TaxTMI 
TaxTMI 
2018 (5) TMI 1157
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rs. 59,38,056/in favour of the assessee. This was so intimated to the assessee by the department on 22.02.1995. Such refund was adjusted against the assessee's tax dues of the earlier years. 4. The Assessing Officer later on issued notice under section 143(2) of the Act and undertook the scrutiny assessment of the assessee's return. He passed order of assessment under section 143(3) of the Act on 08.01.1997. In such order, he determined the assessee's total income at Rs. 26,15,69,680/and computed the assessee's tax liability at Rs. 13,53,62,309/. After giving credit of tax deducted at source and advance tax paid by the assessee as well as self assessed tax, the Assessing Officer found that the assessee was in arrear of tax of Rs. 2,38,65,643/. In this figure, the refund of Rs. 59,38,056/was not accounted for. The Assessing Officer therefore while withdrawing the refund already paid to the assessee, computed a net of Rs. 2,98,03,699/by way of tax payable by the assessee as on the date of the order of assessment. He thereafter proceeded to calculate the interest on such outstanding tax liability of the assessee. It is on the refund amount of Rs. 59,38,056/interest....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o contend that the said provision does not cover the situation as in the present case. Our attention was drawn to section 234D of the Act which was inserted by Finance Act, 2003, with effect from 01.06.2003. On the basis of the said provision, counsel contended that precisely since the statute did not earlier permit charging of interest in such a situation, the legislature felt the need to make appropriate provision in this regard. The levy of interest therefore came to be prescribed for the first time with insertion of the said section. The section therefore creates a new liability and therefore cannot be applied to situations which had arisen earlier. In any case, this provision has not been given retrospective effect. Our attention was drawn to the judgment of the Supreme Court in case of Commissioner of Incometax v. Reliance Energy Ltd. reported in [2013] 40 taxmann.com 116 (SC), to contend that even with the aid of Explanation 2 in section 234D, the said section cannot be applied in a case where the assessment had been completed prior to 01.06.2003. Counsel pointed out that in the present case not only the assessment by the Assessing Officer, but further appeals were also deci....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of section 210 is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period from the 1st day of April next following such financial year to the date of determination of total income under subsection (1) of section 143 and where a regular assessment is made, to the date of such regular assessment, on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax. Explanation 1.-In this section, "assessed tax" means the tax on the total income determined under subsection (1) of section 143 or on regular assessment as reduced by the amount of tax deducted or collected at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income. 11. Before we examine the language of section 234B more minutely, we may take note of section 234D of the Act which was inserted with effect from 01.06.2003, which at its inception, read as under: Interest ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lar assessment is made to the date of such regular assessment, on the amount of assessed tax or the shortfall in payment of advance tax as compared to such assessed tax as the case may be. In simple terms, section 234B of the Act envisages charging of interest where any advance tax paid by the assessee is found short of the assessed tax. This may be pursuant to an order under section 143(1) of the Act or an assessment under section 143(3) of the Act. 14. There are contrary contentions of the assessee and the Revenue. The assessee interprets this provision as to include only that portion of the tax which the assessee at the very outset did not pay though required under the law. The Revenue contends that the portion of tax which the assessee had paid but claimed refund thereof while filing the return and was therefore refunded while processing the return under section 143(1) of the Act would also fall within this description of the tax falling short of the assessed tax. Undoubtedly, two views are possible and standalone, we would have certainly given our interpretation to subsection (1) of section 234B with focus on the fact situation involved in the present case. However, interpr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....payable. But while the assessee pays interest for shortfall in payment of advancetax with effect from the 1st day of the assessment year, nothing is charged from the assessee for having utilized the refund amount, till the date of regular assessment. The Bill, therefore, proposes to insert a new section 234D in the Incometax Act to charge interest on excess refund granted at the time of summary assessment. Subsection (1) of the proposed section provides that where any refund is granted to the assessee under subsection (1) of section 143 and no refund is due on regular assessment, or the amount refunded under subsection (1) of section 143 exceeds the amount refundable on regular assessment, then, the assessee shall be liable to pay simple interest at the rate of twothird per cent on the whole or the excess amount so refunded for every month or part of a month comprised in the period from the date of grant of refund to the date of such regular assessment. Subsection (2) of the proposed section provides that where, as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 26....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... FRANKFURTER, 'Some Reflections on the Reading of Statutes' is reproduced. "Legislation has an aim, it seeks to obviate some mischief, to supply an inadequacy, to effect a change of policy, to formulate a plan of government. That aim, that policy is not drawn, like nitrogen, out of the air, it is evidenced in the language of the statute, as read in the light of other external manifestations of purpose." 16. In case of Union of India v. Elphinstone Spinning and Weaving Co. Ltd. and others reported in AIR 2001 SC 724, Constitution Bench of the Supreme Court observed as under: "It is, therefore, a cardinal principle of construction of statute that the true or legal meaning of an enactment is derived by considering the meaning of the words used in the enactment in the light of any discernible purpose or object which comprehends the mischief and its remedy to which the enactment is directed." 17. In case of Commissioner of IncomeTax, Madhya Pradesh and Bhopal v. Sm. Sodra Devi reported in AIR 1957 SC 832, the Supreme Court considered the question whether the word 'individual' used in section section 16(3)(a)(ii) of the Income Tax Act, 1922, would includ....