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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 ..... in ITA No. 2529/Del/2011. In the said appeal, the assessee has challenged the disallowance of Rs. 1,14,777/- on account of pro rata interest on loan given to sister concern u/s 36(1)(iii). 3. The facts in brief qua the assessee involved are that, assessee has made interest free advances of Rs. 16 lacs to M/s. FLOTEX India, 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 Rs. 20,00,93,028/- and closing capital as on 31.3.2007 for Rs. 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 Rs. 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 proporti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in passing the order u/s 154 even though there was no error apparent from the record. 2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in 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 Rs. 37,16,961/- on the net business income of Rs. 1,48,67,843/- @ 25% which included the export incentives in the shape of duty draw back at Rs. 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 ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of this office in conformity with the binding decision of the Punjab & Haryana High Court in the case of M/s. Mittal Overseas (supra) & accordingly AO's order in the case of M/s. KTM India, Panipat for the assessment year 2007-08 is upheld. In other 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. Mitta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.1 Hon'ble Court had answered this issue against the assesee following other judgments of the same court in the case of CIT vs. Jaswand Sons (supra) wherein the Hon'ble Court after referring to the judgments of Hon'ble Supreme Court in the 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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