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Income Tax Appellate Tribunal, DELHI BENCHES : “A” NEW DELHI
Before: SHRI C.M.GARG, J.M. & SHRI L.P. SAHU, A.M.
O R D E R PER C.M.GARG, JUDICIAL MEMBER
This appeal by the Revenue has been directed against the order of the Ld.CIT(A)-IV, New Delhi dated 11.05.2012 in appeal no.296/11-12 for the A.Y. 2009-10.
1.1. The main grounds for adjudication of the Revenue read as under. “1. The Ld.CIT(A) erred on fact in law on allowing deduction u/s 80 JAA amounting Rs.1,10,28,251/-.
2. The Ld.CIT(A) erred on fact in law in deleting the addition of Rs.1,34,10,746/- on account of sales returns.”
Briefly stated the facts giving raise to this appeal are that the case was selected for scrutiny on the basis of CASS and the A.O. made two disallowances u/s 80 JJAA of the Income Tax Act, 1961 (for short ‘the Act’) amounting to Rs.1,10,28,251/- and another on account of sales return amounting to Rs.1,34,10,746/-. Aggrieved the assessee preferred appeal ITA 4166/Del/2012 AY 2009-10 Amar Ujala Publications Ltd. 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.
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 disallowed and added back to the returned income of the assessee. The Ld.D.R. further took us through the relevant part of the impugned order and submitted that the Ld.CIT(A) granted relief to the assessee without any justified reason, therefore, the impugned order may be set aside by restoring that to the A.O.
Replying to the above, the Ld.Counsel for the assessee submitted that a similar issue was raised by the Revenue before the Tribunal in for the A.Y. 2008-09 and the same was dismissed by the Tribunal vide order dt. 22.2.2013 and the issue has attained finality at the level of the Tribunal, therefore, the same is covered in favour of the assessee by the Order of the Tribunal (supra) for the A.Y. 2008-09. On a specific query from the Bench the Ld.D.R. fairly accepted that a similar issue was decided against the Revenue by the Tribunal confirming the conclusion of the Ld.CIT(A) for the A.Y. 2008-09. On a careful consideration of the submissions of both sides, we note that the ITAT Delhi A Bench in the order dt. 22.2.2013 passed in ITA no.1808/Del/2012 for the A.Y. 2008-09 in Revenue’s appeal in DCIT vs. Amar Ujala Publications in the assessee’s own
ITA 4166/Del/2012 AY 2009-10 Amar Ujala Publications Ltd. case dismissed ground no.1 of the Revenue on a similar set of facts and circumstances by observing as under.
“24. So far as regards ground No.l, the Assessing Officer made a disallowance of Rs.1,42,27,908/- u/s 80JjJA of the Act on the ground that the deduction under the said Section is allowable only if there is an increase in the regular workmen employed during the year of at lease 10% of the existing number of workmen employed in the undertaking as on the last day of the preceding year, on an year to year basis for each year for which deduction is allowed. The Ld. CIT (A) deleted the disallowance, observing as follows:-
In the case before us, the A.O. has not disputed that any of the above conditions is not satisfied by the assessee. The A.O. is only of the view that 10% additional employment as compared to the number of employees at the end of the preceding year should be created in each of the three years for which the deduction u/s 80JJAA is to be granted. However, this interpretation is not borne out by the provisions of the statute as discussed herein above. On a plain reading of section80JJAA it is clear that the benefit of deduction of 30% of additional 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 to add not only 10% of the old number but also 10% of the new addition in the first year. This interpretation goes directly against the provisions of sub-section (1) of section 80JJAA, whereby the benefit is to be allowed for three years starting from the previous year in which such employment is provided. It is settled law that while interpreting the provisions of the Act each word has to be given a meaning and words
ITA 4166/Del/2012 AY 2009-10 Amar Ujala Publications Ltd. which such employment is provided" are very clear that once such employment is created this benefit will be available for succeeding two years. The proviso referred to by the A.O. is applicable in the first year only whereby in the case "of an existing undertaking the additional wages shall be 'nil' if the increase in the number of workmen during the year is less than 10% of workmen employed in such undertaking as on the last day of the preceding year. In view of the above, I find that the addition of Rs.1,42,27,908/- made by the A.O. by disallowing the deduction u/s 80JJAA is not based on proper understanding of the provisions of the statute and hence, cannot be legally sustained. The impugned addition is, therefore, deleted."
Before us, the Ld. OR has contended that the Ld. CIT (A) has erred in deleting the disallowance of the deduction u/s 80JJAA of the Act, failing to consider that as rightly observed by the Assessing Officer, since there were 2123 regular workmen in the unit as on the first day of the previous year and as on the last day, such regular workmen were 1419 in number, there was a discrepancy in the number of workmen employed as on the last day of the immediately preceding year; that during the relevant previous year, as submitted on behalf of the assessee, the regular workmen were 974; that as such, the requirement of the Section did not stand satisfied, as the number of workers at the end of the year were not 10% more than the number of workers at the end of the earlier previous year; that deduction of 30% of additional wages is to be allowed only if the requirement of the Section is met, that the proviso under section clearly states that the additional wages shall be nil if the increase in the regular workmen employed during the year is less than 10% of the existing number of workmen employed in such undertaking as on the last day of the preceding year; that the criteria are to be met 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.
The Id. 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 ;
ITA 4166/Del/2012 AY 2009-10 Amar Ujala Publications Ltd. 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 to create employment every year; the interpretation given by the Assessing Officer would mean that in the first year the assessee needs to create 10% additional employment. which will mean that if the 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; that further, in the third year it needs to create 10% more of the preceding year, which in this case will be at least 134; that 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 to add not only 10% of the old number but also 10% of the new addition in the first year. This interpretation goes directly against the provisions of sub-section (I) of Section 80JJAA, whereby the benefit is to be allowed for three years starting from the previous year in which such employment is provided.
Having considered the rival contentions on this issue with reference to the material on record, we find that indeed the requirement of Section, i.e., Section 80JJAA of the Act are duly met in this case. The assessee is an Indian company deriving profits from an industrial undertaking engaged in manufacture or production of an article or thing. The benefit under the Section is 30% of the additional wages paid to the new regular workmen, which exceed 100 workmen as per requirement. The increase is not of less than 10%. The undertaking is not formed by splitting up or reconstruction of an existing undertaking nor is a result of amalgamation with another industrial undertaking. Undisputedly the report of the Accountant in Form No.10D was filed along with the return of income. The Section nowhere requires employment to be created every year. The explicit provisions of Section 80JJAA(1) require the benefit to be allowed for three years starting from the previous year in which such employment is provided. For ready reference, the relevant provisions of section 80JJAA(1) are reproduced hereunder.
"Where the gross total income of an assessee, being an Indian company, includes any profits and gains derived from any industrial undertaking engaged in the 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
ITA 4166/Del/2012 AY 2009-10 Amar Ujala Publications Ltd. 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."
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."
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 for three years starting from the previous' year in which the employment is provided, when it states "the previous year in which such employment is provided." As such, the benefit will be available for the succeeding two years also. The proviso to the Section is applicable to the first year only and as per the same, in the case of an existing undertaking, the additional wages shall be nil if the increase in the number of workmen during the year is less than 10% of the work men employed in such undertaking as on the last day of the preceding year.
Accordingly, the grievance of the Department by way of ground no.1 does not carry any merit and the same is hereby rejected.”
4.1. In view of the above in assessee’s own case for the A.Y. 2008-09 the Tribunal had upheld the observations of the Ld.CIT(A) that as per provisions of S.80 JJAA(1) of the Act the benefit is to be allowed for three years starting from the P.Y. in which the employment was provided, and as such the benefit will be available for the succeeding two years also. The Tribunal also considered the Proviso to S.80 JJAA of the Act and held that the same is applicable to the first year only and as per said Proviso in the case of existing undertaking the additional wages shall be ‘nil’ if the increase in the ITA 4166/Del/2012 AY 2009-10 Amar Ujala Publications Ltd. number of work men during the year is less than 10% of the work men employed in such undertaking on the last date of the preceding year. 4.2. In view of above legal proposition when we analyse the facts and circumstances of the A.Y. 2009-10 we clearly observe that as per provisions of S.80 JJAA of the Act the deduction is available for three consecutive years in respect of the additional employment created by the assessee company during 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 (supra), 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). Accordingly ground no.1 of the Revenue is dismissed.
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 ITA 4166/Del/2012 AY 2009-10 Amar Ujala Publications Ltd. rightly added to the returned income of the assessee. The Ld.D.R. vehemently contended that the Ld.CIT(A) granted relief to the assessee without any justified reason and basis. Therefore, the impugned order may be set aside by restoring it to the file of A.O. Replying to the above the Ld.Counsel for the assessee pointed out at para 6.1 page 14 of the impugned order and submitted that the Ld.CIT(A) after considering the order of the Tribunal for earlier A.Ys in assessee’s own case on the same issue in the similar facts and circumstances following the said orders of the Tribunal granted relief to the assessee on account of sales return. The Ld.Counsel vehemently pointed out that the Ld.CIT(A) had no option but to follow the orders of the Tribunal for the preceding A.Ys deleting the similar addition made for the current year on identical facts and circumstances. Therefore, no interference in the impugned order is called for. The Ld.Counsel argued that a final submissions that the A.O. ignored an important fact while making this addition that the quantity of sales return varies from place to place as per local condition of law and order and high competition between the assessee and other news paper publishers therefore average percentage of 4.5% cannot be adopted for estimation of excessive sales returns and this aspect was considered by the Tribunal in the orders passed for the earlier A.Ys the Ld.Counsel also pointed out that the order of the ITAT Agra Bench in assessee’s own case in ITA 306/Agra/2007 for the A.Y. 2003-04 and pointed out that similar kind of addition was directed to be deleted by the Tribunal dismissing ground of Revenue in respect of sales returns at Varanasi and Allahabad additions. Therefore the issue is squarely covered in favour of the assessee by the order of the Tribunal.
On a careful consideration of above submissions at the very outset we note that similar ground/issue was raised by the Revenue before ITAT Agra Bench in ITA 360/A/2007 for the A.Y. 2003-04 and the Tribunal decided the issue with following observations and conclusions. “8. We have carefully considered the rival submissions along with the orders of the tax authorities below. We noted that in this case, the Assessing Officer had disallowed the sales return (ignoring that it is not an expenditure claimed) relating to Allahabad and Varanasi Units by holding that at the most 4% of ITA 4166/Del/2012 AY 2009-10 Amar Ujala Publications Ltd. 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 Kanpur 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 21583104 %ge to gross sales 1.32% 13.60% 13.79% 8.11% 2.80% AY 1999-00 Gross Sales 56777387 18117826 17310903 6874889 26321086 Less returns 901674 2483508 2380748 481778 643109 Net Sales 55875623 15634317 14930154 6393111 25677977 %ge to gross sales 1.59% 13.70 13.75% 7.01% 2.44% AY 2000-01 Gross Sales 69293423 Branch 26909319 7720238 32414871 Less returns 606025 under 3082436 406425 651414 Net Sales 68687398 Amar 23826882 7313813 31763457 Ujala %ge to gross sales 0.87% Prakashan 11.45% 5.26% 2.01% Ltd. AY 2001-02 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 Less returns 1231166 2720967 433111 3689903 1024793 Net Sales 80577643 31691676 9574781 30311878 39476969 %ge to gross sales 1.50% 7.91% 4.33% 10.85% 2.53% AY 2003-04 Gross Sales 86026933 34889589 10472644 31916338 37622676 Less returns 1951107 2512856 525372 2308859 1075444 Net Sales 84075816 32376733 9947272 29607479 36547231 %ge to gross sales 2.27% 7.20% 5.02% 7.23% 2.86% From this chart itself it is apparent that in respect of Allahabad unit, the percentage of sales return in the initial years, i.e., A.Y. 1998-99, 1999-2000 were as high as 13.97%, 13.75% and which gradually reduced to 11.45% in assessment year 2000-01, 7.99% in the assessment year 2001-02 and 7.91% in the assessment year 2002-03. Similarly, in the case of the Jhansi Unit also, ITA 4166/Del/2012 AY 2009-10 Amar Ujala Publications Ltd. it was 8.11% in A.Y. 1998-99 and in respect of Varanasi Unit it was 10.85% in the initial year, i.e., in assessment year 2002-03. These percentages of the sales return has duly been accepted by the department. Apparently, the percentage of the sales return during the year as per the chart were only 7.2% and 7.23% for the Allahabad and Varanasi units. 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 on the Assessing Officer to prove that these documents/evidences are not genuine. We also noted that the assessee has submitted before the Assessing Officer about the maintenance of the sales return record in the shape of the sales return advice issued by the agents, credit notes and credit note summary. Even these sales return were also duly shown in the Trade Tax return filed in the Trade Tax Department. The accounts of the assessee were duly audited. The branch-wise details of the sales return along with copy of account were filed. Even the quantitative details were duly filed. The assessee has submitted the stock register maintained by him. The Assessing Officer without bringing any evidence to the contrary, simply rejected the sales tax return shown by the assessee treating them to be abnormal. The assessee has duly explained the system of accounting in respect of newspaper. At the time of dispatch of newspaper packed in bundles, entries are made in taxi dispatch register and in delivery challans. In the books of account all the agents are debited on the basis of monthly bills raised and sales are credited. The return of the unsold newspaper is noted on daily basis and recorded in the manual sales return register maintained at the gate. Thereafter, same is recorded in the intimation register maintained on daily basis showing date, name of the party, station, month and unsold copy. The agent also furnishes monthly statement which is cross verified from the records and credit notes issued. Accordingly, the credit ITA 4166/Del/2012 AY 2009-10 Amar Ujala Publications Ltd. note is received and no discrepancy in the system followed by the assessee was pointed out by the Auditor. Even the Assessing Officer has also notbrought on record any deficiency in this regard. In fact, we noted that during the year, the sales return in Allahabad and Varanasi Branches were 7.2% not 7.7%, as mentioned in the assessment order or by the CIT(A). The Assessing Officer without giving any basis allowed 4% sales return while the Assessing Officer allowed 4% of the sales return while the Assessing Officer allowed 7% of the sales return for both the units. No basis for allowing 4% or 7% sales return was given by any of the authorities below. Neither any comparative instance was brought on record. On this basis itself, in our opinion, the disallowance(addition) cannot be sustained.
We also find force on the legal submissions of the 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 said that the income to that extent has accrued to the assessee during the year. Once the onus gets shifted on the department, now the question arises what material or evidence the Assessing Officer has brought on record so as to discharge the onus of revenue. We find that except allegations for which the assessee has duly submitted the evidence, there is no iota of evidence on record which may point out that the income has accrued to the assessee during the year as the assessee has made the sale much more than what has been shown in the books of account. There is difference between the disallowance of an expenditure and the accrual of the income. Even prudency concept of the accounting lays down that the income cannot be provided until and unless it is realized or accrued to the assessee. What in fact, the Assessing Officer has tried to hold is that the income has accrued to the assessee during the year by disallowing the sale return. This, in our opinion, is not correct. Disallowance of expenditure can be made if the assessee claims the expenditure and he is not able to fulfill the ITA 4166/Del/2012 AY 2009-10 Amar Ujala Publications Ltd. conditions as laid down u/s. 37 or other relevant provisions, under which the deduction has been claimed. The assessee has duly accounted the sales return on the basis of evidence produced and brought on record. Therefore, we set aside the order of the CIT(A) and delete the disallowance made by the Assessing Officer in toto in respect of the sales return at Varanasi and Allahabad Benches. Thus, the ground No. 2 to 4 of assessee’s appeal and ground No. 1 of the cross objection are allowed while ground No. 1(i) of Revenue’s appeal is dismissed.”
On a careful perusal of the impugned order of the Ld.CIT(A) we note that the Ld.CIT(A) has granted relief to the assessee by following ITAT Agra Bench order dt. 28.7.2011 (supra) for A.Y. 2003-04. Relevant operative part of this order of the First Appellate Authority in para 6.1 at page 14 reads as under. “6.1. I have carefully considered the assessment order and the submissions made by the Ld.A.R. on the above issue. The AO has made the impugned disallowance on the basis of similar disallowances made in the assessment order for AYs 2003-04 to 2005-06. In this regard, it is pointed out by the Ld.A.R. that the above matter regarding sales return has been decided in favour of the appellant for A.Y. 2003-04 by the Hon’ble ITAT, Agra Bench vide consolidated order dated 28.7.2011 in cross appeals in 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 Rs.1,34,10,746/- is deleted.”
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 taking 4.5% average sales returns which is ITA 4166/Del/2012 AY 2009-10 Amar Ujala Publications Ltd. not a correct approach. The amount of sales return is an expenditure accrued to the assessee when sold newspapers returned by the vendors on account of unsold stock and the same is deducted from the amount of sales raised against the respective vendors. The revenue authorities can not ignore this fact that the amount of sales return shown by the assessee is varying from place to place and in the maximum cases the percentage of sales return is less than 4.5% which is as low as 2.08% in Agra, 2.32% in Punchkula. In this situation disallowance on the basis of average 4.5% sales returns cannot be held to be unsustainable. In this situation we are in agreement with the conclusion of the Ld.CIT(A) that the assessee has duly accounted sales returns on the basis of evidence produced and brought on record, therefore, disallowance made by the A.O. cannot be held as sustainable and in accordance with law and the Ld.CIT(A) rightly followed the proposition laid down by the ITAT Agra Bench in assessee’s own case for the A.Y. 2003-04 (supra). Accordingly we incline to hold that the AO made disallowance and addition without any basis and by ignoring the relevant facts and explanation of the assessee and the sale was rightly held as unsustainable by the Ld.CIT(A) and the First Appellate Authority had rightly directed the AO to delete the same. We are unable to see any perversity, ambiguity or any other valid reason to interfere with the same and thus ground no.2 of the Revenue being devoid of merits is also dismissed.
In the result the appeal of the Revenue is dismissed. Order pronounced in the Open Court on ......... October, 2015.