Interest u/s 220(2)

In case of assessee company assessment for AY 2003-2004 was completed on 30-6-2006 in the following manner:

                                    Tax on Assessed income Say 7.54 lacs

                                   Interest u/s 234 B           say Rs 2.76 lacs

                                                                             ------------------------

                                   Total Demand                       10.30 lacs

Later company filed appeal before CIT (A) where it lost the case. The company also lost the case in Tribunal. Tribunal order passed in Nov 2008.

Now the company has been asked to pay interest u/s 220(2). Interest has been calculated on the total demand of Rs. 10.30 lacs [ including interest u/s 234B].

Now the qwuestion is whether Department is correct when they calculate interest on Rs 10.30 lacs instead of Rs7.54 lacs.

Please give your considered opinion.

Thanks.