TMI Blog2022 (11) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... to demand interest relating back to a set aside order, when a fresh assessment order has been passed thereafter. The facts of the present case are clearly covered by para 2.1 of the said CBDT circular which anticipates the situation that has arisen in the present proceedings and therefore, the CIT(A) and the ITAT have correctly held that the levy of interest by the AO relating back to the set aside assessment order, was incorrect and have correctly ordered the same to be deleted. Thus, this Court sees no merit in the appeal and accordingly, the same is dismissed. - ITA 428/2022 - - - Dated:- 17-11-2022 - HON'BLE MR. JUSTICE MANMOHAN AND HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA Appellant Through: Mr. Sanjay Kumar, Sr. Standing Counsel for the Revenue with Ms. Easha Kadian, Advocate. Respondent Through: Mr. Sachit Jolly with Ms. Disha Jham, Advocates. J U D G M E N T MANMEET PRITAM SINGH ARORA, J: 1. Present appeal has been filed by the Revenue under Section 260A of the Income Tax Act ( Act ) challenging the order dated 10th November, 2021 passed by the Income Tax Appellate Tribunal ( ITAT ) in ITA No. 5781/Del/2017 for the Assessment Ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period of 30 days from the date of service of demand notice issued pursuant to the fresh assessment order dated 29th March, 2016. 3. Learned counsel for the Revenue states that the ITAT erred in holding that the interest under Section 220(2) is chargeable only from the date falling 30 days after service of the notice of demand as a result of fresh assessment order under 254/143(3) of the Act, ignoring the proviso to Section 220(2) that mandates that the interest is only required to be reduced as a result of reduction in the income under Section 254. Further, he states that the ITAT failed to note that the original assessment dated 28 th December, 2006 in the present case, was neither cancelled nor fully set aside. He states that the interest under Section 220(2) of the Act is attracted from the expiry of the period of 30 days from the issuance of the income tax computation form, even after the matter was remanded by the tribunal to the AO for fresh consideration, inasmuch as the tax liability of the Assessee on remand remained the same and addition remained under the same head, the Assessee is liable to pay interest in relation to the demand issued pursuant to the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 143 (3) read with Section 254 of the Act. However, the AO while preparing the consequent Income Tax Computation Form i.e., I.T.N.S.-150 included therein a demand for interest under Section 220(2) of the Act, which relates back to the original assessment order dated 28th December, 2006. 5.3. The Revenue s basis for raising the said demand for interest in I.T.N.S.-150 on the basis of the original assessment order is that, since the tax liability of the Assessee remained the same even after the matter was remanded by the ITAT to AO for fresh consideration and the addition remained under the same head, the Assessee is liable to pay interest in relation to the demand issued pursuant to the original assessment order. 5.4. On appeal, the CIT(A) deleted the demand of interest, placing reliance in the order of the ITAT Mumbai in the case of Addl. CIT v. Hindalco Industries Ltd. 4 SOT 757 and the CBDT Circular No. 334, dated 3rd April, 1982 and observed that, the original assessment order was set aside by the ITAT Delhi Bench with the direction to reframe the same, thereafter, a fresh assessment order was passed on 29th March, 2016, therefore, interest under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the original assessment order passed by the Income-tax Officer is- (a) Cancelled by him under section 146; (b) set aside/cancelled by an appellate/revisional authority and such appellate/revisional order has become final; or (c) set aside by one appellate authority but, on further appeal, the order setting aside the assessment is varied by the second appellate authority and the demand gets finally determined. 2. These issues were comprehensively examined in consultation with the Ministry of Law and the Board has been advised: 1. Where an assessment order is cancelled under section 146 or cancelled/set aside by an appellate/revisional authority and the cancellation/setting aside becomes final (i.e.. it is not varied as a result of further appeals/revisions), no interest under section 220(2) can be charged pursuant to the original demand notice. The necessary corollary of this position will be that even when the assessment is reframed, interest can be charged only after the expiry of 35 days from the date of service of demand notice pursuant to such fresh assessment order. 2. Where the assessment made originally by the Income-tax Officer is either var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed case, the demand notices issued under Section 156(1) of the Act had been satisfied by the Assessee and nothing was due pursuant to the said demand notice. However, after the judgment of the appellate authority, which went in favour of the Assessee, the Revenue refunded the amount due as per the said order of the authority. Thereafter, when the matter was taken up in a reference by the Revenue to the High Court and the Assessee lost the case, the fresh demand notices were issued and in pursuance to the fresh notices the Assessee paid the amount demanded within the time stipulated therein. However, it was in these facts, that the Revenue demanded interest on the amount refunded to the Assessee and the Supreme Court held that no such demand could be raised under Section 220(2) of the Act. The Supreme Court held that Section 220 of the Act cannot be invoked to demand any interest from the Assessee therein. The relevant extract is reproduced hereunder: .... A Constitution Bench of this Court speaking through one of us (Hon. Bharucha, J.) in the case of V.V.S. Sugars v. Government of A.P. 1999 (4) SCC 192 reiterated the proposition laid down in the India Carbon Ltd.'s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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