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Issues Involved:
1. Deletion of interest charged under Section 220(2) of the IT Act, 1961. 2. Direction to allow proportionate credit of TDS in either assessment year 1992-93 or 1993-94. Issue-wise Detailed Analysis: 1. Deletion of Interest Charged under Section 220(2) of the IT Act, 1961: The first issue pertains to the deletion of interest charged under Section 220(2) amounting to Rs. 1,30,10,582. The sequence of events began with the assessee filing a return for AY 1992-93, which was processed, and refunds were issued. The AO later assessed interest income of Rs. 2,84,56,203 from banks as taxable, leading to adjustments and refunds. The matter escalated to the Tribunal, which directed that a significant portion of the interest income be assessed in AY 1993-94 instead. Consequently, the AO revised the taxable income for AY 1992-93 and assessed the interest income in AY 1993-94. The AO issued a notice under Section 154 to amend the earlier order and withdrew the TDS credit from AY 1992-93, leading to a demand notice and the charging of interest under Section 220(2). The CIT(A) held that interest under Section 220(2) could only be charged if there was a demand notice and a default in payment within the stipulated time. Since the demand notice was issued for the first time in June 2004, charging interest from July 1993 to June 2004 was deemed incorrect. The Tribunal upheld this view, emphasizing that interest under Section 220(2) is chargeable only when there is a default in paying the demanded tax within the specified period. The procedural lapse by the AO in preparing two ITNS-150 forms instead of one was noted, and it was directed that a consolidated ITNS-150 should be prepared to reflect the correct tax and interest calculations. 2. Direction to Allow Proportionate Credit of TDS in Either Assessment Year 1992-93 or 1993-94: The second issue involved the direction by the CIT(A) to allow proportionate credit of TDS in the relevant assessment year. The Tribunal's order had resulted in the interest income being assessed in AY 1993-94, necessitating the adjustment of TDS credit accordingly. The AO initially allowed TDS credit in AY 1992-93, which was later corrected to AY 1993-94 following the Tribunal's directions. The CIT(A) directed the AO to allow TDS credit in the year the income was assessable, which was upheld by the Tribunal. The Tribunal clarified that under Section 199, TDS credit should be given in the year the income is assessable, and directed the AO to allow the TDS credit in the correct assessment year. Conclusion: The appeal for AY 1992-93 was partly allowed for statistical purposes, with directions to the AO to prepare a consolidated ITNS-150 and correctly compute the tax and interest. The appeal for AY 1993-94 was allowed for statistical purposes, affirming the direction to allow TDS credit in the appropriate assessment year. The Tribunal emphasized the importance of following procedural correctness and ensuring that interest and TDS credits are accurately reflected in the respective assessment years.
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