TaxTMI 
TaxTMI 
TaxTMI 
2015 (10) TMI 478
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....g/2004 granted substantial relief to the assessee. The Assessing Officer passed the order giving effect to the order of the Tribunal on 26.7.2005 which resulted in refund to the assessee, as the assessee has made part payment of the demand originally raised by the Assessing Officer. 2.2 Revenue preferred an appeal against the order of the Tribunal before the Hon'ble High Court of Karnataka. The Hon'ble High Court vide orders in ITA No.3027/2005 dt.11.11.2011 partly allowed Revenue's appeal, and thereby partially withdrew the relief granted to the assessee by the Tribunal. The Assessing Officer passed an order dt.22.3.2012 giving effect to the order of the High Court in which interest under Section 220(2) of the Act was charged to the extent of Rs. 1,19,89,939. This order was rectified under Section 154 of the Act vide order dt.27.7.2012 revising the interest chargeable under Section 220(2) of the Act to Rs. 3,50,63,200. 2.3 Aggrieved by the above order passed under Section 154 of the Act dt.27.7.2012, the assessee preferred an appeal before the CIT (Appeals) - VI, Bangalore. The learned CIT (Appeals) vide order dt.7.6.2014 upheld the order of the Assessing Officer in resp....
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....ing of interest under Section 220(2) of the Act; more particularly the period for which the said interest is chargeable. 3.2.1 It is the contention of the assessee that the Assessing Officer has wrongly computed the interest under Section 220(2) of the Act, from the date of original demand i.e. 30.4.2013 till the date of order giving effect to the order of the Hon'ble High Court on 22.3.2012. The assessee submits that the order giving effect to the order of the co-ordinate bench of the Tribunal (supra) was passed on 26.7.2005, which resulted in a refund to the assessee. According to the assessee, since there was no demand subsisting as on 26.7.2005 and thereafter, interest under Section 220(2) of the Act was not chargeable for the period from 26.7.2005 to 22.3.2012. 3.2.2 The learned CIT (Appeals) did not accept the contentions of the assessee and upheld the action of the Assessing Officer in charging interest under Section 220(2) of the Act for the entire period from 30.4.2013 till 22.3.2012. While doing so, the learned CIT (Appeals) had examined the decision of the Hon'ble High Court of Karnataka in the case of Vikrant Tyres Ltd. reported in 202 ITR 451 and subsequently....
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.... herself in interpreting the decision in the case of Vikrant tyres Ltd. (supra), in the manner done by her. It was contended that the said decision was rendered in the context of the particular set of facts of that case wherein the entire demand has been paid. It is submitted that the facts of the assessee's case is different; wherein part of the demand was paid and the assessee was either granted instalments or was granted conditional stay on recovery of demand and therefore the ratio laid down in the case of Vikrant Tyres Ltd. (supra) cannot be relied on completely. It was submitted that since the Hon'ble Apex Court had not addressed the issue in the context of the facts of the assessee's case, the said decision cannot be applied to the facts of the assessee's case. It was contended that the decision of the Hon'ble High Court of Karnataka in the case of P.P. Koya V CIT (2010) 46 DTR 357 (Ker) is applicable to the assessee's case, as the facts in the cited case are similar to those of the case on hand. 3.4 Per contra, the learned Departmental Representative placed strong reliance on the impugned order of the learned CIT (Appeals). 3.5.1 We have heard the ....
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....d CIT (Appeals) in this regard. 4. Two issues remain before us for consideration :- (i) The contention of the assessee that it was granted instalments and stay during the period when the demand subsisted and hence there was no default warranting the charging of interest under Section 220(2) of the Act; and (ii) The decision of the Hon'ble Kerala High Court in the case of P.P. Koya (supra), which has held that Section 220(2) does not apply for the period after the assessee was granted a refund, because there was no subsisting demand and consequently, the assessee cannot be said to be a defaulter. 5.1 Section 220, so far as it relates to our purpose, reads as under :- "220 (1) Any amount, otherwise than by way of advance tax, specified as payable in a notice of demand under s. 156 shall be paid within thirty days of the service of the notice at the place and to the person mentioned in the notice : Provided that, where the Assessing Officer has any reason to believe that it will be detrimental to the Revenue if the full period of thirty days aforesaid is allowed, he may, with the previous approval of the Dy. Commissioner, direct that the sum specified in the notice of deman....
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.... of the assessee is without basis and is not acceptable. 5.4 In the decision in the case of P.P. Koya (supra), the Hon'ble High Court of Kerala held that section 220(2) of the Act does not apply for the period after the assessee was granted a refund because during such period there was no subsisting demand and consequently the assessee cannot be held to be a defaulter. Even in the above cited decision, the Hon'ble High Court Kerala had observed that :- (i) The notice of demand will survive; and (ii) Default is a necessary precondition for demand of interest u/s.220(2) of the Act. 5.5 The facts of the above cited case viz. P.P. Koya (supra) are different from the facts of the assessee's case on hand. In that case, the taxpayer was granted relief at the first appellate stage and refund was granted to the taxpayer. On further appeal before the Tribunal reversed the order of the learned CIT (Appeals) and the original assessment and the original demand was restored. The matter attained finality at the Tribunal stage. In the facts of that case, the Hon'ble High Court held that interest u/s.220(2) of the Act cannot be charged after refund was granted to the taxpayer, a....