S. 220(2) — Liability to pay interest by assessee — AO not justified in charging interest for the intervening period when the CIT(A) allowed the appeal in favour of the assessee to the period when the Tribunal allowed the appeal in favour of the revenue

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ITAT E-1 Bench, Mumbai

Before A. L. Gehlot (AM) and

P. Madhavi Devi (JM)

ITA Nos. 2135 and 2136/Mum./2008

A.Ys. 1995-96 and 1996-97. Decided on : 27-5-2009

Counsel for revenue/assessee : Ajay/Arvind Dalal

Per P. Madhavi Devi :

Facts :

According to the Revenue the CIT(A) had erred in deleting
the interest charged u/s.220(2) for the intervening period when the CIT(A)
allowed the appeal in favour of the assessee to the period when the Tribunal
allowed the appeal in favour of the Revenue. It relied on the decisions of the
Madras High Court in the case of Super Spinning Mills Ltd. and of the
Karnataka High Court in the case of Vikrant Tyres Ltd. and the Board Circular.

Held :

The Tribunal agreed with the assessee that the issue was
covered by the decision of the Supreme Court in the case of Vikrant Tyres Ltd.
The provisions of S. 220 only revives the old demand notice which had never
been satisfied by the assessee and which notice got quashed during some stage
of the appellate proceedings. In the case of the assessee, no such demand was
pending. Accordingly, the appeal filed by the Revenue was dismissed.

Cases referred to :

(1) Vikrant Tyres Ltd., 247 ITR 821 (SC);

(2) Super Spinning Mills Ltd. v. CIT, 244 ITR 814
(Mad.);

(3) Vikrant Tyres Ltd., 202 ITR 456 (Kar.);

(4) Board Circular No. 334, dated 3-1-1982.