Section 234D interest applies where regular assessment is completed after the provision's commencement, even if refund was earlier granted.

Interest under section 234D of the Income-tax Act was held chargeable where the refund had been granted before the provision was inserted but the regular assessment was completed after its commencement. The Court followed its earlier binding decision and reasoned that liability to pay interest on an excess refund arises on completion of the regular assessment, so the provision applied because that assessment occurred after 1 June 2003. The substantial questions of law were answered in favour of the Revenue.

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Issues: Whether interest under section 234D of the Income-tax Act, 1961 could be charged where the refund was granted before the insertion of the provision but the regular assessment was completed after its commencement.

Analysis: The assessment year was 2002-03 and the regular assessment was completed on 28 March 2005, after section 234D came into force on 1 June 2003. Following the earlier binding decision of the Court, the provision was held applicable because the liability to pay interest on excess refund arose when the regular assessment was completed after the commencement of section 234D.

Conclusion: Interest under section 234D was chargeable, and the answer to the substantial questions of law was in favour of the Revenue.

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