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2013 (5) TMI 585 - AT - Income TaxLevy of interest u/s. 220(2) - demand was raised for the first time pursuant to the rectification under section 154/251/143(3) - Held that:- The issue is squarely covered in favour of the assessee by the decision of Seshasayee Paper & Boards Ltd. Vs. CIT [2002 (9) TMI 59 - MADRAS High Court] considering the decision of Vikrant Tyres Ltd. Versus Income Tax Officer [2001 (2) TMI 129 - SUPREME Court] wherein held that the very foundation for a claim for interest under section 220(2) is the notice of demand. Without it there can be no sustainable claim for interest. Since the issue is squarely covered that no interest can be charged u/s. 220(2) of the Act for the period when there is no demand outstanding. In the present case also the demand arises from the order passed u/s. 154/251/143(3) dated 07.11.2008 whereby addition of Rs.25 lakh was made disallowing the liability of PF and Gratuity. That means the AO has to recompute interest u/s. 220(2) in term of the above. AO is directed accordingly. Appeal of assessee is allowed.
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