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2021 (9) TMI 556 - HC - Income TaxInterest levied u/s 234D - Interest levied in the regular assessment or re-assessment - assessment framed under Section 143(3) read with Section 147 against assessee - scope of regular assessment - whether no interest can be charged even for the period subsequent to the introduction of Section 234D merely on the ground that said section was introduced by Finance Act, 2003 with effect from 01.06.2003? - whether Tribunal was right in holding that interest levied under Section 234D of the Income Tax Act cannot be charged for the assessment year 2001-02 especially when the assessment order was made? - HELD THAT - In the instant case, admittedly, the assessment order dated 26.12.2008 under Section 143(3) read with Section 147 was not the first assessment, as the assessment was under Section 143(3) dated 31.03.2004, which fact is not disputed. The decision in the case of CIT vs. Fertilizers Chemicals Travancore Ltd. 2018 (3) TMI 962 - KERALA HIGH COURT would also help us in answering the substantial questions of law, though it was a case arising under Section 234B(3) of the Act wherein, it was held that interest payable under sub-section (1) of Section 234B was levied in the regular assessment and on re-assessment, the liability for advance tax was also stood increased and in such circumstances, the differential tax of reassessment has to be levied interest at the rate provided under sub-section (3) of Section 234B of the Act. There is no such provision in Section 234B of the Act and conspicuously, no provision in pari materia with Section 234B(3) is found in Section 234B of the Act. Thus, in the light of the above discussion, we are of the clear view that the assessment framed under Section 143(3) read with Section 147 dated 26.12.2008, being not the assessment made for the first time, the same cannot be regarded as a 'regular assessment' for the purposes of Section 234D and therefore, no interest can be levied on the respondent-assessee. - Decided against revenue.
Issues Involved:
1. Deletion of interest levied under Section 234D of the Income Tax Act. 2. Applicability of Section 234D for periods subsequent to its introduction. 3. Applicability of Section 234D to the assessment year 2001-02 when the assessment order was made after the introduction of the section. Issue-wise Detailed Analysis: 1. Deletion of Interest Levied under Section 234D: The Revenue appealed against the Tribunal's decision to delete the interest levied under Section 234D. The Tribunal had relied on the Delhi High Court's decision in Director of Income Tax vs. Jacabs Civil Incorporated, which held that Section 234D was applicable only from the assessment year 2004-05 onwards. The Revenue contended that the Madras High Court had already considered this issue in CIT vs. Infrastructure and Development Co. Ltd., and that Explanation (2) to Section 234D, inserted by the Finance Act of 2003 with effect from 1.6.2003, should apply. 2. Applicability of Section 234D for Periods Subsequent to Its Introduction: The matter was reframed to consider whether Section 234D applies to re-assessments under Section 147 revising the original assessment order made under Section 143(3). The Revenue argued that Explanation (2) to Section 234D, which states that the section applies to any assessment year if the proceedings are completed after 1.6.2003, should cover the assessment year 2001-02. The Tribunal, however, had not considered whether Section 234D would apply to proceedings under Section 147. 3. Applicability of Section 234D to Assessment Year 2001-02: The Tribunal had dismissed the Revenue's appeal based on the provisions of Section 234D as they stood at the time, which did not apply to the assessment year 2001-02. However, the insertion of Explanation (2) with retrospective effect from 1.6.2003 changed the legal landscape. The court had to determine whether the assessment completed on 26.12.2008 under Section 143(3) read with Section 147 could be regarded as a "regular assessment" for the purposes of Section 234D. Detailed Judgment Analysis: Deletion of Interest Levied under Section 234D: The Tribunal's decision to delete the interest levied under Section 234D was based on the Delhi High Court's interpretation that the section applied only from the assessment year 2004-05. The Revenue argued that the Madras High Court's decision in CIT vs. Infrastructure and Development Co. Ltd. and Explanation (2) to Section 234D should apply, making the section relevant for the assessment year 2001-02 if the proceedings were completed after 1.6.2003. Applicability of Section 234D for Periods Subsequent to Its Introduction: The court considered whether Section 234D applies to re-assessments under Section 147. Explanation (1) to Section 234D states that an assessment made for the first time under Section 147 shall be regarded as a regular assessment. Explanation (2) clarifies that Section 234D applies to any assessment year if the proceedings are completed after 1.6.2003. The court had to decide if the re-assessment under Section 147 could be considered a "regular assessment" for the purposes of Section 234D. Applicability of Section 234D to Assessment Year 2001-02: The court noted that the assessment order dated 26.12.2008 was not the first assessment, as an assessment had already been made under Section 143(3) on 31.03.2004. The court referred to various judgments, including Darshan Lal Gulati vs. CIT and K.Govindan and Sons vs. CIT, which held that a re-assessment under Section 147 after an initial assessment cannot be considered a "regular assessment." The court also considered the Tribunal's decision in Dredging Corporation of India Ltd. vs. Assistant Commissioner of Income-tax, which held that re-assessment under Section 147 after an assessment under Section 143(3) is excluded from the purview of "regular assessment." The court concluded that the assessment framed under Section 143(3) read with Section 147 on 26.12.2008 could not be regarded as a "regular assessment" for the purposes of Section 234D. Conclusion: The court held that the assessment completed under Section 143(3) read with Section 147 on 26.12.2008 was not a "regular assessment" as it was not the first assessment. Therefore, Section 234D did not apply, and no interest could be levied on the respondent-assessee. The appeal filed by the Revenue was dismissed, and the substantial questions of law were answered against the Revenue.
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