The Principal Commissioner Of Income Tax (Central), Ludhiana v. M/S Mbd Printographics Pvt. Ltd., Jalandhar

ITA-94-2017 (O&M) IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA-94-2017 (O&M) Date of Decision: 8.8.2017 The Principal Commissioner of Income Tax (Central), Ludhiana Versus ....Appellant. M/s MBD Printographics Pvt. Ltd., Jalandhar ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MR. JUSTICE AMIT RAWAL. PRESENT: Mr. Rajesh Katoch, Senior Standing Counsel for the appellant. Mr. Pankaj Jain, Senior Advocate with Mr. Sachin Bhardwaj, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1.This appeal has been filed by the revenue under Section 260Aof the Income Tax Act, 1961 (in short “the Act”) against the order dated13.6.2016 (Annexure A-III) passed by the Income Tax Appellate Tribunal,Amritsar Bench, Amritsar (hereinafter referred to as “the Tribunal”) in ITANo. 534(Asr)/2014 for the assessment year 2010-11, claiming the followingsubstantial questions of law:- (i)Whether on the facts and in the circumstances ofthe case, the Hon'ble Income Tax AppellateTribunal, Amritsar Bench, Amritsar has erred indeleting the addition of ` 1,22,51,965/- on accountthe case, the Hon'ble Income Tax AppellateTribunal, Amritsar Bench, Amritsar has erred indeleting the addition of ` 1,22,51,965/- on account of disallowance of interest expenditure, ignoringthe specific finding of the CIT(A) that the assesseehad not even attempted to show that theinvestments in sister concerns served any businesspurpose? (ii)Whether on the facts and in the circumstances ofthe case, the Hon'ble Income Tax AppellateTribunal, Amritsar Bench, Amritsar has erred indeleting the addition of ` 1,22,51,965/- on accountof disallowance of interest expenditure withoutappreciating the finding of the CIT(A) that fundsraised on interest for working capital requirementshad to be raised to make up for the shortfall causedby interest free investments in sister concernswhich did not serve any business purpose for theassessee company? (iii)Whether on the facts and in the circumstances ofthe case, the Hon'ble Income Tax AppellateTribunal, Amritsar Bench, Amritsar has erred inupholding the order of the CIT(A) in deleting thedisallowance of deduction u/s 80-IC of the IncomeTax Act, 1961 made by the AO on the job workgot done outside the specified area, i.e. HimachalPradesh and on the trading receipt from sale ofunused papers, following its decisions in the caseof the assessee for the assessment years 2005-06 to 2009-10, against which the appeals filed by therevenue are still pending adjudication in ITA Nos.117 to 122 of 2013 before this Hon'ble Court? (iii)Whether on the facts and in the circumstances ofthe case, the Hon'ble Income Tax AppellateTribunal, Amritsar Bench, Amritsar has erred inupholding the order of the CIT(A) in deleting thedisallowance of deduction u/s 80-IC of the IncomeTax Act, 1961 made by the AO on the job workgot done outside the specified area, i.e. HimachalPradesh and on the trading receipt from sale ofunused papers, following its decisions in the caseof the assessee for the assessment years 2005-06 to 2009-10, against which the appeals filed by therevenue are still pending adjudication in ITA Nos.117 to 122 of 2013 before this Hon'ble Court? 2.Put shortly, the relevant facts necessary for adjudication of theinstant appeal as discernible from the record are that the assessee is engagedin the business activity of publication and printing. The assessee e-filed itsreturn of income on 29.9.2010 declaring the total income at ` 6,06,45,948/-.The case was selected for scrutiny under CASS and notice dated 2.9.2011under Section 143(2) of the Act was issued. Subsequently, statutory noticedated 22.11.2012 under Section 142(1) of the Act along with questionnairewas issued to the assessee. During the course of assessment proceedings, itwas, inter alia, noticed that an amount of ` 23,23,31,000/- was standing asinvestments in various related sister concerns but the assessee had notreceived any interest or return on account of such investments. It wasfurther noticed that after making advances, the assessee itself had appliedfor interest linked loans and was bearing the interest burden. It was alsoobserved that if the assessee had excess surplus funds then there was noneed to take interest bearing loans. The Assessing Officer vide assessmentorder dated 28.3.2013 (Annexure A-I) disallowed the interest expenditure of` 1,22,51,965/- and added the same to the income of the assessee. The claimof the assessee under Section 80-IC of the Act on the job work got doneoutside the specified area, i.e., Himachal Pradesh and on the trading receiptfrom sale of unused papers was also not accepted. Feeling aggrieved, theassessee filed an appeal before the Commissioner of Income Tax (Appeals)-I [for brevity “the CIT(A)”]. The CIT(A) vide order dated 8.7.2014(Annexure A-II) confirmed the disallowance of interest expenditure made by the Assessing Officer whereas the claim made under Section 80-IC of theAct was held to be allowable and by adjustment made by the AssessingOfficer while disallowing part of deduction was held to be not sustainableand partly allowed the appeal. Against the order, Annexure A-II, theassessee and the revenue filed separate appeals before the Tribunal, whovide order dated 13.6.2016 (Annexure A-III) allowed the appeal filed by theassessee and deleted the addition on account of disallowance of interestexpenditure. However, the appeal of the revenue was dismissed. Hence,the present appeal by the revenue. 3.We have heard learned counsel for the parties. 4.Learned counsel for the parties were ad-idem that question Nos.(i) and (ii) relating to deletion of addition of ` 1,22,51,965/- on account ofdisallowance of interest expenditure stands concluded by the decision dated17.4.2017 passed by this Court in ITA No.163 of 2017 [The Pr.Commissioner of Income Tax (Central), Ludhiana v. Shri Satish BalaMalhotra, Legal Heir of Shri Ashok Kumar Malhotra, Prop. M/sModern Publishers, MBD House, Railway Road, Jalandhar] wherebythe questions have been decided against the revenue. Accordingly, questionNos. (i) and (ii) are decided against the revenue. 5.Further, question No. (iii) relating to disallowance of deductionunder Section 80-IC of the Act, vide decision dated 17.5.2017 passed bythis Court in ITA No. 15 of 2017 [The Pr. Commissioner of Income Tax(Central), Ludhiana v. M/s MBD Printographics Pvt. Ltd.],the matterhad been remanded to the Tribunal for fresh adjudication after affording anopportunity of hearing to the parties. ITA-94-2017 (O&M) 5.Further, question No. (iii) relating to disallowance of deductionunder Section 80-IC of the Act, vide decision dated 17.5.2017 passed bythis Court in ITA No. 15 of 2017 [The Pr. Commissioner of Income Tax(Central), Ludhiana v. M/s MBD Printographics Pvt. Ltd.],the matterhad been remanded to the Tribunal for fresh adjudication after affording anopportunity of hearing to the parties. ITA-94-2017 (O&M) fresh adjudication on Question No. (iii) after affording an opportunity of hearing to the parties.7.The appeal stands disposed of accordingly.