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TMI Blog2015 (11) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the first year itself i.e. A.Y. 2007-08 and, therefore, the fact that the assessee has employed 1022 new work men during the A.Y. 2009-10 is irrelevant for adjudication of the claim of deduction in respect of employment created by the assessee during the A.Y. 2007-08. Under the above noted facts and circumstances and respectfully following the propositions laid down by the Tribunal in the order for A.Y. 2008-09 in the assessee's own case we are unable to see any incorrectness or any other valid reason to interfere with the order of the First Appellate Authority and thus we hold that the impugned addition made by the A.O. was misconceived and not sustainable on the facts and in law and the same was rightly directed to be deleted by the Ld.CIT(A). - Decided against revenue. Addition on account of sales returns - CIT(A) deleted the addition - Held that:- We are in agreement with the conclusion of the Ld.CIT(A) that there was a difference between the disallowance of expenditure and the accrual of income and as per prudent concept of accountancy the income cannot be charged until and unless it is realised or accrued to the assessee. On this issue the AO tried to charge alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/- and another on account of sales return amounting to ₹ 1,34,10,746/-. Aggrieved the assessee preferred appeal before the Ld.CIT(A) which was allowed by passing the impugned order on both counts. Now the Revenue being aggrieved is before this Tribunal in the second appeal with the grounds reproduced hereinabove. 3. Ground No.1: Apropos ground no.1, we have heard arguments of both sides and carefully perused relevant material placed on record. The Ld.Sr.D.R. submitted that the A.O. noticed that the assessee has employed 1022 regular workers during the current F.Y. and it has taken deduction only of 288 regular workers who were employed in the earlier years. The Ld.Sr.D.R. further pointed out that this means that the assessee has not taken deduction u/s 80 JJAA of the Act on newly employed regular workers engaged during the relevant financial period. The Ld.D.R. further submitted that the assessee disagreed that it is not entitled for deduction, therefore, it has stopped claiming deduction thereon. The Ld.D.R. also contended that factually the assessee has stopped claiming the said deduction in the subsequent years, therefore, the impugned claim of the assessee was rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al wages paid to the new regular workmen is available for three years including the assessment year relevant to the previous year in which such employment is provided. The meaning of these words is that once an employment is created as stipulated by this section, this benefit shall be available for three assessment years. There is no such condition that for claiming benefit of section 80JJAA, the assessee needs to create employment every year. The interpretation given by the A.O. would mean that in the first year the assessee needs to create 10% additional employment which will mean that if in the preceding year there were 100 employees, then in the next year there need to be 110. In the second year again there has to be an increase of 10%, meaning thereby that not only 10% of 100 but also the assessee needs to create 10% of 110 meaning thereby that it should have minimum 121 workmen in the second year. Further, in the third year it needs to create 10% more of the preceding year, which in this case will be at least 134. This number will further increase in case in the first year the new employment generated by the assessee is more than 10%, as in the second year the assessee needs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... throughout the three years and not only in the first year; that the proviso to the Section makes it amply clear that the condition has to be met for each of the years for which the deduction is being claimed. 26. The ld. counsel for the assessee, on the other hand, has submitted that deduction u/s 80JJAA is allowable, if the following conditions are satisfied:- i) it should be an Indian company; ii) The profit and gains should be derived from an industrial undertaking engaged in manufacturing or production of an article or thing; iii) The benefit allowed shall be 30% of the additional wages paid to the new regular workmen; iv) The new regular workmen employed should be in excess of 100 workmen. v) In the case of an existing undertaking the increase should be not less than 10%; and ; vi) The industrial undertaking is not formed by splitting up/reconstruction of existing undertaking or amalgamation with another industrial undertaking and report of the accountant in Form No.10DA is filed with the return of income as per Section 80JJAA (2) of the Act; and there is no such condition that for claiming benefit of Section 80JJAA, the assessee needs t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e manufacture or production of article or thing, there shall, subject to the conditions specified in sub-section (2), be allowed a deduction of an amount equal to thirty per cent of additional wages paid to the new regular workmen employed by the assessee in the previous year for three assessment years including the assessment year relevant to the previous year in which such employment is provided. 28. Further, the relevant Explanation and Proviso to the above Section 80JJAA (1) are as follows:- Explanation (1) - For the . purpose of this section, the' expressions, additional. wages means the wages paid to the new regular workmen in excess of one hundred workmen employed during the previous year: Provided that in the case of an existing undertaking, the additional wages shall be nil if the increase in the number of regular workmen employed during the year is less than ten per cent of existing number of workmen employed in such undertaking as on the last day of the preceding year. 29. The Ld. CIT (A), in our considered opinion, in the light of the above, has correctly observed that as per the provisions of Section 80JJAA (1), the benefit is to be allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was misconceived and not sustainable on the facts and in law and the same was rightly directed to be deleted by the Ld.CIT(A). Accordingly ground no.1 of the Revenue is dismissed. 5. Ground No.2:- Apropos ground no.2 we have also heard rival arguments of both sides and carefully perused the relevant material placed on record including paper book of the assessee spread over 41 pages. The Ld.D.R. supporting the action of the AO submitted that the average sales return of 4.5% was reasonable taking into account the variations that can exist on account of local conditions in which different additions were sold and those could be responsible for different sales return figures for different additions. The Ld.D.R. further submitted that the figure of 4.5% taken by the A.O. was reasonable average percentage for calculating the sales returns in Gorakhpur, Lucknow, Jamnagar, Allahabad, Varanasi and Noida where unnaturally high sales returns have been shown by the assessee. The Ld.D.R. supporting the action of the A.O. further submitted that based on the method of estimation which was purely scientific and accepting the average sales returns of 4.5% the amount of excess sales returns was ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that at the most 4% of the total amount is to be allowed ignoring the fact that the assessee has shown sales return even in Jhansi Unit @ 5.2%, which was duly accepted by the Assessing Officer under the same set of facts. We noted that the comparative position of the sales return as shown by the assessee from the assessment year 1998-99 was as under : A2ra ---K-... anpur Allahabad Jhansi Varanasi Moradabad AY 1998-99 Gross Sales 49925447 13920066 6053788 3599193 22204240 Less returns 660033 1897553 835090 291871 621136 Net Sales 49265414 12022513 5218697 3307322 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gross Sales 75150407 37846476 8154981 36250154 Less returns 1022870 3025413 353204 625506 Net Sales 74127537 34821063 7801777 35624467 %ge to gross sales 1.36% 7.99% 4.33% 1.73% AY 2002-03 Gross Sales 81808809 34412374 10007892 34001742 40501762 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If compared with earlier year, these percentages are the best comparative instance in the case of the assessee. 9. Coming to the facts of the case, we noted that the assessee has duly submitted the details of unsold Dainik Ujala, which were sent by the Agents alongwith the credit notes for the same. We noted in respect of one of the agents at Allahabad, Om Agencies has raised the credit note giving details of un-sold copies date-wise at the end of the month alongwith statement of account, the address as well as phone number of M/s. Om Agencies are duly mentioned in the statement, credit note as well as in the details. The copies of these documents are available at pages 22 to 25 of the paper book. Similarly, the assessee has given the details of the other agents. In our opinion, there is nothing unusual if the agents sent the monthly statement to the principal instead of sending the daily statement. The assessee has duly accepted the credit note. The credit note and the statement which are available on the file cannot be regarding to have been prepared by the assessee. If the Assessing Officer doubted the documents/evidences filed by the assessee, in our opinion, the onus is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. AR that the assessee in this case has not claimed sales return to be an expenditure. Therefore, no question of any disallowance arises. It is a question of accrual of income. The claim of the assessee relate to the fact that actually he has not made sales to the extent of sales return and therefore, there had been no accrual of income. The assessee in this case, in our opinion, claims that he has not made the sales for a particular quantity of the newspapers as the newspapers so sent returned back. If the newspapers are not sold on the day for which it is published it would become out dated, obsulate and remains unsold. The Assessing Officer in this case alleged that the assessee has sold much more what has been shown by the assessee as sales. This is the settled law that apparent is real. Onus is on the person who alleges apparent is not real, in view of the decision of Supreme Court in the case of Rawatmul Daulat Ram, 87 ITR 349. Therefore, we are of the view that heavy onus lies on the revenue to prove that the sales return shown by the assessee are not the sales return and the assessee has sold the newspapers much more than what has been shown as sold so that it can be sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT, Agra Bench vide consolidated order dated 28.7.2011 in cross appeals in ITA nos. 331, 360 (Agra) of 2007 and C.O.No.52 (Agra) of 2007. Following the above, the Hon'ble ITAT Delhi has decided the matter in favour of the appellant for AY 2005-06 vide order dated 18.11.2011 in ITA no.963/Del/2011. Following the above orders of the Hon'ble ITAT, the undersigned vide order dated 20.01.2012 in the case of the appellant company in appeal no.101/10-11 for AY 2008-09 also deleted the impugned addition made by the AO on account of sales return. Since the addition made for the current year is on identical facts, respectfully following the above judicial precedents, the impugned addition of ₹ 1,34,10,746/- is deleted. 8. In view of above conclusion of the Ld.CIT(A) based on the order of the ITAT Agra Bench (supra) we are in agreement with the conclusion of the Ld.CIT(A) that there was a difference between the disallowance of expenditure and the accrual of income and as per prudent concept of accountancy the income cannot be charged until and unless it is realised or accrued to the assessee. On this issue the AO tried to charge alleged excessive sales returns to tax by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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