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DCIT, Circle 1(1) Room no. 390, New Delhi vs. Amar Ujala Publications Ltd. Daryaganj C.R.Bldg. 2/16, Ansari road New Delhi
October, 12th 2015
                IN THE INCOME TAX APPELLATE TRIBUNAL
                     DELHI BENCHES : "A" NEW DELHI

                       BEFORE SHRI C.M.GARG, J.M.
                         AND SHRI L.P. SAHU, A.M.

                           ITA no. 4166/Del/2012
                         Assessment Year : 2009-10

DCIT, Circle 1(1)               vs.    Amar Ujala Publications Ltd.
Room no. 390, C.R.Bldg.                2/16, Ansari road
New Delhi                              Daryaganj
                                       New Delhi

                                       PAN: AADCA 0275 H


(Appellant)                                        (Respondent)

                   Appellant by:- Shri KK Jaiswal, Sr.D.R.
                     Respondent by:- Sh. Ved Jain, Adv.

                                   ORDER
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."

2.     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.

3.    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.




4.    Replying to the above, the Ld.Counsel for the assessee submitted that
a similar issue was raised by the Revenue before the Tribunal in ITA
no.1808/Del/12 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



                                                                                   2
                                 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 "previous year in



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                                 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."

25. 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.

26. 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 ;


                                                                                     4
                                 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.

27. 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


                                                                                    5
                                 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."

28. 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."

29. 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.

30. 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




                                                                                       6
                                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.

5.      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



                                                                                    7
                                 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.

6.    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


                                                                                        8
                                      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,


                                                                                              9
                                 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



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                                 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.

10. 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



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                                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."

7.    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 ITA nos. 331, 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."



8.    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


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                                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.

9.    In the result the appeal of the Revenue is dismissed.

Order pronounced in the Open Court on ......... October, 2015.




    (L.P. SAHU)                                               (C.M. GARG)
 ACCOUNTANT MEMBER                                         JUDICIAL MEMBER

Dated: the .... October, 2015


*manga




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                              ITA 4166/Del/2012
                                  AY 2009-10
                          Amar Ujala Publications Ltd.

Copy of the Order forwarded to:
1.Appellant;
2.Respondent;
3.CIT;
4.CIT(A);
5.DR;
 6.Guard File



                                                          By Order




                                                         Asst. Registrar




                                                                           14

 
 
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