2014 (5) TMI 1202 - AT - Income Tax

Deduction on account of interest paid to the third parties from the estimated income determined by applying the NP rate - HELD THAT - As in the instant cases, the Tribunal while allowing the appeal has directed the Assessing Authority to re-compute the total income as estimated by him and allow relief on account of payment of interest and claim of depreciation. The finding recorded by the Tribunal is purely a finding of fact, based on proper appreciation of material on record and the evidence produced by the assessee. As no question of law arises out of the order passed by the Tribunal, we find no fault with the order of the Tribunal declining to refer the question for our opinion. Deduction on account of interest paid to the third parties is to be allowed to the assessee and modify the earlier order passed by the ITAT to this extent.

Summary

Issues:
1. Rectification of order due to apparent mistake regarding deduction of interest paid to third parties.
2. Consideration of case laws and judgments in deciding the appeal.

Issue 1: Rectification of Order
The Miscellaneous Application filed by the assessee sought rectification of the order dated 16/04/2009 in ITA No. 430/JU/2008 for the A.Y. 2004-05, emphasizing the mistake in not allowing deduction for interest paid to third parties. The appellant contended that the issue involved the allowability of further deduction after applying the rate of profit in the case of interest paid to third parties and depreciation. The Tribunal acknowledged the oversight and directed the recall and rectification of the order, considering the claim of the assessee on interest to third parties as allowable by the Hon'ble Jurisdictional High Court. The mistake was deemed apparent from the record, leading to the decision to recall the order for further consideration of the interest deduction issue.

Issue 2: Consideration of Case Laws and Judgments
The assessee referred to various case laws and judgments during the proceedings, highlighting the binding nature of judgments from the Hon'ble Rajasthan High Court and the Supreme Court. The Tribunal recognized the relevance of case laws cited by the assessee, including judgments related to the application of rate of profit, depreciation, and interest paid to third parties. The Tribunal emphasized the importance of past history as a guide, citing precedents where past results were considered in similar cases. Additionally, the Tribunal discussed the significance of special bench orders, noting their binding nature and the necessity of considering such judgments in decision-making. The Tribunal, in line with the cited case laws and judgments, allowed the deduction for interest paid to third parties, following the precedents set by the Hon'ble Jurisdictional High Court. The decision was based on the established principles and findings of fact from previous cases, ensuring consistency and adherence to legal precedents.

In conclusion, the Appellate Tribunal ITAT Jodhpur, in the cited judgment, addressed the issues of rectification of order due to an apparent mistake regarding the deduction of interest paid to third parties and the consideration of relevant case laws and judgments in deciding the appeal. The Tribunal's decision to recall and rectify the order was based on the acknowledgment of oversight and the need to adhere to legal precedents. The thorough analysis of case laws and judgments ensured a comprehensive and legally sound resolution of the appeal, emphasizing the importance of consistency and adherence to established legal principles.