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TMI Blog2021 (1) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction under Section 10B - expenditure incurred for the renovation and repairs of the rented premises of the assessee Company was disallowed by AO on the ground that such expenses were in the nature of capital expenditure. AO in his re-assessment order noted that in terms of Section 10B(ii) an undertaking in order to be eligible for deduction under Section 10B must not be formed by splitting up or reconstruction of a business already in existence. Further, the Assessing Officer held that deduction under Section 10B was not available to the assessee Company in view of the provisions of Section 10B(iii) which stipulate that eligible business is not formed by transfer to a new business of plant and machinery previously used for any purpose. AO found that the assessee had not complied with both these conditions, hence, it was not entitled to any deduction under Section 10B. In view of the judgment of the Hon'ble Division Bench of this Court [ 2019 (2) TMI 57 - MADRAS HIGH COURT] it is clear that the applicability of Clauses (ii) and (iii) of Sub Clause (2) to Section 10B of the Act, the impugned order passed by the Income Tax Appellate Tribunal is proper. As the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Assessment Year 2002-03, the Assessing Officer disallowed the claim under Section 10A on the ground that an undertaking was formed by splitting up/reconstruction of the business already in existence among others. The Assessing Officer found that the assessee was claiming the deduction with respect of the same unit for earlier year under Section 80HHE. (ii)The Assessing Officer was of the view that the Clauses - ia, ii, iii of Sub Section 2 of Section 10B was not satisfied by the assessee for the Assessment Year 2001-02. The Assessing Officer was of the view that Section 10A(2)(ii) was not satisfied by the assessee for the Assessment Year 2001-02 and 2002-03 and levied interest under Section 234D. (iii)Aggrieved by the assessment order, the assessee filed appeals before the Commissioner of Income Tax (Appeals). The Appellate Authority allowed the appeals for the Assessment Year 2000-01 and 2001-02 by following the order of the Tribunal in I.T.A.No.2255/Mds/06 dated 16.05.2008. For the Assessment Year 2002-03, the Appellate Authority held that the order of the CIT (A) under Section 263 was set aside by the Tribunal in I.T.A.No.2255/Mds/06 dated 16.05.2008 and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer to decide the issue de novo . 5.As the issue of allowability of deduction under Section 10A is common to all the three Assessment Years, all the three Tax Appeals are taken up together and disposed of by this common judgment. For the Assessment Year 2000-01, the assessee had filed its return of income on 29.11.2000. The assessee claimed that it was eligible for deduction under Section 10B. The return was processed on 28.03.2002. Subsequently, the Assessing Officer had reason to believe that income chargeable to tax had escaped assessment on account of the assessee Company being ineligible for deduction under Section 10A. Subsequently, a notice dated 22.03.2007 was issued under Section 148 and after giving an opportunity of hearing, the scrutiny assessment order was passed on 17.12.2007, disallowing the entire claim of deduction under Section 10B. Further, the expenditure incurred for the renovation and repairs of the rented premises of the assessee Company was disallowed by the Assessing Officer on the ground that such expenses were in the nature of capital expenditure. The Assessing Officer in his re-assessment order noted that in terms of Section 10B(ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal No.1916 of 2008, the assessee Company would be entitled to deduction under Section 10A and disallowance made by the Assessing Officer was not correct. Since the order passed under Section 263 itself has been set aside, the cause of action for re-assessment does not survive. 8.So far as the levy of interest under Section 234D is concerned, Mr.J.Narayanasamy, the learned Standing Counsel for the appellant submitted that the Department is entitled to claim interest retrospectively though the said Section was inserted only on 01.06.2003. In support of his contentions, the learned Standing Counsel relied upon a judgment reported in [2014] 49 taxmann.com 221 (Gujarat) [Commissioner of Income Tax-II Vs. Gujarat State Financial Services Ltd.] wherein following the judgment of the Bombay High Court reported in [2012] 210 Taxman 466/25 taxmann.com 284 [CIT Vs. Indian Oil Corpn. Ltd.] held that in all those matters where excess refund has been granted by the Revenue, the provision of Section 234D of the Act will apply even in the case of the earlier Assessment Years where the assessments were framed after 01.06.2003, the interest will be chargeable in accordance with law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 SCR 164 and 185 to 190]. Our attention was, however, drawn by Mr. Sen to two cases. Even in those cases, CIT v. M. Chandra Sekhar [1985] 44 CTR (SC) 110 /[1985] 151 ITR 433 (SC); and Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 58 CTR (SC) 112/[1986] 160 ITR 961 (SC), all that the Court pointed out was that provision for charging interest was, it seems, introduced in order to compensate for the loss occasioned to the Revenue due to delay. But then interest was charged on the strength of a statutory provision, may be its objective was to compensate the Revenue for delay in payment of tax. But regardless of the reason which impelled the legislature to provide for charging interest, the Court must give that meaning to it as is conveyed by the language used and the purpose to be achieved. Therefore, any provision made in a statute for charging or levying interest on delayed payment of tax must be construed as a substantive law and not adjectival law. So construed and applying the normal rule of interpretation of statutes, we find, as pointed out by us earlier and by Bhagwati, J. in the Associated Cement Co.'s case (supra) that if the Revenue's c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear that there is no indication in the language employed in the entire Section that the Parliament intended to make this levy of tax on excess refund retrospectively. On the contrary, after inserting this provision in the Act, it is specifically stated that it comes into effect from 01.06.2003. Though the amendment is by insertion, the Parliament has expressly stated that the amendment comes into effect from 01.06.2003. The Parliament has made its intention clear and unambiguous. In other words, it is not retrospective. Merely because the order of assessment was passed subsequent to the insertion of the said provision in the Act, would not make the said provision retrospective. The provision providing imposition of interest is a substantive provision. It is settled law that in the absence of any express words used in the provision making levy of interest retrospective, it can only be prospective (i.e.) from the date on which it came into force (i.e.) 01.06.2003. 12.The Constitution Bench of the Apex Court in the case of [Karimthuravi Tea Estate Ltd. Vs. State of Kerala] reported in 1966 60 ITR 262 SC held as follows: ...It is well settled that the Income Tax Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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