TMI Blog2014 (7) TMI 1131X X X X Extracts X X X X X X X X Extracts X X X X ..... e of demand. On finality of proceedings, the Assessing Officer can claim interest. We find that the stand taken by the Commissioner of Income-tax (Appeals) is contrary to the provisions of section 220(2) and being so, we are inclined to reverse the order of the Commissioner of Income-tax (Appeals) on this issue and restore that of the Assessing Officer. - Decided in favour of revenue. - I.T.A. No. 202 /Coch/2014 - - - Dated:- 4-7-2014 - S/SHRI N.R.S.GANESAN AND CHANDRA POOJARI, JJ. For the Appellant : Smt. Latha V. Kumar, Jr. DR ORDER Chandra Poojari (Accountant Member).- The appeal filed by the assessee is directed against the order dated February 5, 2014, passed by the Commissioner of Income-tax (Appeals), Kozhikode for the assessment year 1996-97. 2. The grievance of the Revenue in this appeal is with regard to the deletion of interest charged under section 220(2) of the Income-tax Act at ₹ 8,53,671 during the period from May 1, 1999 to March 24, 2009. The Commissioner of Income-tax (Appeals) allowed the claim of the assessee by placing reliance on the judgment of the Supreme Court in the case of Vikrant Tyres Ltd. v. First ITO [2001] 247 ITR 821 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed time, which was later on refunded to it when its appeal was allowed and again paid the taxes in time after demands of notice were revived. Following the reference, it would not be liable to pay interest under section 220(2) of the Income-tax Act. Against this, the Revenue is in appeal before us. 6. None appeared on behalf of the assessee nor any adjournment application filed before the Tribunal and hence we proceed to dispose of the appeal after hearing the learned Departmental representative. 7. The learned Departmental representative relied on the judgment of the Allahabad High Court in the case of Lenoleum House v. ITO [2014] 223 Taxman 83 (All) wherein it was held that the assessee cannot take the benefit of the time spent for litigation because only for the said period the Department could not utilise the amount of tax. The rationale behind the provisions of section 220(2) to levy interest on delayed payment of tax is not to penalise the party but to make a provision for compensation for the Department, on the failure of the assessee to make payment on the first notice of demand. He also relied on the judgment in the case of Girnar Investment Ltd. v. CIT [2012] 340 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has paid the entire tax demanded of him originally and even when it was restored by an order of the appellate authority, after being quashed by a lower appellate authority, since the tax demands were fully satisfied by the assessee even at the initial stage, the assessee was held not liable to pay interest. 8. We have heard the parties and perused the record. In this case, the facts are distinguishable from the case before us inasmuch as the assessee before us did not pay the tax demanded of him by the Assessing Officer fully. The assessee paid only tax demanded as per intimation under section 143(1)(a) of the Act of ₹ 1,44,730 as against ₹ 7,05,953 vide assessment order under section 143(3) dated March 31, 1999. 8.1.. It is pertinent to refer to similar judgments of some of the other High Courts which are as under: 8.2. In A. V. Thomas and Co. Ltd. v. ITO [1982] 138 ITR 275 (Ker), it was held by a learned single judge of the Kerala High Court that if the assessee had paid the full tax at the right time (when demand was raised pursuant to the assessment order) and a portion of the tax was refunded to him as per the order of the first appellate aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In Birla Cotton Spg. and Wvg. Mills Ltd. v. ITO [1995] 211 ITR 610 (Cal) a learned single judge of the Calcutta High Court held that the liability to pay interest would arise under section 220(2) only in cases where the amount specified in the notice of demand is not paid within the period specified in sub-section (1) of the section. It was further observed that interest was not payable if the amount is already paid or was no longer payable. This observation can interpreted to convey that if the tax was not payable by reason of a favourable appellate order there was no liability to pay interest. But a perusal of the decision shows that the observation was made only as a passing observation. Moreover, the controversy in that case was whether the mistake in charging interest under section 220(2) can be rectified. 8.7 The Karnataka High Court had occasion to consider the question in relation to a demand of penalty under section 271(1)(c) of the Act in M. N. Jadhav v. Fourth ITO [1986] 161 ITR 275 (Karn). In that case the Inspecting Assistant Commissioner imposed the penalty on the assessee, which was cancelled by the Tribunal on appeal. A reference was made to the High Court at th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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