M/s MBD Printographics (P) Ltd., Jalandhar V. The Principal Commissioner of Income Tax (Central), Ludhiana

ITA 281/ASR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9572 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 12-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKER
• Assessee Lawyers: SAURABH SEHGAL
• Keywords: Question of law; Bad and doubtful debts
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.281(ASR)/2016 ASSESSMENT YEAR:2012-13 PAN : AAACM9209R M/S.M.B.D. PRINTOGRAPHICS (P) LTD. VS.PRI. COMMISSI ONER OF INCOME TAX, JALANDHAR. (CENTRAL) LUDHIANA. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SAURABH SEHGAL, CA RESPONDENT BY: BHAWANI SHANKER, DR DATE OF HEARING: 30/06/2016 DATE OF PRONOUNCEMENT: 15/09/2016 ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. PRI. COMMISSIONER OF INCOME TAX (CENTRAL), LUDHIANA , DATED 17.03.2016, RELATING TO ASSESSMENT YEAR 2012-13, PASSED UNDER S ECTION 263 OF THE ACT. 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE COMPANY HAD THREE MANUFACTURING UNITS OUT OF WHICH ONE UNIT WAS ENTITLED TO THE BENEFIT OF DEDUCTION UNDER SECT ION 80-IC OF THE ACT. THE ASSESSEE HAD GOT DONE CERTAIN JOB WORK FROM OU TSIDE FOR WHICH THE AO HAD NOT DISALLOWED THE PROPORTIONATE CLAIM UNDER SECTION 80-IC. THE ITA NO.281/ASR/2016 AS.Y. 2012-13 2 LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO DURING ASSESSMENT PROCEEDINGS HAD CALLED FOR THE DETAILS OF JOB WORK DONE FROM OUTSIDE AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO PB-4, WHERE A QUESTIONNAIRE DATED 22.11.2013 WAS PLACED. OUR SPECIFIC ATTENTIO N WAS DRAWN TO POINT (III) OF THE QUESTIONNAIRE. IT WAS SUBMITTED THAT T HE ASSESSEE FILED ITS REPLY VIDE LETTER DATED 27.01.2014, WHICH IS APPARENT FRO M PB-8 AND IS PLACED ON RECORD, WHEREIN DETAIL OF JOB WORK CHARGES PAI D WAS ENCLOSED AS A CHART, AS PLACED IN PB-11. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AFTER GOING THROUGH THIS SUBMISSION, THE AO T OOK PLAUSIBLE VIEW AND DID NOT MAKE DISALLOWANCE FOR PROPORTIONATE DISALLO WANCE OUT OF DEDUCTION UNDER SECTION 80-IC, AS THE ITAT, AMRITSA R BENCH, VIDE ITS ORDER, DATED 8 TH JUNE, 2011, IN ASSESSEES OWN CASE, IN ITA NO.426(ASR)/2009 FOR THE ASSESSMENT YEAR 2005-06, H AS ALREADY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND THEREFORE, THE AO WAS BOUND TO FOLLOW THE SAME. THE LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE ONLY OBJECTION RAISED BY THE LD. PRI. CIT IS THAT THE DE PARTMENT HAD NOT ACCEPTED THE ORDER OF THE TRIBUNAL AND HAD FILED TH E APPEAL BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT. IT WAS SUBMITT ED THAT MERE FILING OF APPEAL BEFORE THE HONBLE HIGH COURT DOES NOT ME AN THAT SUBORDINATE AUTHORITIES SHOULD IGNORE THE ORDER OF THE TRIBUNA L. IT WAS SUBMITTED THAT WHERE THE AO FOLLOWED THE DECISION OF THE APPE LLATE AUTHORITY, IT CANNOT BE SAID THAT HIS DECISION IS ERRONEOUS MERE LY BECAUSE THE DECISION OF THE APPELLATE AUTHORITY IS THE SUBJECT MATTER OF A FURTHER ITA NO.281/ASR/2016 AS.Y. 2012-13 3 APPEAL. RELIANCE IN THIS RESPECT WAS PLACED ON THE DECISION OF THE HONBLE ORISSA HIGH COURT IN THE CASE OF COMMISSIONER OF IN COME TAX VS. ORISSA STATE FINANCIAL CORPORATION, REPORTED IN (1993) 2 03 ITR 747 (ORISSA). FURTHER, RELIANCE WAS PLACED ON THE DECISION OF TH E DELHI BENCH OF THE TRIBUNAL, DATED 15.10.2014 IN THE CASE OF TEJPAL SI NGH KOHLI VS. CIT, PASSED IN ITA NO.3637/DEL/2014. 3. THE LD. DR, ON THE OTHER HAND, HEAVILY PLACED RE LIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE THO ROUGHLY GONE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE AO DURING ASSESSMENT PROCEEDINGS HAS DULY CALLED FOR INFORMA TION FOR JOB WORK DONE FROM OUTSIDE AND ASSESSEE HAD FILED COMPLETE D ETAILS AS IS APPARENT FROM PB-4, 8 & 11 AND THEREFORE, THE AO DID NOT MAK E ANY DISALLOWANCE OUT OF DEDUCTION UNDER SECTION 80-IC OF THE ACT ON PROPORTIONATE BASIS, AS HE MUST BE IN THE KNOWLEDGE THAT IN EARLIER YEAR S SIMILAR ISSUE HAD BEEN DECIDED IN FAVOUR OF THE ASSESSEE, BY THE AMRI TSAR BENCH OF THE TRIBUNAL VIDE ITS ORDER DATED 08.06.2011 IN ITA NO. 426(ASR)/2009 FOR THE ASSESSMENT YEAR 2005-06 (COPY PLACED AT PB 12 TO 17 ), WHERE UNDER SIMILAR CIRCUMSTANCES, IT HAS BEEN HELD AS UNDER: 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 UND ER ITS SUPERVISION. WHILE DECIDING THIS ISSUE, THE LD. CIT 9A) HAS CORRECTLY ITA NO.281/ASR/2016 AS.Y. 2012-13 4 OBSERVED THAT THE ASSESSEE HAS GOT A SMALL PORTION OF ITS PRINTING WORK DONE FROM OUTSIDE. IT SHOULD NOT BE DISENTITLE D TO DEDUCTION U/S 80-IC OF THE ACT IN RESPECT OF SUCH AMOUNT. WHILE H OLDING SO, WE ARE FORTIFIED BY THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT(CENTRAL), CALCUTTA VS. W.H. HARTON AND CO. LTD. (1978) 113 ITR 708 (CAL.), WHEREIN IT HAS BEEN HELD THAT A PUBLISHER GOT ITS BOOKS PRINTED OUTSIDE FROM ANY PRINTER UNDER ITS SU PERVISION AND IT CAN BE SAID THAT THE ASSESSEE HAD TAKEN AN ACTIVE R OLE BY COORDINATING ITS ACTIVITIES AS WELL AS ACTIVITIES O F THE PRINTER IN A BUSINESS LIKE A MANNER. CONSIDERING THE ENTIRE FACT S AND THE CIRCUMSTANCES OF THE CASE, WE UPHOLD THE ORDER OF T HE LD. CIT(A) IN HOLDING THAT THE PRINTING GOT DONE FROM OUTSIDE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IC OF THE ACT. 5. WE FIND THAT THIS ORDER OF THE TRIBUNAL IN THE C ASE OF THE ASSESSEE ITSELF IS DATED 08.06.2011 AND THE AO WAS BOUND TO FOLLOW THE SAME. THE ONLY OBJECTION RAISED BY THE LD. PRI. CIT IS THAT O N THE SAME ISSUE, THE DEPARTMENT WAS IN APPEAL AND THE QUESTION OF LAW H AS BEEN ADMITTED BY THE HONBLE PUNJAB & HARYANA HIGH COURT. FOR THE SA KE OF COMPLETENESS, THE OBJECTION OF THE LD. CIT(A) IS REPRODUCED BELOW : (A) THE DEPARTMENT IS IN APPEAL ON THIS ISSUE OF LA W BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT, CHANDIGARH, IN ITA NO.121 OF 2013. THE SAID QUESTIONS OF LAW RAISED BY THE DEPARTMENT BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT, CHANDIGARH HAVE BEEN ADMITTED VIDE ORDER DAT ED 18.09.2014. 6. THE LD. PRI. CIT HAS NOWHERE HELD THE ORDER TO BE ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE H ONBLE ORISSA HIGH COURT, IN THE CASE OF CIT VS. ORISSA STATE FINANCIA L CORPORATION, REPORTED AT 203 ITR 747 (ORI.), UNDER SIMILAR CIRCUMSTANCES, HAD HELD AS UNDER: ITA NO.281/ASR/2016 AS.Y. 2012-13 5 HELD,(I) THAT FROM THE ORDER PASSED BY THE COMMISSI ONER UNDER SECTION 263, IT WAS CLEAR THAT INTEREST ON DO UBTFUL DEBTS WAS HELD TO BE TAXABLE INCOME BECAUSE REFERENCE APPLICA TIONS AGAINST THE ORDERS OF THE TRIBUNAL HAD BEEN FILED IN THE HIGH C OURT. NO OTHER REASON WAS INDICATED BY THE COMMISSIONER IN SUPPOR T OF HIS CONCLUSION THAT THE ORDER OF THE INCOME TAX OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. HI S CONCLUSION THAT INTEREST ON DOUBTFUL DEBTS WAS REAL INCOME BECAUSE THE MATTER WAS PENDING UNDER REFERENCE BEFORE THE HIGH COURT COULD CERTAINLY NOT BE A GROUND TO ATTRACT THE OPERATION OF SECTION 263. 7. SIMILARLY, THE DELHI BENCH OF THE TRIBUNAL IN TH E CASE OF TEJPAL SINGH KOHLI VS. CIT, PASSED IN ITA NO. 3637/DEL/201 4, HAS HELD AS UNDER: ON PERUSAL OF THE ABOVE PARAGRAPH IN THE ASSESSMENT ORDER, COUPLED WITH THE FACTS THAT IN THE EARLIER ASSESSME NT YEAR THE SAME AO DENIED THE EXEMPTION U/S 80-IC TO THE ASSESSEE O N THE VERY SAME GROUNDS AND THE FACTS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS REVERSED SUCH ADDITION, WE ARE OF THE OPINION THAT THE AO HAS PROPERLY APPLIED ITS MIND AND HENCE TAKE A P LAUSIBLE VIEW. THUS, APPLYING THE PROPORTIONS LAID DOWN BY THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. MAX INDIA LTD. (2007) 295 ITR 282 (SC) AND THE PROPORTIONS LAID DOWN IN THE CASE OF MALABA R INDUSTRIES CO. LTD. VS. CIT, 243 ITR 83 (SC) WE CONCLUDE THAT ORDE R PASSED U/S 263 IS BAD IN LAW. 8. THEREFORE, KEEPING IN VIEW THE FACTS AND CIRCUMS TANCES OF THE PRESENT CASE AND FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON BY THE ASSESSEE, WE ARE OF THE OPINION THAT ASSUMPTION OF JURISDICTION BY THE LD. ITA NO.281/ASR/2016 AS.Y. 2012-13 6 PRI. CIT WAS NOT JUSTIFIED AND THEREFORE, WE CANCEL THE ORDER PASSED BY THE LD. PRI. CIT UNDER SECTION 263 OF THE ACT. 9. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE AS SESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/09/20 16. SD/- SD/- (A.D. JAIN) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER /SKR/ DATED: 15/09/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. MBD PRINTOGRAPHICS (P) LTD. JALAN DHAR. 2. THE PRI. CIT (CENTRAL), LUDHIANA. 3. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.