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2020 (5) TMI 480 - AT - Income TaxLevy of interest u/s 220(2) and section 234B - Interest on refund u/s 234D - HELD THAT:- We agree with the contention of the ld AR that where there is no basis for levy of interest u/s 234D and such levy is ultimately held to be not valid in the present case, the amount paid by the assessee will go to offset the outstanding tax and interest demand except interest u/s 234D and only on the remaining outstanding demand, the interest u/s 220(2) shall be levied. Coming to levy of interest u/s 234D, we agree with the contention of the ld AR that where no refund has been granted u/s 143(1) to the assessee, the question of charging of interest u/s 234D doesn’t arise for consideration. We also agree with the contention of the ld AR that such interest can be charged for the period from the date of grant of refund to the date of such regular assessment i.e, 27.12.2006 in the present case. Matter is accordingly set-aside to the file of the AO for purposes of verifying whether any refund has been granted pursuant to intimation u/s 143(1) and only in a scenario where such refund has been granted, the interest u/s 234D shall be levied from the date of grant of refund to the date of regular assessment order passed u/s 143(3) - Where it is found that no refund has been granted pursuant to intimation u/s 143(1), the assessee shall be granted relief from such levy of interest u/s 234D and consequentially, levy of interest u/s 220(2) will also undergo a change and the Assessing officer is directed to recompute the interest u/s 220(2) after granting credit for amount paid towards the outstanding taxes instead of interest u/s 234D as done correctly.
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