COMMISSIONER OF INCOME-TAX, BANGALORE Vs. CANARA BANK

JUDGEMENT

(1.) Mr.K.V.Aravind, learned counsel for the revenue. Mr.T.Suryanarayana, learned counsel for the assessee.

(2.) This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as the Act , for short) has been preferred by the revenue. The subject matter of the appeal pertains to the Assessment Year 2007-08. The appeal was admitted by a Bench of this Court vide order dated 07.09.2015 to consider the following substantial questions of law:

(3.) Facts leading to filing of this appeal briefly stated are that the assessee is a banking company. The assessee filed the return for the Assessment Year 200708. The Assessing Officer concluded the assessment under Section 143(3) of the Act and assessed the taxable income at Rs.1772,81,78,854/- as against Rs.593,48,70,178/- declared by the assessee. The order passed by the Assessing Officer was subject matter of the proceeding under Section 263 of the Act before the Commissioner of Income Tax (Appeals), who by an order dated 07.03.2011 directed the Assessing Officer to re-assess a sum of Rs.52,77,81,540/- representing the write back of stale demand drafts. The aforesaid order of the Commissioner of Income Tax (Appeals) was challenged by the assessee before the Income Tax Appellate Tribunal. The Tribunal quashed the order of the Commissioner of Income Tax (Appeals) to the extent that it pertained to the assessment of write back of stale demand drafts. Thereafter, the Assessing Officer passed an order on 07.03.2011 giving effect to the order dated 07.09.2012 passed by the Tribunal. The Assessing Officer charged the interest under Section 234C of the Act. The assessee challenged the levy of interest under Section 220(2) of the Act for the period during which the Assessing Officer himself has granted the stay of recovery. The Assessing Officer also granted refund of interest under Section 244A of the Act which according to the assessee was not properly calculated. Being aggrieved, the assessee filed an appeal. The Commissioner of Income Tax (Appeals), by an order dated 25.11.2013, inter alia held that interest under Section 234C of the Act could not have been levied. It was further held that sofar as grant of interest on refund of amount to the assessee under Section 244A of the Act is concerned, the assessee gave a computation of interest payable by the department. The Commissioner of Income Tax (Appeals) directed the Assessing Officer to verify the same. With regard to the issue of levy of interest under Section 220(2) of the Act, it was held by the Commissioner of Income Tax (Appeals) that the short period covered by the stay issued by the Assessing Officer is not for the period from December 2009 to February 2010. In the result, the appeal was partly allowed. Thereupon, the revenue filed an appeal before the Tribunal. The Tribunal, by an order dated 28.11.2014 maintained the order passed by the Commissioner of Income Tax (Appeals). In the aforesaid factual background, this appeal has been filed.