The
AO passed an assessment order and raised a demand of Rs. 21.24 lakhs of which
Rs. 10.50 lakhs was paid by the assessee and the balance of Rs. 10.94 was
stayed. On 20.5.1998, the CIT (A) allowed the appeal of the assessee and no
demand remained payable by the assessee. The AO refunded the taxes paid by the
assessee. Subsequently, the Tribunal reversed the CIT (A). The AO gave effect
to the Tribunal’s order on 30.7.2004 and charged interest u/s 220(2) for the
entire period. The assessee filed a Writ Petition claiming that it was not
liable to pay interest for the period from 20.5.1998 to 30.7.2004 (6y 3M) when
the CIT(A)’s order was operative and no sum was due from it. HELD by the High
Court:
S.
220(2) provides for levy of interest if the demand is not paid within 30 days
of the service of notice u/s 156. A distinction has to be drawn between a case
where the assessee pays up the entire demand raised pursuant to the assessment
order within the period specified in s. 156, wins in appeal and the amount is
refunded and subsequently loses in further appeal and has to repay the taxes.
In such a case, as the assessee is not
in default in the first instance, no interest u/s 220(2) is payable for the period
when the favourable verdict of the appellate authority was operative. However,
if the assessee has not paid up the entire tax within the specified period, it
is liable to pay interest u/s 220(2) from that date on the unpaid amount and
any variation in the amount of the demand favourable to the assessee which was
directed by any of the appellate authorities in the interregnum has no effect
on the liability of the assessee to pay the interest. On facts, as the
assessee had paid only a part of the demand at the first stage, it was held
liable to pay interest for the entire period including the period when the
favourable CIT(A)’s order was operative though no interest was payable on the
s. 244A interest.
For Complete Case Law Contact Administrator
Source: ItatOnline
No comments:
Post a Comment