TaxTMI 
TaxTMI 
TaxTMI 
2021 (9) TMI 20
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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 2013 for assessment year 2006-07, 120 of 2013 for assessment y....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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. 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 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le 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 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 pag....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) 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 which are as under: ITA No. Assessment year CIT(A) CIT(A) order dt. 27(Asr)/2010 2006-07 Jalandhar 28.10.2209 507(Asr)/2011 2006-07 Ludhiana 29.07.2011 506(Asr)/2011 2005-06 Ludhiana 29.07.2011 508(Asr)2011 2007-08 Ludhiana 29.07.2011 533(Asr)/2011 2008-09 Ludhiana 01.08.2011 534(A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 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 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 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 AO be restored." 6. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 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, who remanded the matter to the Tribunal for passing a speaking order in ITA No. 122 of 2013 for assessment year 2005-06and then, similar orders have been passed in the other years.Since, the facts and the issue in all the assessment years are same, all the appeals are heard and disposed-off together for the sake of convenience, asalso both the departmental representative and the counsel of the assessee have accepted the position that all the appeals need to be disposed-off together, being having common issue. 10. The Ld. CIT (DR), appearing for the department while depending the order of the Assessing Office....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... '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 point and allowed the full deduction u/s 80IC.It was argued vehemently by the counsel of the assessee, that there is no consistency in the approach of the department with regard to the deduction u/s 80IC on the basis of same facts and circumstances from year to year and further there is no basis of allowing 20% of deduction u/s 80IC, particularly when earlier CIT(A)'s have already adjudicated the correctness of the claim of the assessee for the assessment years 2005-06 and 2006-07 and for the assessment year 2005-06, the matter has attained finality at the level of the Hon'ble ITAT Amritsar Bench. Sh. Sudhir Sehgal,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rinted 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 charged from the outsiders are for double color, double side printing, whereas, the rate for sister concern for one side color printing, and, therefore, the difference of facts has to be there and hence stated that the contention of the ld. DR is misplaced. He relied upon the finding of the CIT(A) order for Assessment Year 2006-2007, para no. 6.4, vide order dated 28.10.2009 which is being reproduced as under: "6.4 Another comparison has been made by the AO in para 13(ii) to show that the assessee was charging its sister concern almost 18 times the rate charged to PSEB for printing a book. As pointed out by the appellant in its letter ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 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. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 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 in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nowledged 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 43,663,275 558,512,038 2009-10 40,316,245 543,295,191 2010-11 42,622,354 484,720,858 MBD Printographics Pvt. Ltd. Comparative Chart of Processing Overheads/ Raw Material (Part of Financial Statements) Asst Year MBD Enterprises Pvt. Ltd., Jalandhar MBD Printographics Pvt. Ltd., Gagret (H.P.) 2005-06 29,146,136 69,493,124 2006-07 25,613,973 92,401,730 2007-08 30,925,472 214,385,591 2008-09 33,181,695 245,456,626 2009-10 29,574,996 302,825,817 2010-11 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er 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 directions as contained in the ITA No. 122 of 2013 have been given. 26. We have carefully gone through the detailed arguments of the Ld. CIT (DR) and the Ld. counsel of the assessee Sh. Sudhir Sehgal, including the voluminous paper books and the judgement cited.It is an undisputed fact that appellant assessee was entitled for deduction u/s 80IC of the Act as there is nothing to suggest that the assessee has not been carrying out its manufacturing activities exclusively at Gagret, a manufacturing unit in Himachal Pradesh, i.e., Industrial backward State as specified under Eighth Schedule to Income-tax Act. The issue in all the years is about the deduction as claimed by the assessee u/s 80IC and it is a fact on record, that for the assessment year 2005-06, which was the first year of the claim u/s 80IC, the assessing officer had allowed the claim u/s 80IC, except on the sale of paper, sale of raddi, interest inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat 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 specified article or thing but in the facts and circumstances of the case, there is nothing to suggest that the assessee has not been carrying out its manufacturing activities exclusively at Gagret. The AO had relied upon certain annexures as seized during the course of search/survey which have been mentioned in the order of the AO at page no. 3 to 8 and page no. 11 & 12 of the order and primarily on the basis of that the ld. CIT DR, has argued that the AO restricted the claim of the assessee @20% of the deduction u/s 80IC.. The Ld. Counsel of the assessee had argued at length by relying upon his brief synopsis, various submissions as filed before the AO and CIT(A) and other charts as discussed by us in the order as above. We are in agreement with the counsel of the assessee that for the assessment year 2005-06, the issue of deduction u/s 80IChave attained finality in the appeal of the department by the ITAT Amritsar Be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 total number of employees at Gagret were 139 and 406 in three units at Jalandhar during survey/ search operations and assumed that it reflected the functional capacity on comparative basis. Firstly, 406 employees are of 3 independent unit and not of one unit and also, we have also submitted the details of employees in Jalandhar for Financial Year 2002-03 & 2003-04 and the employees at Jalandhar were 495 and 441 respectively, which means that there are no reduction in employees at Jalandhar and, thus, there is no logic in this observation of the AO. 4. The AO in para 3.1(a) has stated that the stock of paper reel was much higher at Jalandhar in comparison to Gagret and framed an opinion that unit at Focal Point was consuming more paper and was having more functional capacity then the unit at Gagret. The AO has himself mentioned at page no. 3 of the order that there are five functional unit at Jalandhar and, therefore, to co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....imilar 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, 2009. Further, the AO has wrongly taken the figure of Rs. 2,26,000/- replaced of Rs. 26,000/- only from the seized annexure in respect of forms printed for "Holy Faith International" and the relevant book is "HFI English Grammar" at page no. 12 of the order. It is further submitted that register contains the details of the work done for various concerns and total number of forms printed as noted by the AO were Rs. 44,93,650/- and out of this, only Rs. 1,94,000/- were printed for the assessee's company and as evidenced by the Annexure A-21. No work for the assessee was done by MBD Enterprises Pvt. Ltd. for the month of January, 2009 and these facts have not been controverted by the AO and only small fraction of printing and binding was got done from the sister concern and this fact has been held in favor of the assessee by ITAT Amritsar bench in the order of the assessee for the assessment year 2005-06 and the findings has been recorded in para no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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% 31. We have also noted that the books of accounts of the assessee have not been rejected u/s145(3) and method of accounting have been 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Thus, the observation of the Assessing Officer about the rate charged by the MBD Enterprises from the assessee being lower than the market rate is not correct observation and no inference can be drawn upon the statements of the employees. Further, as rightly pointed out in the chart reproduced above wherein, the counsel of the assessee has very rightly distinguished the observation of the assessing officer regarding the annexure A-15, that 100% work has not been done at Gagret unit. The AO has incorrectly taken the figure of Rs. 2,26,000/- in place of Rs. 26,000/- and as stated by the assessee in the tabular reply, the contention of the department has not been found to be correct. We hereby 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 Rs. 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 corr....