S. NARAYANAN, A.M.: These two appeals, involving common contentions, were heard together. They are disposed of by this common order. 2 . assessee is Private Ltd. Company. accounting year is financial year. assessee is not banking company or financial company. assessment years involved are 1980-81 & 1981-82. 3. ITO disallowed Rs. 4,456 and Rs. 6,160 out of interest claimed as deductions for asst. yr. 1980-81 and 1981-82. disallowance were effected, by him in terms of s. 40-A(8) of Act. There is no discussion in his order as to basis of computation of disallowance in question. assessment order for 1981-82 does mention that it is worked out at 5 per cent of total deduction claimed at Rs. 41,071 but assessment order for 1980-81 simply says "as per details filed". But assessment order itself does not record such details. assessee contested disallowance in appeal. 4. Both appeal (1980-81 and 1981-82) were disposed of by CIT(A) on 14th June, 1984 by separate orders. In his order for 1980-81, CIT(A) recorded following while dismissing assessee s appeal: "The question for consideration is whether interest paid by appellant to Shri L. G. Mirchandani, HUF of same name and three other ladies of same family constitutes interest paid on deposits as defined in t h e Explanation to s. 40-A(8). Detailed statements of accounts of these five parties have been given in course of proceedings before me and appellant company itself has called them as loan accounts. fact that there have been certain credits into and withdrawals from those accounts would not change their basic character. On facts of case, there can be no doubt that they constitute deposits as defined for this purpose. appellant s contention in this regard, therefore, cannot succeed." In his order for 1981-82, CIT(A) merely followed above reasoning and dismissed assessee s claim as under : "The first ground of appeal is that ITO erred in disallowing Rs. 6,160 out of interest paid by appellant to certain parties. facts in this regard are similar to those discussed in paragraph 5 of my order of even date in IT Appeal No. 9 of 1983-84 in appellant s own case for asst. yr. 1980-81. For reasons stated therein. I uphold ITO s action. This ground of appeal is, accordingly, rejected." assessee is hence in further appeal. 5 . Before us, Shri Anil Bhalla, authorised representative of assessee, referred to accounts of five parties, viz., G. L. Mirchandani, & S. L. Mirchandani, two Directors and L. G. Mirchandani (HUF). P. L. Mirchandani and Soni S. Mirchandani (shareholders of assessee-company). For asst. yr. 1980-81, interest paid to them was as under : "Mr. L. G. Mirchandani, Director Rs. 5,942.44 Mr. L. G. Mirchandani, HUF Rs. 9,976.63 Mrs. P. L. Mirchandani Rs. 4,732.06 Mr. S. L. Mirchandani, Director Rs. 8,892.04 Mrs. Soni S. Mirchandani Rs. 167.20 . 29,710.37" Similarly for asst. yr. 1981-82, interest paid amounted to Rs. 41,072 and details whereof were as under : "Mr. Padma Lalchand Rs. Mirchandani 9,446,74 Rs. Mrs. Soni S. Mirchandani 3,619.70 Rs. Mr. G. L. Mirchandani 1,299.69 M/s L. G. Mirchandani, Rs. HUF 3,838.50 Rs. . 18,204.63 15,3 25 .. Mr. S. L. Mirchandani . .20 Rs. Mr. L. G. Mirchandani 7,442.50 22,867.70 Rs. . . 41,072.33" Shri Anil Bahlla then took us through details of individual accounts of above parties in books of assessee-company. His submissions was, that looking to withdrawal which these accounts show during two years, it could not be argued that amounts keep with limited company by above parties could be described as deposits so as to attract s. 40A(8). Under s. 40A(8) any expenditure incurred by way of interest in respect of any deposit received by company (not being banking company or financial company) has to be disallowed to extent of 15 per cent thereof. further submission of Shri Bhalla is that in this very case, same issue came up before Tribunal for asst. yr. 1979-80 and by its order dt. 24th Aug., 1984, Tribunal deleted similar disallowance for that year with following observations : "We have heard both representative for assessee. Mr. Anil Bhalla and Departmental Representative. facts in present case are almost identical to those in ITA Nos. 1588 & 1589 (Del)/1983 in case ofSinter Kings Virmani (P) Ltd., decided by us today. arguments canvassed by parties before us are on same lines, which were canvassed before us in above appeals. For reasons stated in our consolidated order of today in ITA Nos. 1588 & 1589 (Del)/83, (supra), with which we agree, we hold that ITO and CIT(A) erred in disallowing 15 per cent of interest paid by assessee in each of years under consideration in respect of amounts in current accounts of directors and share-holders under s. 40-A(8) of Act." Shri Bhalla, in fact, placed before us copy of Tribunal order inSinter Kings Virmani (P) Ltd. vs. ITO(ITA Nos. 1588 & 1589/Del/83 dt. 24th Aug., 1984). Shri Bhalla submitted that facts being materially different this year, we should follow prior order of Tribunal in this case and allow assessee s claim in light of decision inCIT vs. Rama Murthy, L. G. & Ors. 1977 CTR (Mad) 416 : (1977) 110 ITR 453 (Mad). 6 . Departmental Representative, Smt. Kapila opposed above submissions. She took us through language of s. 48-A(8). She emphasised terms "any expenditure incurred by way of interest" and any deposit found in said provision. According to her, notwithstanding fact of withdrawals from moneys kept with assessee-company by above persons, ITO was correct in treating said moneys as deposits within meaning of s. 40-A(8). It could not, in any case, be called Current Account, because no interest is payable on Current account balance. She relied in this regard on two decisions of th Tribunal. These areNew International Chemicals (P) Ltd. vs. ITO (1983) 3 ITD 88 (All)andBoyd Smiths (P) Ltd. vs. ITO (1985) 13 ITD 610 (Cal). 7. We have considered position. First of all, as rightly emphasised by Shri Bhalla for assessee, we are ordinarily bound to take same view recorded by Tribunal in this very case for asst. yr. 1979-80, unless some error of law or fact is manifest in that order. There is no such mistake apparent in that order. Secondly, in order of Tribunal inS. K. Virmani (P) Ltd.(supra), decision inNew International Chemicals (P) Ltd.relied upon by Smt. Kapila was also noticed and yet that decision was not followed by Tribunal. Thirdly, even if there are two possible interpretations of s. 40A(8) in present factual context, one favourable to assessee has to be preferred and indeed that is settled law. Looked at from any angle, therefore, assessee s claim succeeds. We delete disallowances and assessment shall be modified accordingly. 8. One other objection for each of two years relates to claim made by assessee under s. 80J. However, Shri Bhalla submitted that he did not wish to press this claim for two years in view of retrospective amendment of s. 80J. These objections are, therefore, rejected. 9. In result, appeals are allowed in part. *** MONICA ELECTRONICS (PVT.) LTD. v. INCOME TAX OFFICER