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TMI Blog2019 (7) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... ification was found correct. The assessee filed various documents like purchase bills of paper, lorry receipts, bills of transporter, Form 16 issued by the VAT department for entry of any goods in Uttarakhand to show that paper was transported to Rudrapur and sent back to 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohtak relevant to assessment year 2011-12. 2. The grounds raised in the appeal read as under:- "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in :- 1. Whether on the facts and circumstances of the case and in law, the CIT(A) is justified in deleting the addition amounting to ₹ 7,28,63,103/- made by the AO by disallowing the claim of the assessee u/s. 80IC of the Income Tax Act, 1961. 2. Whether on the facts and circumstances of the case and in law, the CIT(A) is justified in not upholding disallowance of ₹ 7,28,63,013/- u/s. 80IC of the Act by ignoring the fact that the work of printing was not carried out at the premises of the assessee in the notified area for the purpose of Section 80IC of the Act? 3. Whether on the facts and circumstances of the case and in law, the CIT(A) is justified in deleting the addition made by the AO amounting to ₹ 6,04,45,025/- for not deducting the tax at source on commission payment made to M/s S.Chand & Company Pvt. Ltd. under the guise of 'Trade Discount'. 4. Whether on the facts and circumstances of the case and in law, the CIT(A) is justified in holding that the employees' cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 40(a)(ia) on account of trade discount offered by the assessee to the buyer, M/s S Chand and Company, the AO by relying upon the decision in the case of M/s Skol Breweries Ltd. (2013) 142 ITD 49 (Mum) and M/s Vodafone Essar Cellular Ltd. vs. DCIT (2011) 332 ITR 255 (Kerala), held that the said discount was in the nature of commission, on which, TDS u/s. 194H was required to be deducted, which the assessee failed to do, hence, the AO made the addition u/s. 40(a)(ia) of the Act. Further, the AO observed that the assessee had claimed expenses under the head employee's contribution of EPF, out of which certain payments aggregating to amount of ₹ 1,11,811/- were made beyond the due date as per the relevant statute. The AO did not accept the plea of the assessee that such payments were made before the due date for filing the return of income and in which regard it placed reliance on the decisions in the case of CIT vs. Vinay Cement Ltd. (2007) 213 CTR CTR (SC) 268 and CIT vs. Aimil Ltd. (321 ITR 508 Del.) and made the addition u/s. 2(24)x r.w.s. 36(1)(va) of the Act. Accordingly, the AO assessed the income of the assessee at ₹ 13,43,02,685/- by making various additions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide parties on job work basis. (Page 16 of AO) 3. Despite being given adequate opportunity, assessee failed to furnish bills of freight paid for lifting of paper from Delhi to Rudrapur as well as freight paid for lifting of printed material. (Page 15 of AO) 4. Perusal of ITR reveals that assessee claimed nil cartage expenses while in audited financial statements filed during assessment proceedings assessee has claimed freight expenses of ₹ 31.24 lakhs (Page 17 & 18 of AO) 5. In Audit report under rule 10BBB at point number 25(2)(d)(f), the article manufactured is specified as "Paper Products" while assessee has claimed to be involved in business of printing and publishing of books. The observations have been made by auditor after careful examination of various vouchers, bills and other documents. (Page 16 of AO) 6. The assessee bought some plant and machinery from M/s Rajindra Ravindra Printers Pvt Ltd, a related party. 7. There is addition to new machines which have been put to use in last month of financial year. "Ten Clamp Perfect Binding Machine" was put to use on 10.03.2011 8. Assessee has claimed expenses of ₹ 18,49,380/- for job work of book binding b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report. Therefore, it is not necessary to have a printing unit of its own or to carry out binding on its own for holding the publication of books as a manufacturing activity in view of CIT Vs A Mukherjee & Co. (P) Ltd. (1978) 113 ITR 718 (Cal), Orient Longman Ltd. Vs CIT (1981) 130 ITR 477 (Del) and Gulab Chand Jam vs WTO (1983) 17 TTJ (Jab) 489. Thus, the activity of publishing the books carried out by the assessee was rightly held to be manufacturing activity eligible for deduction u/s 80IC of the Act. A part of the manufacturing activity of the assessee may have been outsourced or the assessee may be carrying out job work for others, does not debar the appeal and to claim deduction if it had manufactured an entirely new product. It is noted that Mr. Rajesh Kumar was engaged as contractor to provide man power to carry out binding work at the premises of the assessee using the machines of the assessee. It is noted that notice issued u/s 133(6) of the Act to him returned unserved due to his incomplete address mentioned on the envelop and on the notice. Further, the same was not confronted to the assessee during the assessment proceedings. The assessee filed his confirmation during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12) 251 CTR 290 (Del.) and the decision in CIT vs. Delhi Press Patra Prakashan Ltd. (2013) 260 CTR (Del.) 253 and the decision in the case of Janak Dehydration Pvt. Ltd. vs. ACIT (2010) 134 TTJ (Ahd. (UO), which deal with this issue with regard to the claim of deduction under section 80IA and section 80IB, respectively, which are para material to the section 80IC. We further note that AO has not disallowed the deduction u/s. 80IC on the ground of violation of prescribed conditions but on the basis of finding that the assessee did not actually carry out any operation at the premise of the eligible undertaking. AS the issue has been independently examined on merit and the assessee's claim of deduction u/s. 80IC in respect of publishing activity carried out from the premise of the eligible undertaking is found to be genuine, based on facts substantiated by relevant evidences, which have not been refuted by the AO in the remand report, hence, the assessee's claim for deduction u/s 80IC was rightly held as fully allowable and accordingly the assessee get full relief on this ground, which does not need any interference on our part, therefore, we uphold the action of the Ld. CIT(A) on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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