Judgment :- P. SATHASIVAM, J. In both the writ petitions, the petitioner is one and the same. Aggrieved against the order of the first respondent herein/CIT, Coimbatore, dt. 6th March, 1989, the petitioner has filed Writ Petn. No. 4397 of 1989, for the asst. yr. 1979-80 and Writ Petition No. 4656 of 1989, for the asst. yr. 1980-81. The case of the petitioner is briefly stated hereunder : According to them, for the asst. yr. 1979-80, the assessee filed its original return on 1st September, 1979, and thereafter two revised returns declaring an income of Rs. 36, 71, 038. For the asst. yr. 1980-81, the assessee filed its original return on 4th August, 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 1st Aug, 1978, and 28th September, 1978, so as to enable to expend its production capacity. In the letter dt. 14th February, 1981, with which the petitioner filed its revised return on 17th December, 1981, it was explained that it took term loans from the Union Bank of India with interest payable thereon for the period 1st July, 1981, to 1st January, 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 31st March, 1979, amounting to Rs. 3, 47, 132 was originally charged as revenue expenditure to the P & L A/c, 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 1st January, 1984, which is not so far capitalised against the profit of the accounting year under consideration. For the asst. yr. For the asst. yr. 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 asst. yr. 1980-81 the petitioner claimed depreciation of Rs. 7, 49, 423 and investment allowance of Rs. 5, 40, 552 on such capitalised interest.It is stated that the ITO by his order dt. 15th October, 1982, for the asst. yr. 1979-80 and 8th May, 1984, for the asst. yr. 1980-81 rejected the claim of the petitioner. Aggrieved by the said orders, the petitioner filed appeals before the CIT(A). The said appellate authority by its orders dt. 20th March, 1985, for both the assessment years upheld the claim of the petitioner in respect of depreciation and investment allowance and directed the ITO 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 CIT(A), the ITO granted the relief in respect of depreciation and investment allowance by his orders dt. 30th April, 1985, for both the assessment years and as a result, the petitioner was entitled to a refund of Rs. 4, 40, 654 for the asst. yr. 1979-80 and Rs. 9, 21, 240 for the asst. yr. 1980-81. Aggrieved by the orders of the CIT(A), the ITO filed an appeal to the Tribunal, Madras. In the meantime, the Finance Act, 1986 135 ITR(St) 10, dt. 3rd April, 1982, wherein he Board had clarified that where the assessment made originally by the ITO is either varied or set aside by one appellate authority, but on further appeal, the original order of the ITO is restored either in part or wholly, the interest payable under s. 220(2) should be computed with reference to the due also 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 s. 220(2) of the Act. Against the said order for both the assessment years, namely, 1979-80 and 1980-81, the petitioner has filed the abovesaid writ petitions.The respondents have not filed any counter affidavit. 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. Mr. Against the said order for both the assessment years, namely, 1979-80 and 1980-81, the petitioner has filed the abovesaid writ petitions.The respondents have not filed any counter affidavit. 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. Mr. G. Sarangan, learned senior counsel for the petitioner, after taking me through the relevant provisions of the Act, particularly ss. 156 and 220(2) of the IT 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 s. 220(2) of the said Act, accordingly, the impugned orders passed by the CIT(A) are liable to be set aside. He also submitted that in impugned order passed by the first respondent is merely based on the circular of the CBDT cannot be sustained since the same is not 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 & Co. Ltd. vs. ITO; (2) ITO vs. A.V. Thomas & Co.; (3) Bharat Commerce & Industries Ltd. vs. CIT; (4) Shri Ambica Mills Ltd. vs. ITO; (5) Birla Cotton Printing & Weaving Mills Ltd. vs. ITO; (6) Vikrant Tyres Ltd. vs. ITO. On the other hand, Mr. S. V. Subramaniam, learned senior counsel for the Revenue, after taking me though the relevant provisions of the IT Act as well as Circular No. 334 [see 1992 135 ITR(St) 10], dt. 3rd April, 1982, issued by the CBDT, contended that in view of the orders of the 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 demand, the respondents are justified in demanding interest under s. 220(2) of the said Act. In order to sustain the impugned orders, he also relied on the following decisions :(1) M. N. Jadhav vs. ITO; (2) K. P. Abdul Kareem Hajee vs. ITO; (3) Roopali Dyeing & Printing Works vs. Asstt. CIT; (4) Mohammed Essa Moosa Sait vs. GTO; (5) Bharat Commerce & Industries Ltd. vs. Union of India. I have carefully considered the rival submissions. CIT; (4) Mohammed Essa Moosa Sait vs. GTO; (5) Bharat Commerce & Industries Ltd. vs. Union of India. I have carefully considered the rival submissions. The only question to be decided in these writ petitions is whether the orders of the CIT dt. 6th March, 1989, under s. 264 of the IT Act, (hereinafter referred to as "the Act"), declining to direct the ITO to delete the interest charged under s. 220(2) of the IT Act for the asst. yrs. 1979-80 and 1980-81 are correct or not ? In order to appreciate the rival contentions, at the foremost I shall consider the relevant provisions, namely, ss. 156 and 220(2) of the Act. Sec. 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 AO shall serve upon the assessee a notice of demand in the prescribed from specifying the sum so payable." Sec. 220 deals with collection and recovery. We are concerned with s. 220(2) which is as under : "220. (2) If the amount specified in any notice of demand under s. 156 is not paid within the period limited under sub-s. (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 mentioned in sub-s. (1) and ending with the day on which the amount is paid." There is no dispute that in the appeals filed by the petitioner/assessee their claim for investment allowance was granted by the CIT(A). As per the order of the said authority, the ITO has also determined the amount refundable in favour of the assessee. Aggrieved by the order of the CIT(A), the ITO preferred appeal before the Tribunal. When the appeal is pending before the Tribunal, in the Finance Act, 1986, an Explanation, namely, Expln. 8 to s. 43(1) was introduced with retrospective effect from 1st April, 1974. Aggrieved by the order of the CIT(A), the ITO preferred appeal before the Tribunal. When the appeal is pending before the Tribunal, in the Finance Act, 1986, an Explanation, namely, Expln. 8 to s. 43(1) was introduced with retrospective effect from 1st April, 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." It is true that the Tribunal following the retrospective amendment of the Act referred to above allowed the appeal of the ITO in respect of the claims for depreciation and investment allowance and reversed the orders of the CIT(A). In pursuance of the order of the Tribunal setting aside the order of the CIT(A), the ITO determined the additional tax as well as interest under s. 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 ITO in pursuance of the order of the Tribunal; hence, they need not pay any interest as per s. 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.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 & Co. In that decision viz., A.V. Thomas & Co. Ltd. vs. ITO (supra), the learned single judge of the Kerala High Court has held that where the tax computed by the ITO 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 AAC, but, on further appeal, the Tribunal reversed the order of the AAC and restored that of the ITO 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 s. 220(2) of the IT 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 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 & Co. Ltd. vs. ITO (supra), 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 AAC, he had no liability to pay the order of the AAC, 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 AAC by the Tribunal. In view of the said factual position, the said judgment is not helpful to the petitioner's case. In ITO vs. A.V. Thomas & Co. (supra), a Division Bench of the Kerala High Court has confirmed the view expressed by the learned single judge in A.V. Thomas & Co. Ltd. vs. ITO (supra). 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 s. 220(2) for attracting the liability to pay interest are not present in that case.In Bharat Commerce & Industries Ltd. vs. CIT (supra), the Division Bench of the Delhi High Court had held that s. 220(2) of the IT 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 s. 220(1). The Division Bench has also held that where an order of rectification is made under s. 154 and a notice of demand is issued thereafter for the amount determined by that order; interest under s. 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 s. 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. In Shri Ambica Mills Ltd. vs. ITO (supra), the Division Bench of the Gujarat High Court has held that where the petitioner had complied with the notice of demand issued under s. 156 of the IT Act, and, therefore, there was no question of applying the provisions of sub-s. (2) of s. 220 of the IT Act, the order levying interest under s. 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. In Birla Cotton Spg. & Wvg. Mills Ltd. vs. ITO (supra), the learned single judge of the Calcutta High Court has held that the liability to pay interest would arise under s. 220(2) only in cases where the amount specified in the notice of demand is not paid within the period specified under sub-s. (1) of s. 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 s. 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.The last decision, namely Vikrant Tyres Ltd. vs. ITO (supra), though relied on by the petitioner, clearly supports the plea of the Revenue only. 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 vs. ITO (supra). In that case the IAC imposed penalty on the assessee under s. 271(1)(c) of the IT Act, 1961. 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 vs. ITO (supra). In that case the IAC imposed penalty on the assessee under s. 271(1)(c) of the IT 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 IAC was valid and legal. In compliance with the order of the Tribunal, the ITO passed consequential orders calling upon the assessee to pay the penalty and interest accrued thereon under s. 220(2) of the IT 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 ss. 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 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 AAC concerning the petitioner was finally set aside by the Tribunal, thereby affirming exhibit P-2A order of the ITO, the cloud hanging over exhibit P-2A was removed and its finality was affirmed. When the order of the AAC concerning the petitioner was finally set aside by the Tribunal, thereby affirming exhibit P-2A order of the ITO, 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, s. 220(2) of the IT Act was attracted in respect of the amount due from the petitioner as per exhibit P-2A dt. 1st December, 1973. It is that interest which is now demanded by the ITO, vide exhibit P-6, and affirmed by the CIT by exhibit P-7. The challenged against the impugned orders accordingly fails. The original petition is dismissed." In Roopali Dyeing & Printing Works vs. Asstt. CIT (supra), a Division Bench of the Gujarat High Court with regard to claim of interest under s. 220(2) of the IT Act has held in the following manner : "The notice of demand under s. 156 was issued in pursuance of an order passed under s. 143(3). The said demand finally stood reduced by the order passed by the Tribunal though in between the CIT(A) had granted greater relief in its order under s. 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." In Mohammed Essa Moosa Sait vs. GTO (supra), a Division Bench of the Kerala High Court, while considering s. 32(2) of the GT Act, 1958, which corresponds to s. 220(2) of the IT Act, 1961, following K. P. Abdul Kareem Hajee vs. ITO (supra) (confirmed by a Division Bench in ITO vs. A.V. Thomas & Co. (supra), has held that the order passed under s. 32(2) of the GT Act demanding payment of interest on the unpaid amount of instalments of gift-tax was valid. (supra), has held that the order passed under s. 32(2) of the GT Act demanding payment of interest on the unpaid amount of instalments of gift-tax was valid. In Bharat Commerce & Industries Ltd. vs. Union of India, a Division Bench of the Delhi High Court, while considering the scope of s. 220(2) of the Act has held as follows : "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 ITO cannot be deemed to have been extinguished by virtue of the appeal having been filed before the CIT(A) or conditional stay of the operation of the assessment having been allowed by the CIT(A) 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 s. 220(2) of the Act. To accept the arguments advanced by Mr. Syali that, by virtue of the order passed by the CIT(A) 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." In the light of the factual position narrated in the earlier part of my order coupled with the scope of ss. 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 vs. ITO (supra), K. P. Abdul Kareem Hajee vs. ITO (supra) and Mohammed Essa Moosa Sait vs. GTO (supra), identical issue was considered and answered in favour of the Revenue. As a matter of fact, in the Karnataka and Kerala cases, namely, M. N. Jadhav vs. ITO (supra), K. P. Abdul Kareem Hajee vs. ITO (supra) and Mohammed Essa Moosa Sait vs. GTO (supra), 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 asst. yrs. 1979-80 and 1980-81. As stated earlier, the correct legal effect of the final order passed by the 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 s. 3 of the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964 "Circular No. 334, dt. 3rd April, 1982 To : All Commissioner of Income-tax, Sir, Subject : Levy of interest under s. 220(2) when the original assessment is set aside-Instructions regarding. Doubts have been raised as to the quantum of interest chargeable under s. 220(2) of the IT Act, when the original assessment order passed by the ITO is : (i) cancelled by him under s. 146 of the IT 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. These issues were comprehensively examined in consultation with the Minister of Law and the Board has been advised ....... (ii) where the assessment made originally by the ITO is either varied or even set aside by one appellate authority but, on further appeal, the original order of the ITO is restored either in part or wholly, the interest payable under s. 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. 400/3/91-ITC]" It is true that in the said circular it is clarified that in the second appeal the original order of ITO is restored with in part or wholly, the interest payable under s. 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 assessee 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, CBDT 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 ss. 156 and 220(2) of the Act, I hold that the proceedings of the CIT dt. 6th March, 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 s. 220(2) for the asst. yr. 1979-80 and 1980-81. Under these circumstances, both the writ petitions fail and are accordingly, dismissed. However, there will be no order as to costs.