For The Assessment Year 1987-88, Was Remanded To Assessing Officer Forreconsideration In The Light Of The Judgement Of The Supreme Court In Alliedmotors (P) Ltd v. This Order Under Section 154 Of The Act Dated 30Th November, 1998On The Question Of Interest U/S 220(2) Had Directed

$~R20 *IN THE HIGH COURT OF DELHI AT NEW DELHI+ITA 457/2005 Date of decision: 16[th]November, 2017M/S TELEVISTA ELECTRONICS LTD...... AppellantThrough :Mr. Satyen Sethi, Mr.Arta TranaPanda, Ms.Gargi Sethee, Advocates.versus DY. COMMISSIONER OF INCOME TAX ..... RespondentThrough :Mr. Asheesh Jain, Senior Standingcounsel for Income Tax Departmentwith Mr.Shahrukh Ejaz, Advocate. CORAM:HON'BLE MR. JUSTICE SANJIV KHANNAHON'BLE MS. JUSTICE PRATHIBA M. SINGH SANJIV KHANNA, J. (Oral) This appeal by the assessee-M/s Televista Electronics Limited relatesto assessment year 1989-90 and arises from the order dated 31[st]May, 2004passed in ITA No. 3888/Del./1999. 2.The appeal was admitted for hearing vide order dated 11[th]July, 2005which also frames a substantial question of law. For completeness, wewould reproduce the relevant portion of the order dated 11[th]July, 2005,which reads as under: “The Assessing Officer's order revised the assessmentorder for the year 1989-90 and directed that demandraised for the said year shall be deemed to have beenraised at the time of the making of the originalassessment order in regard to which a demand noticehad also been served upon the assessee. The AssessingOfficer had on that basis directed that interest underSection220(2)waschargeableontheamount ITA 457/2005 demandedunderSection156.Thefollowingsubstantial question of law is in that backdropformulated for determination: "WhethertheTribunalwas,inthefactsandcircumstances of the case, right in holding that noappeal lies against the said order under Section 246A(1)(c) of the Income Tax Act, 1961 ?" 3.Initially, we wanted to reframe the question of law to decide thequestion of chargeability of interest under Section 220(2) of the Income TaxAct, 1961(‘Act’ for short) on merits. However, in the factual matrix noticedbelow, we have refrained and have not reframed the question of law, as it isunclear whether interest under Sections 215 and 217 of the Act waschargeable and could be charged. 4.The Return declaring income of Rs.12,05,070/- for the AssessmentYear 1989-90 was filed by the appellant-assessee on 29[th]December, 1989.The assessee had not claimed set off of the brought forward losses for earlieryears in the Return of income, though it appears that the assessee hadbrought forward losses for the Assessment Years 1987-88 and 1988-89 asper assessments made. 5.These brought forward losses were duly accounted while passing theassessment order under Section 143 (3) of the Act on 14[th]February, 1992 asincome for the assessment year 1988-89 under the normal provisions wasassessed as nil. The assessing officer, thereupon, invoked provisions ofSection 115J of the Act relating to book profits and income of the assesseeunder the said Section was assessed at Rs.11,26,990/-. 6.Issue of disallowance of Sales Tax amounting to Rs. 32,71,862/- u/s43B of the Act, which had become subject matter of the assessment order ITA 457/2005 for the assessment year 1987-88, was remanded to Assessing Officer forreconsideration in the light of the judgement of the Supreme Court in AlliedMotors (P) Ltd. v. CIT, (1997) 224 ITR 677(SC). The Assessing Officerapplied the said judgement and as Sales tax amounting to Rs. 32,71,862/-was paid within the time, he allowed the said expenditure. Consequently, theAssessing Officer reworked the income for assessment year 1988-89 and anorder u/s 154 of the Act was passed reducing the loss for assessment year1988-89 to Rs. 2,47,077/-. 6.Issue of disallowance of Sales Tax amounting to Rs. 32,71,862/- u/s43B of the Act, which had become subject matter of the assessment order ITA 457/2005 for the assessment year 1987-88, was remanded to Assessing Officer forreconsideration in the light of the judgement of the Supreme Court in AlliedMotors (P) Ltd. v. CIT, (1997) 224 ITR 677(SC). The Assessing Officerapplied the said judgement and as Sales tax amounting to Rs. 32,71,862/-was paid within the time, he allowed the said expenditure. Consequently, theAssessing Officer reworked the income for assessment year 1988-89 and anorder u/s 154 of the Act was passed reducing the loss for assessment year1988-89 to Rs. 2,47,077/-. 7.Assessment order for the assessment year 1989-90 was also madesubject matter of order under section 154 of the Act as brought forwardlosses for assessment year 1988-89 had got reduced. Some relief had alsobeen granted to the assessee by the Commissioner (Appeals). Consequently,the assessing officer passed the rectification order under section 154 of theAct dated 30th November, 1998 for the assessment year 1989-90, assessingincome under the normal provisions at Rs. 19,27,199/-. Section 115J of theAct was therefore not attracted. The assessee has not disputed thecomputation of income made vide the order dated 30th November, 1998under Section 154 of the Act passed by the Assessing Officer. 8.This order under Section 154 of the Act dated 30th November, 1998on the question of interest u/s 220(2) had directed: “Since the asstt. Order of A Y. 89-90 has been revisedin consequence of the decision of the ITAT in A Y. 87-88, therefore, demand raised in A Y. 89-90 shall bedeemed raised at the time of original assessment orderfor which demand notice was served at the time ofregular assessment order. In view of above factsinterest u/s 220(2) is chargeable on the demand of Rs. ITA 457/2005 5,57,061/-created by this order”. 9.Consequent to the aforesaid directions in the order under Section 154of the Act, Computation Sheet in ITNS - 150 was prepared. The tax payableontheincomeofRs.19,27,199/-,includingthesurcharge,wasRs.11,12,958/-. The assessee had paid advance tax of Rs.6,50,877/-. Therewas a short fall of Rs.4,62,081/-. The order records that the assessee wouldbe liable to pay interest under Section 220(2) from 4[th]March, 1992 to 30[th]November, 1998 for a period of 81 months amounting to Rs.6,26,755/-.Accordingly, the total demand payable pursuant to the order u/s 154 wascomputed. 10.We may, for clarity, record that the computation sheet states that theinterest earlier allowed under Section 244 (1A) of the Act of Rs.94,980/-shall stand withdrawn. On this, however, there is no controversy or issuebefore us. 11.The assessee thereafter preferred an appeal specifically challengingthe direction to charge interest u/s 220(2) in the order under Section 154 ofthe Act. It was submitted that interest was not leviable and reliance wasplaced on some legal pronouncements. 12.The Commissioner of Income Tax (Appeals) allowed the appealrecording that interest under Section 220 (2) of the Act was chargeable onlywhen there was non-payment pursuant to notice u/s 156 of the Act. Interestu/s 220(2) would not be chargeable from the date of the original assessmentorder. 13.Revenue preferred an appeal before the Tribunal which, as noticedabove, has been allowed, inter alia, observing that the first appeal by the ITA 457/2005Page 4 of 8 appellant-assessee under Section 246(1)(c) of the Act challenging levy ofinterest under Section 220(2) of the Act was not maintainable before theCommissioner of Income Tax (Appeals). The decisions relied upon by theassessee were distinguished on the ground that they relate to levy of interestunder Sections 215 and 217 of the Act. 14.In our opinion, in the present case, the appeal would be maintainableunder clause (c) to Section 246(1) of the Act. The said provision, asapplicable to the case of the assessee in the relevant year when the appealwas preferred, reads as under: Appealable orders. 13.Revenue preferred an appeal before the Tribunal which, as noticedabove, has been allowed, inter alia, observing that the first appeal by the ITA 457/2005Page 4 of 8 appellant-assessee under Section 246(1)(c) of the Act challenging levy ofinterest under Section 220(2) of the Act was not maintainable before theCommissioner of Income Tax (Appeals). The decisions relied upon by theassessee were distinguished on the ground that they relate to levy of interestunder Sections 215 and 217 of the Act. 14.In our opinion, in the present case, the appeal would be maintainableunder clause (c) to Section 246(1) of the Act. The said provision, asapplicable to the case of the assessee in the relevant year when the appealwas preferred, reads as under: Appealable orders. 246.(1) Subject to the provisions of sub-section(2), any assessee aggrieved by any of the followingorders of an Assessing Officer (other than the DeputyCommissioner)mayappealtotheDeputyCommissioner (Appeals) [before the 1[st]day of June,2000] against such order- XXXXXX (c) an order under section 154 or section 155having the effect of enhancing the assessment orreducing a refund or an order refusing to allow theclaim made by the assessee under either of the saidsections. (emphasis supplied) 15.The order under Section 154 of the Act had the effect of enhancingthe assessment. Such orders are appealable on all aspects decided andadjudicated. The order under Section 154 of the Act had also specificallydealt with and examined the question of interest u/s 220(2) of the Act andthe date from which the interest was chargeable. The direction to chargeinterest was specifically given in the order under Section 154 of the Act. The ITA 457/2005 claim and contention of the appellant assessee to the contrary was rejectedand disallowed. The assessing officer had refused to accept the contentionmade by the assessee that interest would not be chargeable under Section220(2) of the Act, until and unless there was non-payment pursuant to theorder passed. This is a peculiar case wherein the question of levy of interestunder Section 220(2) of the Act, which is payable on non payment, wasdecided, levied and imposed in the order under Section 154 of the Act. Inthe present case, there was a specific direction and finding in the orderpassed under Section 154 in respect of charging interest under Section220(2) of the Act. Consequently, the direction for payment of interest whichwas contested by the appellant-assessee would be appealable under clause(c) of Section 246 (1) of the Act. 16.We are aware of the decisions in Associated Stone Industries (Kotah)Ltd. Vs. CIT [1971] 224 ITR 560 (SC), Central Provinces Manganese Ore.Co. Ltd. Vs. CIT [1986] 160 ITR 961 (SC), Commissioner of Income-TaxVs. M/s. Mahabir Prashad & Sons (1980) 125 ITR 165 (Del), which draw adistinction between cases where the assessee denies his liability to payinterest; and where quantum of interest is in dispute or where waiver andreduction is prayed. In the latter cases appeal is not maintainable, whereasin the former set of cases where the assessee claims that he is not liable topay interest at all, appeal would be maintainable and the plea as to nonliability to pay interest may be raised while disputing the assessment inappeal. However, more appropriate and direct on the point is the decision ofthe Bombay High Court in British Bank of India Vs. CommissionerIncome-Tax [2004] 266 ITR 269 (Bom.), wherein reference was made to ITA 457/2005 Section 246 (1) (f) which was pari materia to the clause applicable and itwas held as under: “7. However, we find merit in the argument advancedon behalf of the assessee that appeal was maintainableunder section 246(1)(f). For the sake of convenience,we reproduce hereinbelow section 246(1)(f) whichreads as follows:— ITA 457/2005 Section 246 (1) (f) which was pari materia to the clause applicable and itwas held as under: “7. However, we find merit in the argument advancedon behalf of the assessee that appeal was maintainableunder section 246(1)(f). For the sake of convenience,we reproduce hereinbelow section 246(1)(f) whichreads as follows:— “Subject to the provisions of sub-section (2), anyassessee aggrieved by any of the orders of ITO mayappeal against such order under section 144 (sic. 154)or section 155 having the effect of enhancing theassessment or reducing the refund or refusing to allowthe claim made by the assessee under either section154 or section 155.” 8. Inthecaseof EmpireIndustriesLtd. v. Commissioner of Income-Tax reported in 193ITR page 295, the assessee had paid advance tax of Rs.24.47 lacs on regular assessment being completedunder section 143(3). The AO raised the demand undersection 156 of the Act of Rs. 7.27 lacs includinginterest of Rs. 56,000/-. By Order dated 27-6-1974, theAppellate Authority allowed the appeal partly. WhilegivingeffecttotheAppellateOrder,theITOdetermined the amount refundable to the assessee atRs. 9.46 lacs. The amount was refunded but interestthereon under section 214 of the Act was not paid.Being aggrieved, the assessee filed an appeal beforethe Appellate Authority and claimed that the ITO oughtto have granted interest under section 214. TheAppellate Authority and the Tribunal held that theappeal was not competent. On reference, it was held bythe Bombay High Court that Income Tax Officer'sOrder had been passed under section 154 and appealtherefrom was competent under section 246(1)(f). ThisJudgment, to the above extent, applies to the facts of our case. In the present case also, the AO wasconcerned with giving effect to the Order dated 31-12-1986 passed by the Commissioner of Income-Tax(Appeals) when he failed to grant interest undersection 214 and under section 244(1A). This is veryclear also from page 5 of the paper-book which refersto Order of Assessing Officer dated 18-2-1987 givingeffect to the Order passed by the Appellate Authoritydated 31-12-1986. Hence, the second part of the aboveissue is answered in favour of the assessee and againstthe Department. We accordingly hold that the appealfiled by the assessee with CJT (Appeals) being AppealNo.CIT(A)/XXII/ARIII/D/227/87-88 was maintainableunder section 246(1)(f).” 17.The question of law is accordingly, answered in favour of appellant-assessee and against the Revenue. We, however, clarify that we have notexamined the question of chargeability of interest under Section 220(2) ofthe Act, or the date from which it would be payable as the said questionwould be examined by the Tribunal. 18.We have not expressed any opinion on the contention raised by thecounsel for the Revenue that they would be entitled to raise the issue of levyof interest under Sections 215 and 217 of the Act. If any such contention israised, the same would be examined by the Tribunal including the questionwhether the Revenue can raise such a contention or not. 19.The appeal is disposed of in above terms with no order as to costs. SANJIV KHANNA, J. NOVEMBER 16, 2017j ITA 457/2005 PRATHIBA M. SINGH, J.