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2015 (7) TMI 413 - HC - Income TaxLevy of interest u/s 234A & 234B on returned income or assessed income - Retrospective amendment made by the Finance Act, 2001 w.e.f. 01.04.1989 - Held that - We are bound by the decision of this Court in Parkash Agro Industries Vs Dy. Commissioner of Income Tax 2007 (10) TMI 294 - PUNJAB AND HARYANA HIGH COURT which has answered this question in favour of the appellant i.e. interest was chargeable on the assessed income. - Decided in favour of appellant.
Issues:
1. Interpretation of Section 234-B of the Income Tax Act, 1961 regarding the levy of interest on returned income or assessed income. 2. Validity of retrospective amendment made by the Finance Act, 2001. 3. Jurisdiction of CIT (Appeals) to rectify orders under Section 154 of the Act. 4. Applicability of previous court judgments on the present case. Analysis: Issue 1: Interpretation of Section 234-B The appeal under Section 260-A of the Income Tax Act, 1961 questions whether interest under Section 234A and 234B should be levied on returned income or assessed income. The Supreme Court precedent held that interest is chargeable on returned income. However, a subsequent retrospective amendment by the Finance Act, 2001 made interest chargeable on assessed income. The High Court upheld the constitutional validity of this amendment, stating that interest is to be charged on the assessed income, not the returned income. Issue 2: Validity of Retrospective Amendment The retrospective amendment by the Finance Act, 2001, effective from 01.04.1989, clarified that interest should be levied on the assessed income. Previous court decisions, including Raj Kumar Singal Vs Union of India and Parkash Agro Industries Vs Dy. Commissioner of Income Tax, supported this amendment. The High Court affirmed that the amendment was meant to resolve ambiguity and was not arbitrary or unreasonable, thereby upholding its validity. Issue 3: Jurisdiction of CIT (Appeals) The question arose whether the CIT (Appeals) had the power to rectify orders under Section 154 of the Act. The subsequent proceedings rendered this issue academic. The CIT (Appeals) rectified the order to levy interest on the assessed income, aligning with the retrospective amendment. The High Court emphasized that the CIT (Appeals) had the jurisdiction and obligation to decide the interest levy issue in the appellant's appeal. Issue 4: Applicability of Previous Judgments The respondent argued that a previous judgment was not applicable to the present case. However, the High Court disagreed, highlighting that earlier court decisions had upheld the Finance Act, 2001 amendment. The Division Bench's interpretation clarified that interest was to be charged on the income as determined by the assessing authority, minus the income on which tax had been paid or deducted. In conclusion, the High Court allowed the appeal, setting aside the Tribunal's order and answering the substantial question of law in favor of the appellant. The judgment reiterated the applicability of the retrospective amendment and previous court decisions in determining the levy of interest on assessed income.
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