This is appeal filed by assessee against order of Commissioner Cochin passed under section 263 of Income-tax Act, 1961 ('the Act') dated 22-7-1983 and it relates to assessment year 1976-77. brief facts of case are as follows. assessee is private limited company engaged in manufacture of aluminium conductors. assessment was completed for 1976-77 on 12-9-1976 on total income of Rs. 2,89,480 on which income-tax payable was Rs. 1,71,872. However, as advance tax of Rs. 1,32,300 was already paid by assessee-company, demand of Rs. 39,572 only was raised against assessee. demanded amount was paid on 18- 12-1976. assessee-company went in appeal before AAC against certain additions made in assessment order. AAC allowed appeal of assessee by his orders dated 29-9-1977. ITO gave effect to AAC's orders on 15-10-1977. According to orders of ITO dated 15-10-1977 income-tax payable by assessee was reduced to Rs. 1,16,609. Consequent upon it refund of Rs. 55,263 was issued to assessee. further refund of Rs. 3,436 was also issued by another order of ITO dated 25-6-1979. department carried matter to this Tribunal as against AAC's order dated 29-9-1977. appeal was allowed by Tribunal, order of AAC was set aside and that of ITO was restored. This Tribunal passed its orders on 9- 2-1981, consequential orders were passed by ITO giving effect to this Tribunal's order on 3-7-1981 whereunder demand of Rs. 77,787 was made in which Rs. 14,088 represent interest under section 220(2) of Act was included. assessee-company filed petition under section 154 of Act before ITO on 23-7-1981 stating that no interest under section 220(2) was payable by it and, hence, inclusion of Rs. 14,088 in demand issued by orders of ITO dated 3-7-1981 was incorrect and constituted error apparent on face of record. ITO allowed application and deleted entire interest of Rs. 14,088 and restricted demand only to Rs. 58,699. Commissioner revised order of ITO dated 30-7-1981 passed under section 154. In revisionary orders dated 22-7-1983 which constituted subject-matter of this appeal, two Kerala High Court decisions were brought to notice of learned Commissioner, one in case of A. V. Thomas & Co. Ltd. v. ITO [1982] 138 ITR 275 and second in K. P. Abdual Kareem Hajee v. ITO [1983] 141 ITR 120. Purporting to have considered matter in detail, learned Commissioner in ultimate para of impugned order, namely para 7, held as follow: "I have considered matter in detail. very fact that Kerala High Court has pronounced two differing judgments on issue is sufficient to show that issue involved is highly debatable. ITO acted absurdly and erroneously in invoking section 154 to delete interest already charged. There was no mistake, of law or, of fact, which would be apparent from assessee's records, enabling Income-tax Officer to invoke section 154. assessee's application dated 23-7-1981 requesting Income-tax Officer to delete interest charged under section 220(2) was misconceived, and Income-tax Officer's order accepting it under section 154 was quite erroneous. I, therefore, set aside order of Income-tax Officer dated 30-7-1981, restoring Income-tax Officer's order dated 3-7-1981." impugned order, thus, passed by learned Commissioner under section 154 whereby he had set aside order of refund of Rs. 14,088 granted to assessee was set aside, constituted subject-matter of appeal before us. 2. We have heard Shri Velu Pillai, learned counsel for assessee and Shri V. R. Sudhakaran Pillai, learned departmental representative Shri Velu Pillai relied upon decisions of Kerala High Court in A. V. Thomas & Co. Ltd.'s case (supra) and also latest decision of same High Court in ITO v. A. V. Thomas & Co. [1985] 44 CTR (Ker.) 77. On other hand, learned departmental representative relied upon decision of Kerala High Court in K. P. Abdul Kareem Hajee's case (supra) as well as CBDT's Circular No. 334 dated 3-4-1982 [see TAXMANn's Direct Taxes Circulars, Vol. 1, 1985 edn., p. 1257]. After going through decision of Kerala High Court, we are of opinion that facts in A. V. Thomas & Co. Ltd.'s case (supra) as well as A. V. Thomas & Co's. case (supra) are almost identical with facts on hand. On other hand, fact in K. P. Abdul Kareem Hajee's case (supra) are quite distinguishable. In fact, main distinguishing feature between facts of case similar to one before us and facts obtaining in case of K. P. Abdul Kareem Hajee (supra) were pointed out by Kerala High Court itself in A. V. Thomas & Co.'s case (supra) as follow. "The counsel relied on decision reported in A. K. Haji v. ITO [1982] 31 CTR (Ker.) 278: [1983] 141 ITR 120 (Ker.). facts of this case are substantially different from facts of present case. crucial difference is that in [1982] 31 CTR (Ker.) 278: [1983] 141 ITR 120 (Ker.) there was no occasion or refund of tax. assessee did not pay tax as demanded under section 156 of Act. In such case, department is fully justified in making demand for payment of interest. This Court rightly held so ....." (p. 81). Therefore, it can seen that in K. P. Abdul Kareem Hajee's case (supra) though demand was raised no payment was paid under demand whereas in this case, whenever demand was raised amount thereunder was duly paid by assessee. In view of latest decision of Kerala High Court in A. V. Thomas & Co.'s. case (supra) which distinguishes earlier decision in K. P. Abdul Kareem Hajee's case (supra), we here to hold that order of learned Commissioner passed under section 263 which is assailed before us in bad under law and, therefore, has to be set aside. As regards arguments that CBDT's Circular No. 334 dated 3-4-1982 levy of interest under section 220(2) was permissible when original assessment is set aside, we can do no better than citing decision of Kerala High Court in CIT v. Malayala Manorama & Co Ltd. [1983] 143 ITR 29 which expressed following about said circular: "... court will have to put its own construction upon provisions of Act regardless of practice of department and directions for guidance of officials ....." (p. 29) In view of all of above, we set aside order of Commissioner and restore order of ITO dated 30-7-1981 passed under section 154. 3. In result, appeal is allowed. *** MADHAV ALUMINIUM CONDUCTORS (P) LTD. v. INCOME TAX OFFICER