Regular assessment governs interest liability; later reassessment cannot enlarge interest absent express statutory authority.

Interest under section 18A(6) of the Indian Income-tax Act, 1922 was held to be computed by reference to the tax determined on the original regular assessment under section 23. Once that liability was worked out on the regular assessment, it could not be recomputed merely because the assessment was later reopened under section 34 and the tax enhanced, absent express statutory authority. The Madras HC applied the principle that any ambiguity in a fiscal provision must be resolved in favour of the assessee. The assessee therefore succeeded, and the interest could not be extended up to the date of reassessment.

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Issues: Whether interest under section 18A(6) of the Indian Income-tax Act, 1922 could be levied with reference to a reassessment made under section 34 after an original regular assessment under section 23 had already been completed.

Analysis: Section 18A(6) ties the levy of interest to the tax determined on the basis of the regular assessment, and the scheme of section 18A shows two fixed termini for computation of interest. Once the regular assessment under section 23 is made and the liability under section 18A(6) is worked out on that basis, the statute contains no express provision enabling the interest to be recomputed merely because the assessment is later reopened under section 34 and the tax is enhanced. The construction adopted follows the principle that, in a fiscal statute, ambiguity is resolved in favour of the assessee.

Conclusion: Interest under section 18A(6) could not be recomputed up to the date of reassessment under section 34, and the assessee succeeded.

Ratio Decidendi: Where a fiscal provision fixes interest with reference to the date of regular assessment, the liability becomes final on the original regular assessment and cannot be enlarged by a subsequent reassessment unless the statute expressly so provides.

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