In this case ITO initially did not pass any order levying interest under s. 217(1A) while passing assessment order, but alongwith order prepared tax calculation and demand notice in which interest under s. 217 (1A) was charged. assessee filed appeal to CIT (A) and among various other grounds, contended that it was not liable for any interest under s. 217 (1A). CIT(A) noticed that ITO had no passed any order for charging interest under s. 217(1A) in demand notice. It was duty of IAC to give specific order for charging interest under s. 217 (1A) either in assessment order or separately. Without so doing he would not be entitled to charge said interest through demand notice. He, therefore, directed that levy of interest be withdrawn. Revenue has come up in second appeal before us. We have heard representatives of parties at length in this appeal. O n behalf of Department it was urged that interest under s. 217 (1A) was mandatory and since assessee had failed to file estimate or advance tax under sub-cl. (iv) of s. 209 (a) or sub-s. (3A) of s. 212, therefore, interest had to be levied. mere absence of mention for levy of interest in assessment order did not exonerate assessee from liability to pay this interest. For this purpose reliance was placed upon decision of Allahabad High Court in P. C. Dwadesh Shreni & Co. Ltd. vs. ITO (1969) 72 ITR 539 (All) wherein it has been held that it is not necessary that separate order awarding interest must be passed and law stands fully complied with when in assessment order not only amount determined in regular assessment but also amount calculated under sub-s. (5) read with sub-s. (6) of s. 18A of IT Act of 1922 had been shown. Thus. according to Department non- mention of levy of interest in present case was no bar to charging thereof in demand notice which was further supported by regular form (ITNS 150A) prescribed for that purpose. On behalf of Department reliance was placed upon decision of Calcutta High Court in Monohar Gidwany and Others vs. CIT (1983) 139 ITR 498 (Cal) in which case assessment order did not contain any mention of levy of interest but from challans it appeared that interest had been charged under ss. 139 and 217. Writ petition was field against order of CIT dismissing revision petition challenging levy of interest. It was held by their lordships that challan accompanying demand notice was part of he demand notice. However, omitted position was that there was no mention of penal interest in assessment. As such, levy of penal interest under ss. 139 and 217 was not valid. Moreover, interest under s. 217 could not be levied o n assessment of reassessment under s. 147. Sub-ss. (1) and (2) of s. 139 could have no application to facts and circumstances of this case as there was no application for extension or time and there was no extension in fact. Sub- s. (1) had no application in facts and circumstances of case because no return had been filed by petitioner within four years from date within meaning of said sub-section, Hence, levy of penal interest under s. 139 was without any authority of law. order levying penal interest under ss. 139 and 217 was liable to be quashed. On basis of this decision it was argued that no interest could be claimed by ITO. Next it was contended that even otherwise interest was not leviable under s . 217 (1A). order of ITO showed that most of income of assessee amounting to Rs. 52,428 consisted of short term capital gain. In fact as result of order of CIT (A) in quantum matter assessee was entitled to refund of Rs. 45,045 if tax on short term capital gain was not levied. After going through position of law on subject, we are of opinion that ordinarily non-mention of levy of interest in assessment order may not be fatal but unless ITO has specifically applied his mind and levied interest, mere fact that claim has been made in demand notice or in ITNS form would not be sufficient to show that ITO had actually applied his mind to levy interest. proper course in these circumstances would be to ask ITO to pass fresh speaking order according to law. Therefore, ordinarily we would have to direct ITO to pass another order after taking into consideration all facts and circumstances of case. We, however find that in computation show by assessee as well as that adopted by ITO one of items of income of assessee was short term capital gain of Rs. 1,00,548. In cl. (ii) of s. 209 (1) amount of capital gain and income referred to in sub-cl. (ix) of cl. (24) of s. 2, if any, is included in such total income is to be deducted therefrom and on balance income-tax is to be calculated at rates in force in financial year. If amount of capital gains is deducted from income for purpose of computation of advance tax under s. 209, assessee would not be liable to any interest under s. 217 (1A) at all. Moreover, total amount of shortfall in payment of tax even including tax on capital gain calculated by ITO in his demand notice was only Rs. 6156 Now this order of ITO was subject matter of appeal before CIT (A) on merits and CIT (A) has already directed ITO to verify amount and allow claim of assessee on basis of percentage prescribed for relief under s. 80M on dividends. He has also held that half of establishment expenses should be attributed to earning of dividends and entire net interest payable should be deductible expense from gross dividends. Only after deducting expenses stated above, net dividend income would be computed and on such dividend income assessee would be entitled to deduction under s. 80M. IAC has been directed to recompute income according to his direction. So, taxable income after deducting TDS may not be even Rs. 6000. In fact, assessee has stated that after excluding tax on capital gains it is entitled to refund of Rs. 45,045. In these circumstances it will not be worthwhile to send matter back to ITO for applying his mind afresh on this aspect. We accordingly find no force in this appeal which is hereby dismissed. In result, appeal is dismissed. *** INCOME TAX OFFICER v. VARDHAN LIMITED