- (1.) BOTH the appeals have been filed by the department against the consolidated order dated 26.08.2004, passed by the Income Tax Appellate Tribunal, New Delhi in I.T.A. No.1769 & 1770/Del/2001 for the assessment years 1996 -97 & 1997 -98.
(2.) ON 26.08.2009, both the appeals were admitted by a Co -ordinate Bench on the following substantial question of law: - "Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal have erred in law in holding that sub section (10) of section 80 -1A was not applicable to the case relying on the ratio of law laid down by the Apex Court in the case of Bajaj Tempo Ltd. Vs. CIT,1992 62 Taxman 480 ignoring the ratio of law laid down by the Apex Court in the case of CIT Vs. Sterling Foods Ltd, 1999 237 ITR 579 and CIT Vs. N.C. Buddhiraja and Co,1993 204 ITR 142"
(3.) THE brief facts of the cases are that, during the assessment year under consideration, the assessee company set up a new unit at Sansarpur Terrace, District -Kangra, (Himachal Pradesh), for manufacture and sale of Lamination tordials cores and transformers etc. It was claimed by the assessee that said unit is located in industrially backward area therefore the profits and gains of the said unit are eligible for 100% deduction under Section -80IA of the Income Tax Act. For the purpose, the component of income includes the interest income earned by the assessee company on account of charge of overdue interest from customers to whom sales were executed from Himachal unit on account of late payment of their dues and also towards bank interest. The total claim for the deduction under Section -80 IA was at Rs. 65,24,023/ -, but the A.O. has allowed partial deduction of Rs. 25,93,772/ -. The remaining amount was disallowed by the A.O. and the same was upheld by the First Appellate authority. However, the Tribunal has allowed entire claim of the assessee. Being aggrieved, the department has filed the present appeal. With this background, heard Sri R.K. Upadhyay, learned counsel for the department, who has justified the order passed by the A.O. He submitted that in the case of CIT Vs. Sterling Foods, 1999 237 ITR 579, it was held that: - "The assessee was engaged in processing prawns and other sea food, which it exported. It also earned some import entitlements granted by the Central Government under an Export Promotion Scheme. The assessee was entitled to use the import entitlements itself or sell the same to others. It sold the import entitlements that it had earned to others.";