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TMI Blog2006 (3) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO only initiates the proceedings for assessment and he does not make any assessment at all. After having recorded the reasons the hands of the AO are not tied and he has a discretion to examine the explanation of the assessee on merits and if convinced, not to assess the amount that he believed at the time of initiation of assessment proceedings as having been escaped assessment. To hold otherwise would render proceedings after service of notice u/s 148 on the assessee to be an empty formality. It is not the case of the assessee that the inferences drawn by the AO are not based on facts and circumstances of the case. The assessee has also not been able to show that the reasons recorded by the learned AO are mere pretence and the view taken by him is such that no person reasonably instructed in law would take. On the contrary, we found animated debate on the contentions of the learned AO during the course of proceedings before us. We, therefore, hold that reasons to believe as recorded by the learned AO meet the requirements of provisions of s. 147. We, therefore, reject assessee's ground of appeal disputing initiation of proceedings u/s 147. Disallowance of depreciation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the AO, could not be misused for making roving and fishing enquiries so as to explore further items of income having escaped assessment. He, therefore, deletes the additions in due deference to the judicial pronouncement of the jurisdictional High Court. How can the learned CIT(A) then issue any finding or direction to the AO to initiate proceedings u/s afresh for assessment of those very additions. In other words, according to the learned CIT(A) while the proceedings u/s 147 cannot be misused for the purpose of making fishing and roving enquiries, nonetheless proceedings u/s 147 can be misused for making fishing and roving enquiries for the purpose of initiating proceedings u/s 147 next time. To say the least, we cannot appreciate such convoluted logic of the learned CIT(A). We, therefore, allow the assessee's ground of appeal No. 4 and hold that the impugned order of the learned CIT(A) contains no finding or directions within the meaning of s. 150 in respect of the disputed additions in question. Levy of interest under ss. 234B and 234C - In the case of CIT vs. B.C. Srinivasa Setty [ 1981 (2) TMI 1 - SUPREME COURT] , Hon'ble Supreme Court have held that preponderance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown inflated income by charging @ Rs. 3.72 per unit for captive consumption of power as against Rs. 2.32 per unit charged from State Electricity Board with a view to claim reduction of book profit by a higher amount worked out as profits derived from the business of generation and distribution of power. According to the AO if the amount charged to captive consumption of power was taken at the same rate at which the assessee supplied power to State Electricity Board, the assessee's deduction on account of the business of power generation would be less by Rs. 25,76,59,186. Secondly, the learned AO also noted that the assessee had claimed deduction of depreciation of power generating plant installed/added after 1st April, 1997 on WDV basis rather than on straightline method. Thus, the assessee had claimed excessive depreciation by more than Rs. 2,21,00,000. The learned AO held that due to assessee's omission to declare all material facts relevant for assessment an income of Rs. 27,97,59,186 chargeable to tax had escaped assessment for asst. yr. 2000-01. He, therefore, issued notice under s. 148. 3. In response to the notice under s. 148 issued by the learned AO, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of assessment proceedings under s. 147. The same are as under: 1. Disallowance out of air journey expenses 2,00,000 2. Disallowance on account of alleged sales-tax liability payable to Jindal Strips Ltd. 45,25,628 3. Disallowance of depreciation on hydraulic excavator 14,92,626 4. Disallowance of interest on loan 3,68,219 5. Addition on account of alleged undervaluation of closing stock 3,98,193 In addition, the learned AO also made a disallowance of Rs. 15.23 lakhs from out of commission expenses claimed by the assessee. That addition having been deleted by the learned CIT(A), we are not concerned with the same in this appeal. 6. While computing assessee's income under the general provisions of the Act, the learned AO made a total addition of Rs. 3,06,47,797. Out of the same the addition to the extent of Rs. 15,23,000 has been deleted by the learned CIT(A) in the impugned order. Out of the remaining additions to the returned income the addition to the extent of Rs. 2,21,40,131 is relatable to escapement of income from assessment, as referred to in the reasons recorded by the learned AO. Other additions are supported by the AO on the ground that escapement from assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and there the case of the AO was that the assessee had claimed excess depreciation by following WDV method instead of straightline method in relation to business of power generation and distribution. The second issue pertained to computation of tax liability under s. 115JA and there the case of the AO was that an inflated amount was excluded by way of profits of the assessee in the business of power generation and distribution. In the assessment order under s. 143(3) r/w s. 147 the AO had made a number of disallowances and additions to the income declared by the assessee that had nothing to do with the specific issues on which the assessment was taken up under the provisions of s. 147 of the Act. The assessee argued that it was not open to the learned AO during the course of proceedings under s. 147 to make roving/fishing enquiries and consequent disallowances/additions/adjustments to the assessed income. The assessee relied upon the judgment of Hon'ble Supreme Court in the case of CIT vs. Sun Engineering Works (P) Ltd. (1992) 107 CTR (SC) 209 : (1992) 198 ITR 297 (SC) and the judgment of Hon'ble Punjab and Haryana High Court in the case of Vipan Khanna vs. CIT (2002) 175 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Rs. 15,23,000 on account of commission payments could not have been made by the AO in the impugned assessment order under s. 147. The learned CIT(A), therefore, deleted those additions/disallowances. However, he did so subject to his directions/findings under s. 150(1) of the Act. 9. On merits, the learned CIT(A) held that disallowance of depreciation of Rs. 2,21,40,131 had rightly been made by the learned AO because the assessee had failed to furnish an option as required under r. 5(1A). As to the disallowance of Rs. 2 lakhs from out of expenditure on aircraft, the learned CIT(A) noted that there was no evidence of entitlement of even managing director/chairman to use the aircraft for the purpose other than business. As the assessee failed to produce any evidence of the business purpose of various air journeys prior to 27th Nov., 1999, the learned CIT(A) held that journeys to Bhuj, Patiala, Kullu and Bareilly were not for the purpose of business. At an average rate of expenditure of Rs. 8,177 per hour, the learned CIT(A) held that disallowance was called for of Rs. 1,37,046. The learned CIT(A) recorded this finding and directed the AO to initiate proceedings under s. 147 r/w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Board. The assessee argued that the rate at which price of power was charged from the assessee's own units was fixed being the rate at which State Electricity Board charged price of power from industrial consumers. The learned CIT(A) held that sub-cl. (iv) of Explanation to s. 115JA did not speak of book profit. It referred to profits derived . Therefore, the AO was not required to accept the profits as recorded in the books of accounts of the assessee and was required to correctly compute the profits derived. The learned AO was, therefore, justified to make adjustment to the book profits on the basis of what, according to the learned AO, was the correct amount of profit. earned by the assessee from various units of the assessee company. As to the adjustment of Rs. 3,98,193 to the closing stock while computing book profit under s.115JA, the learned CIT(A) held that here again the AO was required to work out the correct profits derived by the assessee and he was not bound to accept the amounts recorded in the books of accounts of the assessee. The learned CIT(A) also turned down the assessee's grounds of appeal relating to levy of interest under ss. 234B, 234C and 234D of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation on the fixed assets of the power generating undertaking on WDV basis. The learned counsel argued that as the assessee's claim of depreciation was perfectly in accordance with law, there was no understatement of income as alleged by the AO. There was no force in the contention of the learned CIT(A) that assessee had not exercised the option within the meaning of r. 5(1A). There was no prescribed form or procedure for exercise of the option by the assessee. The deduction claimed by the assessee in the computation of income chargeable to tax for the first assessment year satisfied the requirement of the assessee exercising his option. The learned counsel for the assessee found support to these arguments from the decision of Tribunal, Delhi, in the case of Shiva Medicare vs. Dy. CIT in ITA No. 5900/Del/1998 where the note given by the assessee at the end of the return of income was treated a declaration under s. 10A/B(7) of the Act. 12. The learned counsel argued that the second reason given by the learned AO for initiation of assessment proceedings under s. 147 relating to cl. (iv) of Explanation to s. 115JA was not tenable. The assessee had set up two separate and di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of the rate at which power was supplied by the State Electricity Board to its industrial customers. The learned counsel referred to the decision of Tribunal. Kolkata in the case of Assam Carbon Products Ltd. vs. Asstt. CIT in ITA No. 11/Gau/2004 [reported at (2006) 100 TTJ (Kol) 224-Ed.]. In that case the assessee company used NH coke for manufacture of electrographized carbon blocks. The company had been importing the material from its collaborators in the UK. Subsequently, the assessee entered into an agreement with the collaborators in the UK for transfer of new technology for in-house production of NH coke in order to substitute imports. As stipulated by the Government of India the assessee was compulsorily required to export a part of the produce of NH coke at pre-determined price to the UK company. The Tribunal held that market value of NH coke for the purpose of valuing captive consumption of NH coke for claiming deduction under s. 80-IA would be the price at which the assessee could obtain NH coke from the open market. Accordingly the notional landed cost of NH coke was held to be indicative of market value and not the price at which NH coke had actually been exporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2005) 96 TTJ (Chd) 896 : (2005) 95 ITD 111 (Chd). 15. The learned counsel vehemently opposed the action of the learned CIT(A) of announcing findings and directions under s. 150(1) in respect of the following additions made in the assessment order under s. 147: Rs. (i) Expenditure on aircraft 2,00,000 (ii) Amount refundable to Jindal Strips 45,25,628 (iii) Depreciation on hydraulic excavator 14,92,626 (iv) Interest on term loan 3,68,219 (v) Alleged undervaluation of closing stock 3,98,193 In the proceedings of assessment under s. 147 of the Act, Shri Tulsiyan argued, the powers of the AO were limited to look into items/issues in respect of which the proceedings were initiated. Any item/issue which was not in contemplation of the AO at the time of recording of reasons under s. 148 could not be subjected to verification/examination in the proceedings under s. 147. The expression any other income which comes to his notice subsequently in course of the proceedings under this section employed in s. 147 only empowered the AO to tax that escaped income which came to his notice while examining the items escaping assessment as recorded in the reasons under s. 148. That expression could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Madras High Court in N. Naganatha Iyer vs. CIT (1966) 60 ITR 647 (Mad), the Tribunal, had held that what the AO could not do directly, could not be done indirectly through the medium of appellate/revisionary orders. In support of these contentions, the learned counsel for the assessee also relied upon the judgments in the cases of CIT vs. Kelvinator of India Ltd. (2002) 174 CTR (Del)(FB) 617 : (2002) 256 ITR 1 (Del)(FB), Windson Electronics (P) Ltd. Anr. vs. Union of India Ors. (2004) 191 CTR (Cal) 542 : (2004) 269 ITR 481 (Cal), Smt. Durgabati Smt. Narmadabala Gupta vs. CIT (1956) 30 ITR 101 (Pat), Raja Yadvendra Datt Dube vs. State of Uttar Pradesh (1964) 54 ITR 506 (All) and Tribunal order in the case of Babulal Lath vs. Asstt. CIT (2003) 78 TTJ (Mumbai) 14 : (2002) 83 ITD 691 (Mumbai). 17. The learned counsel for the assessee took us closely through the provisions of ss. 150 and 153 and he pointed out that the meaning of the term finding or direction as contemplated under s. 150 has been elucidated under Expln. 2 to s. 153(3). The effect of the second Explanation to s. 153(3) was that where the income of an assessee had been excluded from one assessment year and it had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k profit. Such event could not take place prior to the completion of assessment by the AO and certainly not at the time when the advance tax instalments become due. In this view of the matter provisions of ss. 234B and 234C levying interest could not be invoked in relation to tax liability determined under s. 115JA. In support of these contentions the learned counsel placed reliance on the following Tribunal decisions: (i) Dy. CIT vs. Samir Diamond Mfg. (P) Ltd. (1997) 59 TTJ (Ahd) 1; (ii) Tej International (P) Ltd. vs. Dy. CIT (2000) 69 TTJ (Del) 650; (iii) Kwality Biscuits Ltd. vs. CIT (2000) 159 CTR (Kar) 316 : (2000) 243 ITR 519 (Kar); (iv) Steel Authority of India Ltd. vs. Dy. CIT (1991) 40 TTJ (Del) 559 : (1991) 3B ITD 193 (Del); (v) Bhushan Steels Strips Ltd. vs. Dy. CIT (ITA No. 3727/Del/1997) [reported at (2004) 91 TTJ (Del) 108-Ed.]; (vi) Asstt. CIT vs. Pratappur Sugar Industries Ltd. (ITA No. 2619/Kol/2002); (vii) Jt. CIT vs. IFGL Refractories Ltd. in ITA No. 1360/Cal/1999, dt. 19th Feb., 2002. In relation to ground of appeal No. 12 directed against levy of interest under s. 234D of the Act, the learned counsel argued that since the assessment framed by the AO under s. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative argued that sufficiency or adequacy of reasons recorded by the AO was not justiciable. Reasons as recorded by the AO could be subject to challenge only on the ground of irrationality or having been based on no material at all. In the present case the learned AO's finding of escapement of income from assessment was based on the facts not disputed by the assessee. It was also not the case of the assessee that there was no application of mind on the part of the AO. There was absolutely no reason to consider that the AO had not acted bona fide. That being so, initiation of proceedings under s. 147 was in order and the assessee's ground of appeal challenging the initiation of s. 147 proceedings deserved to be rejected. 21. On merits of the assessment the learned Departmental Representative argued that the reliance placed by the assessee on earlier years' treatment was not justified. The assessee merely claimed depreciation in the return of income for asst. yr. 1999-2000 without making any declaration of exercise of his option in accordance with the second proviso to sub-r. (1A) of r. 5. That return of income was only processed under s. 143(1). That being so, it was ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of accounts. The AO was required to reduce the amount of profit actually derived by the assessee from business of generation and distribution of power and not the artificially inflated profit worked out in the accounts of the assessee with an eye on the tax liability under the provisions of s. 115JA. 24. The learned Departmental Representative strongly defended the action of the learned CIT(A) in relation to the assessment of items of income not referred to in the reasons recorded by the AO. He argued that the AO made the aforesaid additions and disallowances in the assessment order under s. 143(3) r/w s. 147 on 29th Dec., 2004. As the assessment proceedings were already pending, the AO could not have issued a fresh notice under s. 147 after recording fresh reasons based on escapement of income noticed by the AO after recording of reasons earlier on 27th Oct., 2003 but before completion of assessment on 29th Dec., 2004. Otherwise, the AO had time-limit available to him at that point of time. The assessee's challenge to those disallowances and additions was accepted by the learned CIT(A) for technical reasons only. For that reason provisions of s. 150 were attracted and the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time of initiation of assessment proceedings as having been escaped assessment. To hold otherwise would render proceedings after service of notice under s. 148 on the assessee to be an empty formality. 27. In the case of Calcutta Discount Company Ltd. vs. ITO, the Hon'ble Supreme Court have stated the legal position relating to reasons to believe in the following words: The expression 'reason to believe' postulates belief and the existence of reasons for that belief. The belief must be held in good faith: it cannot be merely a pretence. The expression does not mean a purely subjective satisfaction of the ITO : the forum of decision as to the existence of reasons and the belief is not in the mind of the ITO. If it be asserted that the ITO had reason to believe that income had been underassessed by reason of failure to disclose fully and truly the facts material for assessment, the existence of the belief and the reasons for the belief, but not the sufficiency of the reasons, will be justiciable. The expression therefore predicates that the ITO holds the belief induced by the existence of reasons for holding such belief. It contemplates existence of reasons on which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the assessee to contend that the ITO did not hold the belief that there had been such non-disclosure. The existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. The expression 'reason to believe' does not mean a purely subjective satisfaction on the part of the ITO. The reason must be held in good faith. It cannot be merely a pretence. It is open to the Court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief and are not extraneous or irrelevant for the purpose of the section. To this limited extent, the action of the ITO in starting proceedings in respect of income escaping assessment is open to challenge in a Court of law. 31. In the recent judgment in the case of Raymond Woollen Mills Ltd. vs. ITO (1999) 152 CTR (SC) 418 : (1999) 236 ITR 34 (SC), this position has once again been reiterated as under: In this case, we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1312 out of Rs. 3,80,50,138 claimed by the assessee on the ground that the assessee was entitled to depreciation on straightline basis and not on the WDV basis. The learned AO held that under rules various power generating turbines put to use during the financial year 1998-99 were entitled to depreciation on straightline method. During the course of proceedings before the learned CIT(A), the assessee pointed out that under r. 5(1A) of IT Rules, the assessee was given an option to claim depreciation if he so desired on WDV basis instead of straight line method basis. Since the assessee had opted for depreciation on WDV basis, the AO erred in reducing the assessee's claim of depreciation to an amount worked out on the basis of straight line method. The learned CIT(A) held that the assessee had not exercised his option and, therefore, the AO rightly calculated depreciation on straight line method. On consideration of the matter we find that as per second proviso to r. 5(1A), the assessee may, instead of the depreciation specified in Appen. IA on his option, be allowed depreciation under sub-r. (1) r/w Appen. I i.e. on WDV basis if such option was exercise by the assessee before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case in this behalf have already been briefly stated by us earlier in this order. The dispute has arisen because the assessee has worked out transfer pricing of power supplied to its industrial units from captive power generation plants at the rate at which State Electricity Board was supplying power for industrial units. According to the learned AO, the assessee has inflated the profits of power generation plants in this manner. He has, therefore, determined the profits of the assessee's power generation and distribution business at the selling rate at which the assessee supplied power to SEB. During the course of hearing before us, considerable arguments were made from both sides justifying the transfer pricing adopted by them. In our opinion, the entire debate is unnecessary, inasmuch as insofar as the provisions of s. 115JA are concerned, cl. (iv) of Explanation does not empower the AO to determine an amount other than the amount as worked out in the assessee's P L a/c. It is not the case of the AO that the assessee's P L a/c has not been prepared in accordance with the provisions of Parts II and ill of Sch. VI to the Companies Act, 1956. 34. In the case of Bhila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 205, proviso cl. (b), of the Companies Act, a meaning different from the one in which it is understood therein solely because it is being read along with s. 115J of the IT Act. Sec. 115J, Explanation, cl. (iv), is a piece of legislation by incorporation. Dealing with the subject, Justice G.P. Singh states in Principles of Statutory Interpretation (7th Edn., 1999): 'Incorporation of an earlier Act into a latter Act is a legislative device adopted for the sake of convenience in order to avoid verbatim reproduction of the provisions of the earlier Act into the latter. When an earlier Act or certain of its provisions are incorporated by reference into a latter Act, the provisions so incorporated become part and parcel of the latter Act as if they had been 'bodily transposed into it.' The effect of incorporation is admirably stated by Lord Esher, M.R.: 'If a subsequent Act brings into itself by reference some of the clauses of a former Act, the legal effect of that, as has often been held, is to write those sections into the new Act as if they had been actually written in it with the pen, or printed in it'.: 'Even though only particular sections of an earlier A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is found to be correctly provided in accordance with the provisions of the Companies Act, 1956, the amount as provided in the books of accounts cannot be ignored and substituted by what in the opinion of the AO is the correct amount of profit of the assessee from the business of power generation and distribution. 37. In the case of Krishna Oil Extraction Ltd. vs. CIT (1998) 144 CTR (MP) 660 : (1998) 230 ITR 806 (MP), the Hon'ble Madhya Pradesh High Court have held that the depreciation and loss have to be worked out in terms of the borrowed Act, i.e., under s. 205(1)(b) of the Companies Act and not under the IT Act. The same view has been held by Hon'ble Kerala High Court in their judgments in the cases of CIT vs. Malayala Manorama Co. Ltd. (2002) 172 CTR (Ker) 600 : (2002) 253 ITR 378 (Ker) and CIT vs. Dynamic Orthopedics (P) Ltd. (2002) 176 CTR (Ker) 432 : (2002) 257 ITR 446 (Ker). During the course of hearing before us and even during the course of proceedings before the authorities below, there is no issue that the amount provided for in the books of accounts of the assessee as profit of power generation and supply business is not in accordance with the provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome reflected in the company's books of account the deemed income for the purpose of assessing the tax. If we examine the said provision in the above background, we notice that the use of the words 'in accordance with the provisions of Parts II and ill of 8ch. VI to the Companies Act' was made for the limited purpose of empowering the assessing authority to rely upon the authentic statement of accounts of the company. While so looking into the accounts of the company, an AD under the IT Act has to accept the authenticity of the accounts with reference to the provisions of the Companies Act which obligates the company to maintain its account in a manner provided by the Companies Act and the same to be scrutinised and certified by the statutory auditors and will have to be approved by the company in its general meeting and thereafter to be filed before the Registrar of Companies who has a statutory obligation also to examine and satisfy that the accounts of the company are maintained in accordance with the requirements of the Companies Act. In spite of all these procedures contemplated under the provisions of the Companies Act, we find it difficult to accept the argument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paras, we hold that for the purpose of adjustment as provided in Expln. (iv) to s. 115JA, the AO cannot substitute the amount of profit derived by an industrial undertaking from the business of generation or generation and distribution of power as certified by the auditors of the company to be in accordance with the provisions of Parts II and III of Sch. VI to the Companies Act, 1956. We, therefore, delete the addition made by the AO while computing the assessee's income chargeable to tax under s. 115JA in this behalf and restore the working of the assessee in relation to Expln. (iv) to s. 115JA. 40. Ground of appeal No. 4 in this appeal is directed against the so-called findings and directions made by the learned CIT(A) and issued to the AO for the purpose of initiation of proceedings under s. 147 once again in the case of the assessee irrespective of the provisions of s. 149 of the Act. Brief facts in this regard have already been enumerated by us in the earlier part of the order. The learned CIT(A) has purported to act under the provisions of s. 150. 41. On consideration of the matter we find that the learned CIT(A) has made a self-contradictory order or worse still made a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) then issue any finding or direction to the AO to initiate proceedings under s. 147 afresh for assessment of those very additions. In other words, according to the learned CIT(A) while the proceedings under s. 147 cannot be misused for the purpose of making fishing and roving enquiries, nonetheless proceedings under s. 147 can be misused for making fishing and roving enquiries for the purpose of initiating proceedings under s. 147 next time. To say the least, we cannot appreciate such convoluted logic of the learned CIT(A). We, therefore, allow the assessee's ground of appeal No. 4 and hold that the impugned order of the learned CIT(A) contains no finding or directions within the meaning of s. 150 in respect of the disputed additions in question. 42. Ground of appeal Nos. 5 to 10 are directed against the decision on the merits as given by the learned CIT(A). It so happened that after deleting the additions in question as not being legally tenable in the ratio of the judgment of jurisdictional High Court in the case of Vipan Khanna, the learned CIT(A) considered it necessary to examine the additions independently on merit. He has, therefore, discussed each one of the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Supreme Court have held that preponderance of judicial opinion should be respected. We, therefore, decide this ground of appeal in favour of Revenue and against the assessee. 44. Ground of appeal No. 12 is directed against levy of interest under s. 234D of the Act. The contention of the assessee is that the provisions of interest under s. 234D were inserted by the Finance Act, 2003, w.e.f. 1st June, 2003. The same are, therefore, not applicable to asst. yr. 2000-01. Alternatively the assessee has argued that such interest cannot be levied for the period prior to 1st June, 2003. On consideration of the matter we do not see merit in the main contention of the assessee but we agree with the alternate contention of the assessee. Levy of interest to be computed with reference to period of time has to come into force immediately and it cannot be bound to any particular assessment year. At the same time it would be wholly unreasonable to charge interest for the period when the provisions of s. 234D were not on the statute book. We, therefore, allow the assessee's ground of appeal No. 12 partially and direct the AO to compute interest chargeable under s. 234D, if any, w.e.f. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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