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2010 (4) TMI 797 - AT - Income TaxInterest u/s 234D - retrospective effect - Held that - If any rule is made applicable from a particular date and has not been specifically made retrospective the rule do not apply to cases pending on specific date irrespective of the assessment year involved therein. See Sree Karpagambal Mills Ltd. Vs CIT(1998 - TMI - 16208 - Madras High Court). In particular case the Assessing Officer has charged interest u/s 234D which was non-existent provision and was effective from a later date. Decided in favor of the assessee. Rectification u/s 154 - Substantive law - Held that - Application of a non-existent provision which was effective from a later date such mistake does not involve long drawn process of reasoning on points on which there may be two opinions. Mistake is glaring patent and obvious and the same has to be rectified under section 154 of the Act. - Decided in favor of assessee.
Issues Involved:
Rectification of order under section 154 of the Income-tax Act, 1961 for assessment years 2000-01, 2001-02, and 2002-03. Analysis: 1. Rectification of Order under Section 154: The common issue in all appeals was the rectification of orders under section 154 of the Income-tax Act, 1961. The assessee objected to the levy of interest under section 234D while giving effect to the Commissioner of Income-tax (Appeals)'s order. The assessee argued that since section 234D came into effect from June 1, 2003, it could not be applied retrospectively to the years in question. The Tribunal considered the arguments and previous decisions, including the case of Sigma Aldrich Foreign Holding Co. v. CIT, and concluded that the interest under section 234D could not be charged for the years up to 2002-03. The Tribunal emphasized that the mistake in charging interest under a non-existent provision was obvious and patent, making it eligible for rectification under section 154. 2. Debatable Issue and Applicability of Section 234D: The Tribunal analyzed the contentions of both parties regarding the debatability of the issue and the applicability of section 234D. The Department contended that the issue was debatable, while the assessee argued that the provision could not be applied to the years in question. The Tribunal referred to relevant decisions, including the case of T. S. Balaram, ITO v. Volkart Bros., and the Special Bench decision in the case of Ekta Promoters (P.) Ltd. The Tribunal held that the provision of section 234D was not retrospective and could not be applied to the years before it came into effect. It emphasized the importance of following the jurisdictional High Court's decision and concluded that the interest under section 234D could not be charged for the assessment years up to 2002-03. 3. Jurisdictional High Court's Decision and Rectification under Section 154: The Tribunal considered the jurisdictional High Court's decisions, such as Sree Karpagambal Mills Ltd. v. CIT, and the applicability of section 154 in rectifying the mistake of charging interest under section 234D. It highlighted the non-retrospective nature of section 234D and the clear language of the provision specifying its application from June 1, 2003. By following the jurisdictional High Court's decision and the principles laid down in relevant cases, the Tribunal allowed the appeals for all the years under consideration, ruling that interest under section 234D could not be charged for the assessment years up to 2002-03. In conclusion, the Tribunal set aside the orders of the authorities below and allowed all the appeals of the assessee, emphasizing the non-retrospective applicability of section 234D and the eligibility of rectification under section 154 for the mistake in charging interest under a provision that was not in effect during the relevant assessment years.
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