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Issues involved: Appeal against levy of interest u/s 234D for AY 1996-97.
The appeal was initially dismissed by ITAT due to lack of COD approval, but later recalled for adjudicating the assessee's ground against the levy of interest u/s 234D. The only ground remaining for consideration was the levy of interest u/s 234D. Interest u/s 234D is chargeable when refund is granted to the assessee u/s 143(1) and demand is raised on regular assessment. In this case, refund was granted by CIT(A) and then demand was raised due to partial reversal by ITAT, making Section 234D inapplicable. The dispute arose regarding whether the refund was granted as per CIT(A)'s order or u/s 143(1), determining the applicability of interest u/s 234D. Section 234D specifies the conditions for charging interest on excess refund granted to the assessee. The Tribunal observed that interest u/s 234D is chargeable only if refund is granted u/s 143(1) and later reduced on regular assessment. Due to ambiguity in the order, the matter was remanded to the Assessing Officer for factual verification and readjudication of interest under Section 234D. The decision deemed the assessee's appeal partly allowed for statistical purposes, with the case remanded to the Assessing Officer for clarification on the charging of interest u/s 234D.
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