawn, and in the remand report the AO has simply relied on the assessment order. In view of the explanation given by the appellant, this contention of the AO is held to be misplaced." 33. Thus, the observation of the Assessing Officer about the rate charged by the MBD Enterprises from the assessee being low....
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....aced. No evidence have been brought on record to show the assessee has got work done for the sister concern in excess of what is recorded in the books of accounts and even the charges for the work done by the sister concern, is no way lower than the market rate and, therefore, the claim of deduction u/s 80IC for all the years i.e.; for Assessment Year 2005-06, 2006-07, 2007-08, 2008-09, 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) 32.In view of that we have....