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TMI Blog2018 (9) TMI 1685X X X X Extracts X X X X X X X X Extracts X X X X ..... d his order and has allowed this issue in favour of the department - Held that:- Following a binding judicial precedents of the Jurisdictional High Court in the rectification proceedings has been upheld by ACIT vs. Saurashtra Kutch Stock Exchange Ltd. (2008 (9) TMI 11 - SUPREME COURT), wherein held that failure to apply the judgment of the Jurisdictional High Court even rendered subsequently gives rise to a mistake apparent from records and the appellate authority has to rectify its judgment so as to bring in consonance with the judgment of the Hon ble Jurisdictional High Court. Therefore, we hold that there is no legal infirmity by the Ld. CIT (A) in rectifying his earlier order and same is much within the scope of section 154. Thus, the appeal of the assessee on this issue is dismissed. Levy of penalty u/s 271(1)(c) - disallowance of deduction u/s 80IB; and also on account of disallowance of pro-rata interest - Held that:- The assessee s claim of deduction u/s 80IB on Duty Drawback/DEPB at the time of filing of return was then supported by various judgments of the Tribunal which was also confirmed by the Hon ble Jurisdictional High court as discussed in the earlier part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was a sister concern. In response the show cause notice by the Assessing Officer as why the proportionate interest should not be disallowed, assessee submitted that the advances were given out of the capital of the partners, wherein the opening capital of the partner as on 1.4.2006 was ₹ 20,00,93,028/- and closing capital as on 31.3.2007 for ₹ 4,49,79,503/-. Apart from that, profit earned by the assessee during the relevant year was far more sufficient to cover the impugned loan of ₹ 16 lacs. In support, reliance was placed on the judgment of Hon ble Supreme Court in the case of Munjal Sales Corporation vs. CIT (2008)22CAPJ8(SC). However, the AO has rejected the assessee s contention and after applying the judgment of Hon ble Punjab Haryana High Court in the case of CIT vs. M/s. Abhishek Industries Ltd. (2006) 286 ITR 1, he disallowed the proportionate interest @9% which worked out to ₹ 1,14,777/- Ld. CIT(A) held that the judgment of Hon ble Supreme Court in the case of CIT vs. M/s. Munjal Sales Corporation (supra) is distinguishable on facts, because here in this case the capital of the Partners has already been applied for the business purpose and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law and on facts in disallowing the deduction u/s 80lB in respect of purported export incentives even though assessee was supporting manufacturer. 3. That in any case and any view of the matter, action of Ld. CIT (A) in passing the impugned order u/s 154 and disallowing the claim u/s 801B in respect of purported export incentives is bad in law and against the facts and circumstances of the case. 7. The brief facts and background of the case are that, Assessee Company derived its income from business of supporting manufacturer and direct export of textile goods, etc. The assessee has claimed deduction u/s 80IB of ₹ 37,16,961/- on the net business income of ₹ 1,48,67,843/- @ 25% which included the export incentives in the shape of duty draw back at ₹ 3,52,05,597/-. Ld. AO had disallowed the same after rejecting the assessee s contention and following the judgment of Hon ble Supreme Court in the case of Liberty India (2009) 317 ITR 218 (SC). Before the Ld. CIT (A) the assessee s contention was that the ratio of Liberty India pertains to direct exporter whereas in assessee s case is not that of direct exporter but supporting manufacturer and in similar ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er words, on this point appeal of the assessee is dismissed and the AO is directed to re-compute the income accordingly. 9. Before us, Ld. Counsel for the assessee first of all he pointed out that, earlier there was a decision of Hon ble P H Court in the case of CIT vs. M/s. Mittal Overseas in ITA No. 544 of 2007 and other appeals, judgment and order dated 13th May, 2008, wherein this precise issue was discussed threadbare and the matter was resolved in favour of the assessee that deduction u/s 80IB on duty draw back/DEPB in the case of supporting manufacturer would be allowed. Apart from that, in the assessment year 2004-05 also, similar issue has been allowed by the Tribunal in assessee s own case in ITA No. 141/Del/2008 vide order dated 4.11.20015 after following catena of decisions. He admitted that though there is a subsequent judgment of Hon ble P H High Court dated 4.10.2010 in ITA No. 269/2010 in the CIT vs. M/s. Mittal Overseas wherein this issue has been decided against the assessee. He pointed out that, since there are two sets of judgment of Hon ble Jurisdictional High court, one in favour and other against, therefore within the scope of section 154, such a rect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of CIT vs. Sterling Foods (1999) 237 ITR 579 and Liberty India vs. CIT has decided the issue against the assessee. Since these decisions were not brought to the notice of the Ld. CIT (A) in the quantum proceedings, therefore the matter was decided in favour of the assessee. The AO in his application filed u/s 154 brought to the notice of Ld. CIT(A) that there was a binding judicial precedent of Hon ble Jurisdictional High Court, then Ld. CIT(A) has rectified his order and has allowed this issue in favour of the department. Following of such binding judicial precedents of the Jurisdictional High Court in the rectification proceedings has been upheld by the Hon ble Supreme Court in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd. 305 ITR 227 (SC), wherein the Hon ble Apex Court has held that failure to apply the judgment of the Jurisdictional High Court even rendered subsequently gives rise to a mistake apparent from records and the appellate authority has to rectify its judgment so as to bring in consonance with the judgment of the Hon ble Jurisdictional High Court. Therefore, we hold that there is no legal infirmity by the Ld. CIT (A) in rectifying his earlier orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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