CARBORUNDUM UNIVERSAL LIMITED,CHENNAI vs. DCIT, CHENNAI

आदेश / O R D E R

PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER:

This is an appeal filed by the assessee against the Order dated 26.12.2013 of Commissioner of Income Tax (Appeals), Chennai, in for the AY 2003-04.

2.0 All the grounds of the appeal are related to the charging of interest u/s.220(2) of IT Act. The assessment is completed in this case u/s.143(3)

ITA No.802/Mds/2014 :- 2 -: by an Order dated 28.02.2006. The assessee went on appeal before the CIT(A) and the Ld.CIT(A) deleted the addition by an Order dated 19.01.2006. The AO has given effect to the Order of the Ld.CIT(A) on 11.07.2008. The Hon’ble ITAT vide Order dated 03.06.2009 restored the Order of the AO. While giving effect to the Order of the Hon’ble ITAT, the AO charged interest u/s.220(2) as follows:

On Rs.1,02,47,362/- from April, 2006 to August, 2006 Rs. 5,12,368 On Rs.57,98,393/- from Sep.2006 to Nov. 2006 Rs. 1,73,952 On Rs.56,60,702/- from Dec.2006 to July, 2008 Rs. 11,32,140 On Rs.83,42,147/- from Aug.2008 to Oct.2012 Rs. 42,54,495 Total Rs. 60,72,955 3.0 Against the order of the AO, charging interest u/s.220(2) for a sum of Rs. 60,72,955/- the assessee went on appeal before the Ld.CIT(A) and the Ld.CIT(A) dismissed the appeal of the assessee. Hence, the assessee filed appeal before this Tribunal.

4.0 Appearing for the assessee, Ld.Sr.Counsel argued that the interest u/s.220(2) is chargeable during the period of demand outstanding and when there was no demand the interest is not chargeable. Merely because the ITAT restored the order of the AO, AO cannot be entitled to charge the interest for the entire period from the original date of demand fallen due.

The assessee was not in default for non-payment of taxes during the period when the demand was deleted by appellate authorities thus no interest is chargeable during said period. The Ld.AR relied on the amendment made to Sec.220 which is effective from 01.10.2014 and ITA No.802/Mds/2014 :- 3 -: argued that the amendment was not clarificatory and hence applicable prospectively.

5.0 We heard the rival submissions and perused the material placed on record.

In this case the AO passed the assessment making some additions and the Ld.CIT(A) deleted the addition and the demand was reduced consequent to the order of the CIT(A). Subsequently on appeal by the Revenue, the Hon’ble ITAT restored the order of the AO and the AO charged the interest u/s 220(2) from the date of the demand originally fallen due after assessment. Ld. ARs contention is that on account of the order of the Ld.CIT(A) during the period 19.12.2006 to 03.06.2009, there was no outstanding demand to treat the assessee as assessee in default and thus no interest is chargeable. The proviso to Sec.220(2) is introduced in Finance Act, 2014 w.e.f. 01.10.2014 and applicable prospectively. Though, there were decisions in favour of the Revenue since the Act has been amended to charge interest from the original date of assessment in the case of consequent appellate orders the same is applicable prospectively from 01.10.2014. Thus, there is no provision in the Income Tax Act to charge interest u/s.220(2) during the intervening period. Therefore, we hold that the interest u/s.220(2) is not chargeable during the intervening period from 19.12.2006 to 03.06.2009 accordingly we set aside the orders of the Lower authorities and direct the AO pass

ITA No.802/Mds/2014 :- 4 -: orders charging the interest during the period in which the assessee is treated as assessee in default.

6.0 In the result, the appeal filed by the assessee is allowed.

Order pronounced in the Open Court on June 08, 2017, at Chennai.