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TMI Blog2015 (10) TMI 2163X X X X Extracts X X X X X X X X Extracts X X X X ..... ue that the refund has arisen due to order u/s 143(1) of the Act. Therefore, the first necessary condition for charging of interest u/s 234D of the Act is not satisfied. Further, the refund has arisen due to an order giving effect to an appellate order, which was subsequently rectified u/s 154 of the Act, wherein the interest u/s 234D of the Act was charged. In these circumstances, the second condition that refund granted earlier becomes refundable to Revenue on regular assessment is also not satisfied.In view of the factual matrix of the case on hand, as discussed above, we are of the considered opinion that both the conditions for charging of interest u/s 234D of the Act are not satisfied. On the actual dated on which the undated or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er was paid to the assessee vide cheque dated 8/5/2007. 2.2 After a lapse of considerable time, it was found that the refund has been granted to the assessee in excess, due to wrong computation of interest u/s 244A of the Act. The Assessing Officer, therefore sought to rectify the OGE by invoking the provisions of sec. 154 of the Act. After putting the assessee on notice, the Assessing Officer passed an order u/s 154 of the Act dated 31/3/2011 ( (sic.31/3/2012) determining the amount of refund to the assessee at ₹ 36,21,199/-; which included an amount of ₹ 15,72,339/- towards interest u/s 244A of the Act, as against ₹ 26,58,286/- granted earlier. In this order, the Assessing Officer charged interest of ₹ 3,09,495/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithdrawn. 3) The appeal may be allowed for the above ground(s) and any other grounds(s) which the appellant may be permitted to adduce at the time of hearing. 3.2 In the proceedings before us, the learned AR for the assessee reiterated the submissions made before the learned CIT(A). In short, the assessee contends that the undated OGE of the Assessing Officer was actually passed on 31/3/2007 and, therefore, the rectification order u/s 154 of the Act passed on 31/3/2012 is beyond the statutory limit specified in the Act and is, therefore, barred by limitation and is liable to be set aside. 3.3 Per contra, the learned DR for Revenue supported the view of the learned CIT(A) that the undated order was passed on 8/5/2007. The lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to which he was not entitled, the charged interest u/s 234D of the Act is charged on such refund upto the period which he enjoyed the excess refund. (iii) The interest charged u/s 234D of the Act is compensatory in nature as the assessee has enjoyed excess refund (including interest) wrongly granted to him. There is no question of compound interest chargeable or charged by the Assessing Officer u/s 234D of the Act. A plain and careful reading of sec. 234D will throw light on the correct legal position. 3.4.3 At this stage, it would be relevant to have a plain reading of the provision of sec. 234D of the Act, which is as under:- Interest on excess refund (1) Subject to the other provisions of this Act, where any refun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst condition for charging of interest u/s 234D of the Act is that there should have been refund granted to the assessee u/s 143(1) of the Act. This principle has been upheld by the Hon ble High Court of Bombay in the case of DIT(Int. Taxation) Vs. Vs. Delta Activities Inc., (2012) 21 Taxman.com 511 (Bom), relied upon by the assessee, wherein the Hon ble High Court has held that sec. 234D of the Act is attracted only when the refund granted to the assessee u/s 143(1) of the Act become refundable. 3.4.5 Regular assessment has been defined u/s 2(40) of the Act to mean assessment made u/s 143(3) or 144 of the Act. Therefore, the definition of regular assessment does not include order giving effect to appellate order . This principle h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harging of interest u/s 234D of the Act are not satisfied. Consequently ground No.2 raised by the assessee is allowed. 4. As regards the contention raised by the assessee in ground No.1 that the order u/s 154 of the Act was barred by limitation, the documents brought on record by the learned DR seem to clearly indicate that the order giving effect to the Hon ble High Courts order (Supra) was passed in the period relevant to Fin. Year 2007-08 and, therefore, the Assessing Officer had time till 31/3/2012 to pass the rectification order. Since the substantive issue regarding the charging of interest u/s 234D of the Act has been decided in favour of the assessee and the assessee has no grievance with respect to the re-computing of interest u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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