Madras High Court
Super Spinning Mills Ltd. vs Commissioner Of Income-Tax And Anr. on 8 June, 1998
Equivalent citations: [2000]244ITR814(MAD)
Author: P. Sathasivam
Bench: P. Sathasivam
JUDGMENT P. Sathasivam, J.
1. In both the writ petitions, the petitioner is one and the same. Aggrieved against the order of the first respondent herein/Commissioner of Income-tax, Coimbatore, dated March 6, 1989, the petitioner has filed Writ Petition No. 4397 of 1989 for the assessment year 1979-80 and Writ Petition No. 4656 of 1989 for the assessment year 1980-81.
2. The case of the petitioner is briefly stated hereunder :
According to them, for the assessment year 1979-80, the assessee filed its original return on September 1, 1979, and thereafter two revised returns declaring an income of Rs. 36,71,038. For the assessment year 1980-81, the assessee filed its original return on August 4, 1980, and subsequently three revised returns declaring a total income of Rs. 91,77,888. It is stated that the petitioner company had taken two term loans from the Union Bank of India and the petitioner-company utilised these loans to the extent of Rs. 46,02,268 for the acquisition of plant and machinery between the period of August 1, 1978, and September 28, 1978, so as to enable to expand its production capacity. In the letter dated February 14, 1981, with which the petitioner filed its revised return on December 17, 1981, it was explained that it took term loans from the Union Bank of India with interest payable thereon for the period July 1, 1981, to January 1, 1984, amounting to Rs. 19,05,321 that with the loan taken the petitioner company, has acquired assets for its expansion programme in the accounting year, as per the rules, the interest on the loans taken goes to enhance the cost of the assets acquired and in view of this and of the fact that the petitioner-company is going to capitalise the entire interest payable even though in the accounting year the interest payable pertaining to the year ended March 31, 1979, amounting to Rs. 3,47,132 was originally charged as revenue expenditure to the profit and loss account, the petitioner-company is going to pass reverse entries, now taking the interest charged to revenue account to capital account and on this consideration, it is claiming depreciation and investment allowance on the entire interest payable up to January 1, 1984, which is not so far capitalised against the profit of the accounting year under consideration. For the assessment year 1979-80, the petitioner claimed depreciation on the capitalised interest on the term loans amounting to Rs. 3,81,064 and investment allowance on the said capitalised interest amounting to Rs. 4,76,330. For the assessment year 1980-81 the petitioner claimed depreciation of Rs. 7,49,423 and investment allowance of Rs. 5,40,552 on such capitalised interest.
3. It is stated that the Income-tax Officer by his order dated October 15, 1982, for the assessment year 1979-80 and May 8, 1984, for the assessment year 1980-81 rejected the claim of the petitioner. Aggrieved by the said orders, the petitioner filed appeals before the Commissioner of Income-tax (Appeals). The said appellate authority by its orders dated March 20, 1985, for both the assessment years upheld the claim of the petitioner in respect of depreciation and investment allowance and directed the Income-tax Officer to verify that all other conditions laid down under the Act have been fulfilled for grant of investment allowance. Consequent on the order of the Commissioner of Income-tax (Appeals), the Income-tax Officer granted the relief in respect of depreciation and investment allow-
ance by his orders dated April 30, 1985, for both the assessment years and as a result, the petitioner was entitled to a refund of Rs. 4,40,654 for the assessment year 1979-80 and Rs. 9,21,240 for the assessment year 1980-81.
4. Aggrieved by the orders of the Commissioner of Income-tax (Appeals), the Income-tax Officer filed an appeal to the Income-tax Appellate Tribunal, Madras. In the meantime, the Finance Act, 1986, added an Explanation 8 to Section 43(1) with retrospective effect from April 1, 1974. In view of the retrospective amendment, the appellant was not entitled to the relief granted by the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal following the retrospective amendment of the Act, allowed the appeal of the Income-tax Officer in respect of the claims of depreciation and investment allowance and reversed the orders of the Commissioner of Income-tax (Appeals). Giving effect to the orders of the Income-tax Appellate Tribunal, the Income-tax Officer passed orders dated December 17, 1987, for both the assessment years and determined an additional tax of Rs. 2,94,555 for the assessment year 1979-80 and Rs. 4,35,402 for the assessment year 1980-81. The Income-tax Officer also computed interest under Section 220(2) of the Income-tax Act. He determined interest for the year 1979-80 at Rs. 2,04,677 and for the year 1980-81 at Rs. 2,19,877 and issued notice of demand. It is further stated that on receipt of the orders giving effect to the order of the Income-tax Appellate Tribunal, the petitioner paid the tax within the time. However, in respect of the interest under Section 220(2) of the Income-tax Act, the petitioner filed a petition to the Commissioner of Income-tax, Coimbatore, under Section 264 of the Income-tax Act praying for deletion of the interest levied under Section 220(2) on the ground that the additional tax payable came to be sustained only on account of the retrospective amendment to the Income-tax Act, by the Finance Act, 1986, that the petitioner was not in arrears of any tax after the orders of the Income-tax Officer dated April 30, 1985, giving effect to the orders of the Commissioner of Income-tax (Appeals) and that, therefore, no interest under Section 220(2) could be levied on the petitioner. The Commissioner of Income-tax by his common order dated March 6, 1989, followed a circular of the Central Board of Direct Taxes No. 334 (see [1982] 135 ITR (St.) 10), dated April 3, 1982, wherein the Board had clarified that where the assessment made originally by the Income-tax Officer is either varied or set aside by one appellate authority, but on further appeal, the original order of the Income-tax Officer is restored either in part or wholly, the interest payable under Section 220(2) should be computed with reference to the due date reckoned from the original notice of demand and not with reference to the tax finally determined, rejected the claim of the petitioner with regard to waiver of interest claimed under Section 220(2) of the Act. Against the said orders for both the assessment years, namely, 1979-80 and 1980-81, the petitioner has filed the abovesaid writ petitions.
5. The respondents have not filed any counter affidavit.
6. I have heard Mr. G. Sarangan, learned senior counsel for the petitioner in both the writ petitions, and Mr. S. V. Subramanian, learned senior counsel for the respondents.
7. Mr. G. Sarangan, learned senior counsel for the petitioner, after taking me through the relevant provisions of the Act, particularly Sections 156 and 220(2) of the Income-tax Act submitted that inasmuch as the petitioner has already paid the income-tax as demanded and within the time, there is no question of imposing penalty under Section 220(2) of the said Act, accordingly, the impugned orders passed by the Commissioner of Income-tax (Appeals) are liable to be set aside. He also submitted that the impugned order passed by the first respondent is merely based on the circular of the Central Board of Direct Taxes cannot be sustained since the same is riot binding on the said authority. In support of his contentions, he also relied on the following decisions of various High Courts :
(1) A. V. Thomas and Co. Ltd. v. ITO ;
(2) ITO v. A. V. Thomas and Co. ;
(3) Bharat Commerce and Industries Ltd. v. CIT ;
(4) Shri Ambica Mills Ltd. v. ITO [1993] 203 ITR 84 (Guj) ;
(5) Birla Cotton Spinning and Weaving Mills Ltd. v. ITO ;
(6) Vibrant Tyres Ltd. v. First ITO [1993] 202 ITR 454 (Kar).
8. On the other hand, Mr. S. V. Subramaniam, learned senior counsel for the Revenue, after taking me through the relevant provisions of the Income-tax Act as well as Circular No. 334 (see [1982] 135 ITR (St.) 10), dated April 3, 1982, issued by the Central Board of Direct Taxes, contended that in view of the orders of the Income-tax Appellate Tribunal, the petitioner has to pay higher amount of tax and the same having been part of the original demand, in the absence of payment of the entire amount demanded, the respondents are justified in demanding interest under Section 220(2) of the said Act. In order to sustain the impugned orders, he also relied on the following decisions :
(1) Jadhav (M. N.) v. Fourth ITO [1986] 161 ITR 275 (Kar) ;
(2) Abdul Kareem Hajee (K. P.) v. ITO ;
(3) Roopali Dyeing and Printing Works v. Asst. CIT [1995] 212 ITR 573 (Guj) ;
(4) Mohammed Essa Moosa Sait v. GTO [1987] 167 ITR 338 (Ker) ;
(5) Bharat Commerce and Industries Ltd. v. Union of India .
9. I have carefully considered the rival submissions.
10. The only question to be decided in these writ petitions is whether the orders of the Commissioner of Income-tax dated March 6, 1989, under Section 264 of the Income-tax Act (hereinafter referred to as "the Act"), declining to direct the Income-tax Officer to delete the interest charged under Section 220(2) of the Income-tax Act for the assessment years 1979-80 and 1980-81 are correct or not ?
11. In order to appreciate the rival contentions, at the foremost I shall consider the relevant provisions, namely, Sections 156 and 220(2) of the Act. Section 156 deals with notice of demand which reads thus :
"156. Notice of demand--When any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the Assessing Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable."
12. Section 220 deals with collection and recovery. We are concerned with Section 220(2) which is as under :
"2201 (2) If the amount specified in any notice of demand under Section 156 is not paid within the period limited under Sub-section (1), the assessee shall be liable to pay simple interest at one and one-half per cent. for every month or part of a month comprised in the period commencing from the day immediately following the end of the period mentioned in Sub-section (1) and ending with the day on which the amount is paid."
13. There is no dispute that in the appeals filed by the petitioner/assessee their claim for investment allowance was granted by the Commissioner of Income-tax (Appeals). As per the order of the said authority, the Income-tax Officer has also determined the amount refundable in favour of the assessee. Aggrieved by the order of the Commissioner of Income-tax (Appeals), the Income-tax Officer preferred appeal before the Income-tax Appellate Tribunal. When the appeal is pending before the Income-tax Appellate Tribunal, in the Finance Act, 1986, an Explanation, namely, Explanation 8 to Section 43(1) was introduced with retrospective effect from April 1, 1974. The said Explanation is as follows :
"For the removal of doubts, it is hereby declared that where any amount is paid or is payable as interest in connection with the acquisition of an asset, so much of such amount as is relatable to any period after such asset is first put to use shall not be included, and shall be deemed never to have been included, in the actual cost of such asset."
14. It is true that the Income-tax Appellate Tribunal following the retrospective amendment of the Act referred to above allowed the appeal of the Income-tax Officer in respect of the claims for depreciation and investment allowance and reversed the orders of the Commissioner of Income-tax (Appeals). In pursuance of the order of the Income-tax Appellate Tribunal setting aside the order of the Commissioner of Income-tax (Appeals), the Income-tax Officer determined the additional tax as well as interest under Section 220(2) of the Act. It is the case of the petitioner that they have paid the original demand as well as the additional demand made by the Income-tax Officer in pursuance of the order of the Income-tax Appellate Tribunal ; hence, they need not pay any interest as per Section 220(2) of the Act. Even though it is stated in the affidavit and also contended by learned senior counsel for the petitioner that the petitioner has paid the entire amount demanded on both the occasions for both the assessment years, during the hearing, learned senior counsel for the Revenue produced the records and contended that the statement made by the petitioner as well as the reference in the order impugned is factually incorrect and, according to him, the petitioner did not pay the entire tax as demanded.
15. In the light of the above factual position, now I shall consider the decisions referred to by learned senior counsel for the petitioner. In that decision viz., A. V. Thomas and Co. Ltd, v. ITO , the learned single judge of the Kerala High Court has held that where the tax computed by the Income-tax Officer was paid in full and within time by the assessee and a portion of the tax was refunded to the assessee consequent to the order of the Appellate Assistant Commissioner, but, on further appeal, the Tribunal reversed the order of the Appellate Assistant Commissioner and restored that of the Income-tax Officer and, therefore, a fresh notice of demand was served on the assessee calling upon him to pay back to the Department the tax refunded to him, the liability to pay interest to the Department under Section 220(2) of the Income-tax Act, 1961, arises only from the date when the fresh notice of demand is issued to the assessee and not from the date when the tax was refunded to the assessee. In this case, A. V. Thomas and Co. Ltd. v. ITO , it is not disputed that the petitioner had paid the amount at the right time and received the refund as per the order of the Appellate Assistant Commissioner, he had no liability to pay any amount to the Department until the notice of demand was served on him consequent upon the reversal order of the Appellate Assistant Commissioner by the Tribunal. In view of the said factual position, the said judgment is not helpful to the petitioner's case.
16. In ITO v. A V. Thomas and Co. [1986] 160 ITR 818, a Division Bench of the Kerala High Court has confirmed the view expressed by the learned single judge in A V. Thomas and Co. Ltd. v. ITO [1982] 138 ITR 275. After considering the factual position in that case, the Division Bench while confirming the order of the learned single judge has held that the requirements under Section 220(2) for attracting the liability to pay interest are not present in that case.
17. In Bharat Commerce and Industries Ltd. v. CIT [1994] 210 ITR 13, the Division Bench of the Delhi High Court had held that Section 220(2) of the Income-tax Act, 1961, gives power to the authority to levy interest only if the amount specified in any particular demand has not been paid in accordance with Section 220(2). The Division Bench has also held that where an order of rectification is made under Section 154 and a notice of demand is issued thereafter for the amount determined by that order ; interest under Section 220(2) can be levied on the amount of demand only if there is no payment of the amount covered by the rectification order in accordance with the notice of demand. The rectification order cannot include interest under Section 220(2). In that case, the demand was made in pursuance of the rectification order ; hence, the same is distinguishable and not helpful to the petitioner's case.
18. In Shri Ambica Mills Ltd. v. ITO [1993] 203 ITR 84, the Division Bench of the Gujarat High Court has held that where the petitioner had complied with the notice of demand issued under Section 156 of the Income-tax Act and, therefore, there was no question of applying the provisions of Sub-section (2) of Section 220 of the Income-tax Act, the order levying interest under Section 220(2) was liable to be quashed. A perusal of the said decision shows that the entire amount demanded was paid in time. Hence, the same is distinguishable.
19. In Birla Cotton Spg. and Wvg. Mills Ltd. v. ITO [1995] 211 ITR 610, the learned single judge of the Calcutta High Court has held that the liability to pay interest would arise under Section 220(2) only in cases where the amount specified in the notice of demand is not paid within the period specified under Sub-section (1) of Section 220. The learned judge has also held that the amount specified in the notice of demand is either already paid or no longer payable or subsisting, no liability to pay interest under Section 220(2) can arise. A perusal of the said judgment shows that the impugned order therein seeks to rectify the mistake. The abovesaid conclusion of the learned judge is only a passing observation ; hence, the same is also not much helpful to the petitioner's case.
20. The last decision, namely Vikrant Tyres Ltd. v. First ITO [1993] 202 ITR 454 (Kar), though relied on by the petitioner, clearly supports the plea of the Revenue only.
21. Now I shall consider the various decisions cited by learned senior counsel for the Revenue. At the foremost, he relied on a decision reported in M. N. Jadhav v. Fourth ITO [1986] 161 ITR 275 (Kar). In that case the Inspecting Assistant Commissioner imposed penalty on the assessee under Section 271(1)(c) of the Income-tax Act, 1961. On appeal, the Tribunal cancelled the penalties levied against the assessee. The High Court, on a reference, at the instance of the Revenue, held that the levy of penalty was valid. Thereafter, the Tribunal disposed of the appeals filed by the assessee holding that the levy of penalty by the Inspecting Assistant Commissioner was valid and legal. In compliance with the order of the Tribunal, the Income-tax Officer passed consequential orders calling upon the assessee to pay the penalty and interest accrued thereon under Section 220(2) of the Income-tax Act, 1961. In the writ petitions, the challenge was made on the ground that fresh notices of demand were not issued for recovery of penalty and interest. The learned single judge of the Karnataka High Court in that case after considering Sections 156 and 220(2) of the Act has held that (i) that the legal effect of the later order made by the Tribunal was that the earlier notices of demand stood revived and became valid, legal and enforceable against the assessee. Therefore, the question of issuing fresh notices of demand did not arise ; (ii) that in view of the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964, the original notices of demand issued by the Income-tax Officer continued to be valid and operative against the assessee. The learned judge has further held that the original notices of demand issued by the Income-tax Officer were valid and legal and that in compliance with them, the assessee had not paid penalties at any rate till February 15, 1979. From a combined reading of Sections 156 and 220(2) of the Act, the assessee could not escape his liability for payment of interest for the aforesaid period which was also the legal position achieved by the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964.
22. In K. P. Abdul Kareem Hajee v. ITO , a learned single judge of the Kerala High Court, while considering Section 220(2) of the Act, has held as follows (page 122) :
"The order of a judicial or quasi-judicial authority is not final for the purpose of res judicata during the time allowed for filing an appeal or the pendency of an appeal. In the absence of any statutory provision to the contrary, or an interim stay granted by a competent authority, the order, although not final, is provisionally executable, subject to restoration. The finality of exhibit P-2A was qualified by and subject to appeal, which was taken before the appellate authority. The order of the appellate authority itself was likewise provisional during the period allowed for filing an appeal or during the pendency of the appeal. When the order of the Appellate Assistant Commissioner concerning the petitioner was finally set aside by the Tribunal, thereby affirming exhibit P-2A order of the Income-tax Officer, the cloud hanging over exhibit P-2A was removed and its finality was affirmed. Consequently, for the relevant period, exhibit P-2A is deemed to have operated in full vigour to make the petitioner liable in law by reason of the Tribunal's affirmative order. If this is the position in law, which I think it is, Section 220(2) of the Income-tax Act was attracted in respect of the amount due from the petitioner as per exhibit P-2A dated December 1, 1973. It is that interest which is now demanded by the Income-tax Officer, vide exhibit P-6, and affirmed by the Commissioner by exhibit P-7. The challenge against the impugned orders accordingly fails. The original petition is dismissed."
23. In Roopali Dyeing and Printing Works v. Asst. CIT [1995] 212 ITR 573, a Division Bench of the Gujarat High Court with regard to claim of interest under Section 220(2) of the Income-tax Act has held in the following manner (headnote) :
"The notice of demand under Section 156 was issued in pursuance of an order passed under Section 143(3). The said demand finally stood reduced by the order passed by the Tribunal though in between the Commissioner of Income-tax (Appeals) had granted greater relief in its order under Section 250. The notice of demand must relate back to the original notice of demand. On the basis of the original notice of demand on finality of the proceedings, the levy of interest was valid."
24. In Mohammed Essa Moosa Sait v. GTO [1987] 167 ITR 338, a Division Bench of the Kerala High Court, while considering Section 32(2) of the Gift-tax Act, 1958, which corresponds to Section 220(2) of the Income-tax Act, 1961, following K. P. Abdul Kareem Hajee v. ITO (confirmed by a Division Bench in ITO v. A. V. Thomas and Co. ), has held that the order passed under Section 32(2) of the Gift-tax Act demanding payment of interest on the unpaid amount of instalments of gift-tax was valid.
25. In Bharat Commerce and Industries Ltd. v. Union of India [1991] 188 ITR 277, a Division Bench of the Delhi High Court, while considering the scope of Section 220(2) of the Act has held as follows (page 286) :
"The logical consequence of the view enunciated by the High Courts of Kerala and Calcutta, in so far as it has a bearing on the present case, would be that the first notice of demand, issued after the original assessment order passed by the Income-tax Officer cannot be deemed to have been extinguished by virtue of the appeal having been filed before the Commissioner of Income-tax (Appeals) or conditional stay of the operation of the assessment having been allowed by the Commissioner of Income-tax (Appeals) pending disposal of the appeal before him or by virtue of subsequent reduction of the taxable income, for the reason that, under the order of the Tribunal which has attained finality between the parties, the original assessment has been restored with the result that the first demand notice which, at the most, lay in abeyance or suspension would stand revived and it would be apposite to hold that there was non-compliance with this notice of demand apparently beyond 35 days so as to attract the provisions of Section 220(2) of the Act. To accept the arguments advanced by Mr. Syali that, by virtue of the order passed by the Commissioner of Income-tax (Appeals) the demand cannot be said to have been in operation until the Tribunal's final order, would be indulging in over simplification, which is not warranted by the relevant provisions of the Act."
26. In the light of the factual position narrated in the earlier part of my order coupled with the scope of Sections 156 and 220(2) of the Act, I am in agreement with the views expressed by the various High Courts in the decisions referred to by learned senior counsel for the Revenue. As a matter of fact, in the Karnataka and Kerala cases, namely, M. N. Jadhav v. Fourth ITO [1986] 161 ITR 275 (Kar) ; K. P. Abdul Kareem Hajee v. ITO and Mohammed Essa Moosa Sait v. GTO [1987] 167 ITR 538 (Ker), identical issue was considered and answered in favour of the Revenue. I have already observed that though it is stated that the tax demanded was paid in time, the same has been disputed by learned senior counsel for the Revenue. He also produced the relevant files to show that the assessee was in arrears of tax demanded for both the assessment years 1979-80 and 1980-81. As stated earlier, the correct legal effect of the final order passed by the Income-tax Appellate Tribunal is that the earlier notice of demand stood revived and became legal, valid and enforceable against the assessee. In such circumstances, there is no question of issuing fresh notice of demand as claimed. Further, in view of Section 3 of the Taxation Laws (Continuation and Validation of Recovery Proceedings), Act, 1964, the original notice of demand issued by the Income-tax Officer continued to be valid and operative against the assessee. I am of the view that from a combined reading of Sections 156 and 220(2) of the Act, the assessee could not escape from his liability of payment of interest and more particularly, in the light of the legal position, as per the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964. In other words, the 1964 Act comes to the rescue of the Revenue to hold that the original notice of demand issued by the Income-tax Officer continued to be valid and operative against the petitioner. As rightly observed by the Division Bench in Bharat Commerce and Industries Ltd. v. Union of India , the demand of interest cannot be termed as a penal provision, as the rationale behind the said provision is not to penalise a party but to make a provision for compensation to the Department on the failure of the assessee to make payment on the first notice of demand. I have already concluded that as per the order of the Appellate Tribunal, the original demands stood revived, if that is so, in the absence of payment of entire amount demanded, the respondents are justified in claiming interest under Section 220(2) of the Act. To make it clear even if a part of the amount of tax is outstanding, interest is chargeable from the expiry of 35 days. Even though learned senior counsel for the petitioner very much relied on some of the decisions of the various High Courts as mentioned above, after carefully scrutinising the factual position therein, I am of the view that those cases are either distinguishable or not applicable to the facts of the present case. As a matter of fact, I have already concluded that in most of the cases referred to by learned senior counsel for the petitioner, the assessee in those cases has paid the entire tax demanded, and in some cases, demand arose under rectification orders. In such circumstances, with respect, I am not in a position to follow those decisions.
27. Finally an argument was advanced by learned senior counsel for the petitioner that the Tribunal has committed an error in merely following the circular issued by the Central Board of Direct Taxes. It is true that with regard to levy of interest under Section 220(2) when the original assessment is set aside, the Central Board of Direct Taxes has issued clarification by way of Circular No. 334 (see [1982] 135 ITR (St.) 10), dated April 3, 1982. The relevant portion which is relied on by the Revenue reads thus :
"Circular No. 334, dated 3rd April, 1982 To :
All Commissioners of Income-tax.
Sir, Subject : Levy of interest under Section 220(2) when the original assessment is set aside--Instructions regarding. Doubt's have been raised as to the quantum of interest chargeable under Section 220(2) of the Income-tax Act, when the original assessment order passed by the Income-tax Officer is-
(i) cancelled by him under Section 146 of the Income-tax Act ; or
(ii) set aside/cancelled by an appellate/revisional authority and such appellate/revisional order has become final ; or
(iii) set aside by one appellate authority but, on further appeal, the order setting aside the assessment is varied by the second appellate authority and the demand gets finally determined.
2. These issues were comprehensively examined in consultation with the Ministry of Law and the Board has been advised : . . .
(ii) where the assessment made originally by the Income-tax Officer is either varied or even set aside by one appellate authority but, on further appeal, the original order of the Income-tax Officer is restored either in part or wholly, the interest payable under Section 220(2) will be computed with reference to the due date reckoned from the original demand notice and with reference to the tax finally determined. The fact that during an intervening period, there was no tax payable by the assessee under any operative order would make no difference to this position. . .
Yours faithfully, (Sd.) H. Venkataraman, Director, Central Board of Direct Taxes.
[F. No. 400/3/81-ITCO]"
28. It is true that in the said circular, it is clarified that in the second appeal the original order of Income-tax Officer is restored either in part or wholly, the interest payable under Section 220(2) will be computed with reference to the due date reckoned from the original demand notice and with reference to the tax finally determined. It is also clarified that the fact that during the intervening period, there was no tax payable by the asses-see under any operative order would make no difference to this position. It is settled law that various circulars issued by the head of the Department, Central Board of Direct Taxes are binding only in so far as the officers working in the said Department. In other words, the same are not binding on the authorities constituted under the Act or the courts deciding the issues. Absolutely there is no doubt with regard to the above position. Even without reference to the above circular, as stated earlier, in the light of the factual position available on record, coupled with Sections 156 and 220(2) of the Act, I hold that the proceedings of the Commissioner of Income-tax dated March 6, 1989, are in order and I do not find any infirmity or error in rejecting the claim made by the petitioner with regard to waiver of interest charged under Section 220(2) for the assessment years 1979-80 and 1980-81.
29. Under these circumstances, both the writ petitions fail and are accordingly, dismissed. However, there will be no order as to costs.