TaxTMI 
TaxTMI 
TaxTMI 
2022 (11) TMI 1037
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....2,15,72,740/- by the Assessing Officer ('AO') vide original assessment order dated 28th December, 2006. 2.1. Aggrieved by the said order, the Assessee filed an appeal before the Commissioner of Income Tax (Appeals), ['CIT(A)'], which upheld the order of the AO and confirmed the additions. Thereafter, an appeal arose before the ITAT and the Tribunal vide its order dated 30th September, 2014, set aside the original assessment order dated 28thDecember, 2006, and restored the matter to the file of the AO for determining the issue of taxability of the amounts received as brand building fund, the allowability of brand building expenses as well as a separate claim for other expenses. 2.2. On remand, the AO on the 29th March, 2016 reframed the assessment and passed a fresh assessment order under Section 143(3) of the Act read with Section 254 of the Act. The AO reconfirmed the disallowance of brand expenses for a sum of Rs.2,66,42,537/- and the total income was determined as Rs. 31,96,57,720/-. 2.3. In the Income Tax Computation Form (ITNS 50) issued pursuant to the aforesaid assessment order, the AO levied interest under Section 220(2) of the Act and raised a demand of Rs. 1,75,74,756/....
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.... where an issue arising out of the original assessment is restored to the file of AO by the higher appellate authorities, there is an extinguishment of the original demand i.e., the demand raised vide the first assessment order dated 28th December, 2006. He states that the fresh assessment was framed on 29th March 2016 under Section 143(3) read with Section 254 of the Act and demand notice was issued pursuant thereto, therefore, interest cannot be charged for the period prior to the issue of the fresh demand notice. The learned counsel for the Respondent, Assessee, placed reliance on the CBDT Circular No. 334, dated 3rd April, 1982 and the judgment of the Rajasthan High Court in the case of Commissioner of Income Tax v. Rajesh Kumar Dinesh Kumar, [2010] 325 ITR 346 and stated that since the assessment order was reframed, interest under Section 220(2) of the Act can only be charged after the expiry of 30 days from the date of service of demand notice pursuant to the fresh assessment order. 5. We have heard the learned counsel for the parties. The issue arising in the present appeal is, whether interest can be charged under Section 220(2) of the Act from the date of the original ass....
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.... Revenue has relied upon the Section 220(2) of the Act for raising the demand for interest on the basis of the original assessment order dated 29th December, 2006. However, the said original assessment order was admittedly set aside by the ITAT vide order dated 30th September, 2014 and upon such setting aside, the said assessment order ceased to exist. The ITAT had remanded back the taxability of the said additions to the file of the AO; and the AO reframed his assessment and passed a fresh order on 29th March, 2016. 7. The relevant date for charging interest under Section 220(2) of the Act, in the facts of this case, is to be determined as per the date of demand notice raised pursuant to the fresh assessment order i.e. 29th March, 2016. 8. The liability of Assessee to pay interest under Section 220(2) of the Act can be levied only after expiry of the time limit prescribed in the fresh demand notice issued by the AO in pursuance to the fresh reframed assessment order dated 29th March, 2016. The reframed order is the subsisting assessment order in the facts of this case. 9. The contention of the Revenue that the Assessee is liable to pay interest in relation to the demand issued ....
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....ifference to this position. 3. The foregoing legal position will apply mutatis mutandis to the proceedings under other direct taxes also. Circular: No. 334 (F. No. 400/3/81-ITCC), dated 3-4-1982." (Emphasis Supplied) Para 2.1 of the said Circular expressly states that if the assessment order is 'set aside' by the appellate authority, no interest under Section 220(2) of the Act can be charged pursuant to the original demand notice. The judgment of the Rajasthan High Court in Commissioner of Income tax v. Rajesh Kumar Dinesh Kumar, [2009] 221 CTR 78 (Rajasthan) relied upon by the learned counsel for the Assessee also refers to the said Circular to hold that no interest is payable on the demand raised by the original order when the original order of the AO is set aside by the appellate authority and a fresh assessment order is passed. Similarly, the Bombay High Court in the case of Commissioner of Income-tax-1, Mumbai v. Chika Overseas (P.) Ltd., [2012] 23 taxmann.com 315 (Bom.) held that an Assessee is liable to pay interest under Section 220(2) of the Act from the end of the period mentioned under Section 220(1) of the Act i.e., thirty (30) days after service of the notice of ....