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TMI Blog2019 (1) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... shall also apply to an assessment year commencing from 01.6.2003 if the proceedings in respect of such assessment year is completed after the said date. Having regard to the legal position, which has been clarified by the Parliament, by insertion of Explanation (2) to Section 234D of the Act, in the said case, where the assessment was completed prior to 01.6.2003, it was held that retrospectivity of Section 234D of the Act does not arise. The above decision would be squarely applicable to the case of the assessee, as, admittedly, the regular assessment was completed under Section 143(3) of the Act much prior to 01.6.2003 i.e. On 30.3.2001. For the above reasons, we are of the view that no interest can be charged under Section 234D of the Act for the assessment year in question. - Decided in favour of assessee - Tax Case Appeal No.154 of 2011 - - - Dated:- 13-12-2018 - Mr. Justice T.S. Sivagnanam And Mr. Justice N. Sathish Kumar For the Assessee : Mr.Vijayaraghavan for M/s.Subbaraya Iyer Padmanabhan For the Revenue : Mrs. R. Hemalatha, SSC JUDGMENT T.S.SIVAGNANAM, J. This appeal filed by the assessee under Section 260A of the Income Tax Act, 1961 (h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal income at ₹ 49,76,93,255/-. Thereafter, by another order dated 20.6.2008, a rectification order was passed under Section 154 of the Act with regard to the disallowance of provision of NPA and contingency deposit, which, according to the Assessing Officer, were inadvertently omitted. Thus, the total income was determined at ₹ 54,13,12,386/- apart from levying interest under Section 234D of the Act, which provision was introduced with effect from 01.6.2003 amounting to ₹ 67,87,554/- from 01.6.2003 to 30.6.2008. 6. Aggrieved by that, the assessee preferred an appeal to the CIT(A), who, by an order dated 30.9.2009, followed the decision of the Special Bench of the Delhi Tribunal in the case of ITO Vs. Ekta Promoters Private Limited [reported in (2008) 113 ITD 719] and held that the interest under Section 234D could not be charged prior to the assessment year 2004- 05. Aggrieved by that, the Department preferred an appeal to the Tribunal. The Tribunal, by following the decision of the Kerala High Court in the case of CIT Vs. Kerala Chemicals and Proteins Limited [(2010) 323 ITR 584], allowed the appeal by order dated 25.6.2010. As against that, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 or Section 254 or Section 260 or Section 262 or Section 263 or Section 264 or an order under Section 245D(4) passed by the Settlement Commission, the amount of refund granted under Sub-Section (1) of Section 143 of the Act is held to be correctly allowed, either in whole or in part, as the case may be, then, the interest chargeable, if any, under Sub-Section (1) of Section 234D of the Act shall be reduced accordingly. 11. It is her further submission that the order passed under Section 154 of the Act dated 20.6.2008 levying interest under Section 234D for the amount of refund, which was reduced, is valid and accordingly, the Department is entitled to demand interest as mentioned in the order dated 20.6.2008. To support such a contention, the learned Senior Standing Counsel relies upon Explanation (2) to Section 234D of the Act and submits that the provisions of this Section will apply also to any assessment year commencing before the first day of June 2003 if the proceedings in respect of such assessment year is completed on the said date. 12. She has placed reliance on the decision of the Full Bench of this Court in the case of State of Tamil Nadu Vs. Arulmurugan Co. [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Finance Act, 2012 with retrospective effect from 01.6.2003, we will have to look into the Memorandum Explaining the Provisions in the Finance Bill, 2012. The issue relating to charging of interest on recovery of refund granted earlier is dealt in Clause 85 of the Memorandum, which reads as follows : Charging of interest on recovery of refund granted earlier Under the existing provisions of Section 234D of the Income-tax Act (inserted with effect from 1.6.2003, vide Finance Act, 2003), where any refund has been granted to the assessee under Sub-Section (1) of Section 143 and subsequently on regular assessment, no refund or lesser amount of refund is found due to the assessee, then, the assessee shall be liable to pay simple interest at the rate of one-half per cent on the excess amount so refunded for the period starting from the date of refund to the date of such regular assessment. In a recent decision of the Court, it has been held that the provisions of Section 234D inserted with effect from 1.6.2003 would be applicable from the assessment year 2004-05 only and accordingly no interest could be charged for earlier assessment years even though the regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken to be framing of a regular assessment for such a year. Further, in our opinion, the regular assessment in the assessee's case is the assessment order passed under Section 143(3) of the Act on 30.3.2001. Admittedly, in the said order dated 30.3.2001, there was no levy of interest on the assessee. Furthermore, it is clear that Sub- Section (2) of Section 234D of the Act would be attracted only if reduction occurs and it cannot be made applicable when there is an increase. 22. The Hon'ble Supreme Court, in the case of Reliance Energy Limited, has clarified the legal position and has spelt out the legislative intent and as to how the provisions of Section 234D of the Act should be applied. In the said case, it was held that Explanation (2), which has been inserted by the Finance Act, 2012, in Section 234D of the Act, declared that the provisions of the said Section shall also apply to an assessment year commencing from 01.6.2003 if the proceedings in respect of such assessment year is completed after the said date. The High Court, in the said case, was dealing with an assessment of the year 1998-99. It was an admitted case that the assessment of that year was compl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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