THE DY. COMMISSIONER OF INCOME-TAX,, JALANDHAR vs. M/S. MBD. PRINTOGRAPHICS P.LTD,, JALANDHAR

The captioned bunch of appeals by the department have come back from the Hon’ble Punjab & Haryana High Court for the assessment years 2005-06 to 2010-11, having identical issues where the Hon’ble Punjab & Haryana High Court has in of 2013,vide order dated 11.01.2017 for the assessment year 2005-06 has remanded the case back to the ITAT Amritsar Bench, Amritsar, with the observations and the finding recorded vide para no. 8, page no. 7, of the order and the relevant finding of the judgement in this regard is reproduced below: ITA No. 122 of2013 “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 fact- finding authority was required to deal with all aspects of factual matrix

Thus, to summarize the above, the following year-wise detail of deduction claimed us 80IC and allowed/disallowed by the AO in the assessment us 143(3) for assessment year 2005-06 & 2006-07 (before the search on 22th January, 2009) and in the assessments completed us 153C r.w.s. 143(3) after search, is reproduced in tabular form as under:

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 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.

The Ld. CIT (DR), appearing for the department while depending the order of the Assessing Officer, stated that during the course of search, it was noticed that the substantial work of printing and binding was being carried on from the sister concern located at Jalandhar, namely MBD Enterprises Pvt. Ltd., Focal Point, Jalandhar. She also stated there has been more functional

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 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 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, the Ld. Counsel of the assessee placed heavy reliance on the order for CIT(A) for Assessment Year 2006-07 dated 28.10.2009 and also, on the order of the CIT(A) for the assessment year 2005-06 dated27.03.2009 and the order of the ITAT order dated 08.06.2011 for assessment year 2005-06.

It has further been argued by the ld. Counsel of the assessee that during the course of survey at the factory premises at “Gagret” (Himachal Pradesh), the actual manufacturing activity being carried on by the assessee have been looked into and the assessee is engaged in the business of “printing and publishing” of the books and the manufacturing activities of industrial undertaking at “Gagret” start with the purchase of paper and chemical which are fed in various state of “Art OFF-Set Printer”. The printed reels along with the printed titles, are then cut as per specification of the books and these books are then binded with the title page and, thereafter, given for lamination. After lamination, the books are packed and dispatched and the complete record is maintained by the assessee to prove the movement of paper to Gagret, publishing and printing work carried out at the premises and, it was noticed and accepted by the assessing officer in his assessment order at page no. 3 that there were 139 employees working at Gagret unit, and the total turnover for various years as declared in the audited books of accounts of the assessee is as under:

As regards the argument of the Ld. DR, that substantial work of printing and binding was done at MBD Enterprises 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 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 dated 22-06-2009, along with the books submitted, the comparison is based on incorrect data. The MBD guide book Physical Education Class-X has 296 pages including 8 colored pages, though stated as 215 pages with single color in the Assessment order. It’s order size is stated to be much smaller than the PSEB text book for the same class and subject which had 96 pages, none of which are colored. While the data of the number and quality of pages differs from that in the asst order, no comments have been made in the remand report on the appellant’s submissions on this issue or on the factual discrepancies. These differences can well explain the difference in rates mentioned in para 13(ii). It is obvious that the rate charged to PSEB at Rs.0.27 per book of 96 pages is extremely low and would be even below the cost price since the AO has herself noted in the asstt order that binding charges itself were higher. This supports the appellant’s contention that orders from Govt. agencies were booked at low margins or even loss so as to increase visibility of the brands.”

Further, it has been argued that only very nominal work of printing and binding was got done from outside viz-a-viz, percentage of turnover which is as per the following chart and as also printing and binding got done from outside as percentage of expenses is very much negligible, which is proved by the following chart:

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 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.

TheLd. counsel for the assessee, Sh. Sudhir Sehgal, has relied upon the various judgement of the different benches of the ITAT that the assessee is a liberty to do manufacture for itself or for other, which makes no difference for purposes of section 80IC, as deduction is admissible for the job work done for others. This had been held in the following cases: I. Jaiswal Metals Pvt. Ltd. Vs. Joint Commissioner of Income Tax CHD-TRIB. II. Vashisht Alloys vs. Joint Commissioner of Income Tax ITA No. 573/Chd/2018 CHD-TRIB. III. Commissioner of Income Tax vs. Aar Ess Exim (P) Ltd. 56 taxmann.com 222 DEL-HC. IV. Hero Moto Corp. Ltd. Vs. Deputy Commissioner of Income Tax ITA No. 6990/Del/2017 DEL-TRIB. V. Addl. Commissioner of Income Tax vs. A. Mukherjee & Co. (P) Ltd. 113 ITR 718 CAL-HC.

Even the judgment of the Kolkata High Court (Supra), in the case of A. Mukherjee & Co. (P) Ltd. clearly applicable to this case which is evidenced from the following gist of judgment:

It was argued by relying upon the above said judgments, coupled with the facts that 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.

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.

It has further been argued that there has been huge/latest installation of machinery at Gagret unit as compared with the MBD Enterprises Pvt. Ltd., the block of machinery year wise at Gagret Unit is much more and which is evidenced from the following chart at page no. 41 of the order of the CIT(A) order:

It has further been argued, that there is no material for suppression of expenses and inflation of receipts and no enquiries have been made either from the persons from whom assessee had made purchases or to whom the sales have been made. The movement of goods from Gagret and outside were duly checked by the sale tax authorities at the barrier and, in fact, it has been argued vehemently by the counsel of the assessee, that finding of the assessing officer is based upon incorrect facts. Thus, in nutshell, it has been argued that there was proper infrastructure, man power at Gagret and has further drawn attention of the bench that the order for the assessment year 2005-06 have attained finality up to the level of the Hon’ble ITAT Amritsar Bench, Amritsar and even for the assessment year 2006-07, the CIT(A), Jalandhar has granted the 100% deduction u/s 80IC on the basis of the order of the assessing officer passed u/s 143(3), before the date of search vide order dated 15.12.2008 after calling for remand reports and thereafter, after the search conducted on 22.01.2009 on the assessee, the assessments 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).

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 compared to MBD Enterprises Pvt. Ltd. was much more as per the following details:

From the above chart, it is proved beyond any iota of doubt that the unit at “Gagret” was specialized unit, with latest machinery and technique and capable of printing “four colors” and which facility was not there in the MBD Enterprises, Jalandar and machinery installed therein is very old, and at the time of survey, the unit at Gagret was found to be working with 139 employees engaged in the production process, though, as per the EPF record for which a sample copy was filed for the financial year 2008-09, there were sufficient employees and, thus, mainly on the basis of certain incorrect data wrong inferences have been drawn and different CIT(A) have held in detailed orders before the search and after the search that the more than requisite condition for claim u/s 80IC have been met and, as such, it was pleaded that the CIT(A) has rightly allowed the deduction u/s 80IC for all the years.

The Ld. CIT (DR) in her rejoinder relied upon the order of the Assessing Officer for the assessment year 2005-06 and other orders of the assessing officer for the assessment year 2006-07 to 2010-11 and especially the observation of the assessing officer at page no. 3 to 8 of the assessment orders for Assessment Year 2005-2006. The CIT (DR) also argued that the basis of deduction u/s 80IC after the search conducted on 22.03.2009 was changed on the basis of the seized annexures as found during the search & survey operations, since new facts 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 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.

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 income and printing done from outside as per order dated 23.12.2007 passed by the Assessing Officer, Range-IV, Jalandhar, placed at paper book page no. 1 to 3 of the assessee and similarly, for the assessment year 2006-07, the assessing officer vide order dated 15.12.2008 had allowed the deduction @3.15% out of total deduction claimed u/s 80IC on the basis of the profit declared in its sister concern of the assessee namely MD Enterprises at Jalandhar and which is carrying on the business of job work of printing and binding and is a concern established many years ago. The said concern has the requisite old machinery.

The assessee had carried the matter to the respective CIT(A) for the assessment year 2005-06 and 2006-07 and for the assessment year 2005-06 vide order dated 27.03.2009, the CIT(A) had allowed the deduction u/s 80IC in respect of “sale of raddi” and “printing got done from outside” but in respect of the “sale of paper” and “interest income” deduction u/s 80IC was not allowed and copy of the order of CIT(A) have been placed by the assessee in the paper book at page no. 4 to 17 and the same order was upheld by the Amritsar Bench, Amritsar vide order dated 08.06.2011 in the appeal filed by the department. Similarly, for assessment year 2006-07, the CIT(A) for assessment year 2006-07 in a detailed order vide order dated 28.10.2009 after calling a remand report from the Assessing Officer allowed the deduction u/s 80IC as claimed by the assessee 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.

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 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 Bench in vide order dated 08.06.2011 and after the search/survey action on 22.01.2009 on the assessee, certain observations have been made by the Assessing Officer on the “seized documents” leading to disallowance of deduction u/s 80IC to the extent of 80% of the total claim made by the assessee and as per the department, the assessee is entitled to a claim of 20% only. Thus, in view of the above said facts, it is important to discuss the evidences which have led the Assessing Officer to disallow the deduction to the extent of 80% u/s 80IC. The assessee had filed a “tabular chart”

The AO has relied upon The AO has wrongly compared the two as annexure A-15 from Focal comparable items since the register at A- Point, Jalandhar which is 21 is for printing of form which end up as a register containing a book, when binding is done and register A-6 is a “binding register” maintained at record of printing the books for Gagret for Gagret, which records the number of December, 2008 and for books bound as against number of forms January, 2009 and the AO printed as recorded in Annexure A-21.

The AO has observed that Firstly, 406 employees are of 3 total number of independent unit and not of one unit and employees at Gagret were also, we have also submitted the details of 139 and 406 in three units employees in Jalandhar for Financial Year at Jalandhar during 2002-03 & 2003-04 and the employees at survey/ search operations Jalandhar were 495 and 441 respectively, and assumed that it which means that there are no reduction reflected the functional in employees at Jalandhar and, thus, capacity on comparative there is no logic in this observation of the basis. AO.

The AO in para 3.1(a) has The AO has himself mentioned at page stated that the stock of no. 3 of the order that there are five paper reel was much functional unit at Jalandhar and, therefore, higher at Jalandhar in to compare the stock of one unit with the comparison to Gagret and five units is totally misconceived and even framed an opinion that the closing stock cannot be the basis for unit at Focal Point was drawing any adverse inference. The state consuming more paper of a concern cannot be the basis for and was having more functional capacity of the unit. functional capacity then the unit at Gagret.

The AO has relied upon As is evident from the submissions of the the statements of three assessee that only negligible portion of persons at page no. 6 to 7 printing and binding was got done from of the order, that job work sister concern and also, percentage of of MBD Printographics expenses of printing and binding from Pvt. Ltd. was being outside were negligible being less than carried out at Jalandhar. the 1% in all the years. Further, none of the employees have stated that substantial work was being got done from outside and also, as per the binding judgment of the High Court and the ITAT no adverse inference could be drawn, if some portion of work is got done from outside.

The AO has relied upon It is submitted that annexure A-15 was the Annexure A-15 from similar to the register maintain at Focal Point, Jalandhar Annexure A-21 and the difference is that which contains the Annexure a-15 relate to number of forms printing of the books done printed for the month of December, 2008 for the Gagret for the whereas, Annexure A-21 relates to month of December, 2008 numbers of form printed for the month of and January, 2009 and January, 2009. Further, the AO has said details have been wrongly taken the figure of Rs. 2,26,000/- mentioned at page no. 12 replaced of Rs. 26,000/- only from the of the order of the AO and seized annexure in respect of forms printed for “Holy Faith International” and the AO has presumed that the relevant book is “HFI English 100% of the work had not Grammar” at page no. 12 of the order. It is been done at Gagret.

From the above chart and as argued by the ld. counsel of the assessee wrong inference have been drawn on the basis of abbreviation MP, which refers to “Modern Publishers” and not to MBD Printographics Pvt. Ltd. and such is easily verifiable from the records and, as such, there is no need for any presumptions and assumptions. Even, the observations of the Assessing Officer with regard to the certain registers seem to be incorrect besides that there has no reduction of the employees at Jalandhar, even after new unit had been set-up at Gagret and the AO has also compared the employees of the three units at Jalandhar, with one single unit at Gagret and further, the finding of the Assessing Officer of the stock found at Gagret and comparing it to the stock of “five concern” located at Focal Point, Jalandhar is also misleading, because stock of at Jalandhar belonged to five concern which have also been carrying on the same business. Even otherwise, the stock situation on any particular date cannot be taken a basisto judge the production capacity of any unit. This chart is self-explanatory and the issue therefore, stands explained on the basis of the wrong inferences drawn by the Assessing Officer on the basis of the seized material during the course of search/survey operations.

There is no evidence brought on record by the Assessing Officer that any 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:

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 at Jalandhar for the Gagret unit. Thus, no adverse inference could be drawn on account of printing and binding of small portion from the sister concern and no case can be made out for part disallowance of deduction u/s 80IC. It was further explained that printing charges, charged by the sister concern from the other parties are inclusive of printing & processing charges.The difference in the rates as mentioned by the AO in para no. 3.6 on para no. 12 of the assessment order, has been explained adequately that the processing includes highly skilled, technical and manual method of scrutinizing and arranging of pages of a particular book in a desired order and then they are checked and rechecked in proper order. Further, the charges are also depending upon the type of binding needed for the particular book i.e., center pin, side pin, perfect binding etc. then for printing a book, the same is not printed at one time because most of the times, only the first and the last pages are printed first and then there is complete process involved in serially arranging these pages, which takes lots of time. The rates charged also vary on account of type of printing like single side color, single side double color, single side multicolor, therefore, the inference drawn by the assessing officer about the rate charged from the other concern and from the MBD Printographics is totally misplaced.

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.”

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 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 correctly observed that the assessee has got a smallportion of its printing work done from outside, it should not be disentitled to deduction u/s.80-IC of the Act in respect of such amount. While holding so, we are fortified by the decision of the Hon’ble Calcutta High Court in the case of CIT(Central), Calcutta Vs. W.H. Hart on and Co. Ltd.(1978) 113 ITR708 (Cal), wherein it has been held that a publisher got its books printed outside from any printer under its supervision and it can be said that the assessee had taken an active role by coordinating its activities as well as activities of the printer in a business like a manner. Considering the entire facts and the circumstances of the case, we uphold the order of the CIT(A) in holding that the printing got done from outside is eligible for deduction under section 80-IC of the Act.”

The Assessing Officer on the basis of certain documents relating to the two months of the Financial Year 2008-09 have made consequential addition in the Assessment Year 2005-06, 2006-07, 2007-08 & 2008-09 and extrapolating the same other Assessment years carries no logic without any material found during the course of search/survey and there is no basis for such extrapolating and, therefore, the conclusion for the Assessment Year 2005-06 to 2008-09 totally misplaced. 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 no hesitation in confirming the order of the CIT(A), in allowing the deduction us 80IC for all the Assessment Years.

Before parting, we have also taken into consideration, that for the Assessment Year 2012-13, the deduction of 30% as eligible to the assessee under section 80IC had been allowed by the Assessing Officer, which was subject matter of the action us 263 by the PCIT and the matter was carried to the ITAT in which cancelled the order of the PCIT as passed us 263 and no further appeal was filed by the department. Thus, the issue have attained finality and further for Assessment Year 2013-14 & 2014- 15, the Assessing Officer had allowed the deduction as claimed by the assessee @30% as eligible deduction for that year in the order passed us 143(3) and since the facts and circumstances, for these years are the same as in the earlier years and, therefore, when on an issue, a particular claim has been settled one way or the other, then the consistency has to be maintained as per the binding judgment of the jurisdictional High Court in the case of Leader Valves Ltd. reported in 295 ITR 273 P & H (HC) and Berger Paint 266 ITR 99 Apex Court.

In view of the above factual matrix and Judicial pronouncement, we find no merit in the argument of the department, and that the claim of the assessee for deduction u/s 80IC is hereby held to be legally justified and therefore, all the appeals of the department are dismissed.

In Assessment Year 2010-11,the ITAT, Amritsar Bench, Amritsar had allowed the appeal of the assessee with regards to disallowance of the interest. The department filed appeal before the Hon’ble Punjab and Haryana High Court, wherein the Hon’ble Jurisdictional High Court, In ITA No. 94/2017 vide para 4 of its order dated 08/08/2017 had dismissed the appeal of the department on the issue of disallowance of interest. In view of that we understand that the subject appeal was registered by mistake on record by the registry and as such, this is dismissed as infructuous. 38. In the result, all the appeals of department and that of assessee stand dismissed. Order pronounced in the open court on 25.08.2021 Sd/- Sd/- (Laliet Kumar) (Dr. M. L. Meena) Judicial Member Accountant Member *doc Copy of the order forwarded to: (1) The Appellant