TaxTMI 
TaxTMI 
2019 (1) TMI 600
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.... prior to assessment year 2004-05? and iii. Whether interest under Section 234D can be charged for the first time in a revision passed under Section 143(3) read with Section 254 giving effect to the Tribunal's order?" 3. The brief facts leading to the filing of this appeal are as follows : The assessee is engaged in the business of hire purchase financing, equipment leasing and allied activities. For the assessment year under consideration namely 1998-99, the assess filed a return of income on 30.11.1998 declaring a total income of Rs. 50,38,16,950/-. This return was accepted vide intimation under Section 143(1)(a) of the Act. The case was selected for scrutiny and a notice under Section 143(2) of the Act was issued on 08.6.1999. The scrutiny assessment was completed under Section 143(3) of the Act on 30.3.2001 determining the total income at Rs. 79,16,75,880/-. While completing the assessment, the Assessing Officer made various additions and disallowances. 4. Aggrieved by that, the assessee preferred an appeal to the Commissioner of Income Tax (Appeals) [for short, the CIT(A)], who, by order dated 24.10.2001, partly allowed the appeal by following the order passed in the....
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....Limited, the Kerala High Court observed that the Revenue had no answer to the query made by the Court as to whether interest under Section 234D of the Act could be levied in cases of regular assessment completed under Section 143(3) of the Act prior to 01.6.2003 leading to demand of refunded amount as tax determined on regular assessment. By relying upon this observation, it is submitted that no interest could have been levied as done by the Assessing Officer for the first time by way of a rectification order. 9. It is also submitted that the regular assessment in the assessee's case under Section 143(3) of the Act was completed on 30.3.2001 i.e. prior to 01.6.2003 and therefore, interest under Section 234D of the Act could not be charged. In support of this contention, the learned counsel has placed reliance on the decision of the Hon'ble Supreme Court in the case of CIT-I Vs. Reliance Energy Limited [reported in (2013) 358 ITR 0371]. The learned counsel for the assessee has also invited our attention to the Memorandum Explaining the Provisions in the Finance Bill, 2012 and in particular Clause 85, with regard to charging of interest on recovery of refund granted earlier.....
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....of Section 234D reads as follows: "In terms of Sub-Section (2) of Section 234D, where any refund is granted to the assessee under Sub-Section (1) of Section 143, (a) no refund is due on regular assessment; or (b) the amount refunded under Sub-section (1) of Section 143 exceeds the amount refundable on regular assessment, the assessee shall be liable to pay simple interest on the whole or the excess amount so refunded at the rate of one-half per cent, for every month or part of." 15. Sub-Section (2) of Section 234D of the Act deals with contingencies where, as a result of an order under Section 154 or other provisions mentioned therein, the amount of refund granted under Sub- Section (1) of Section 143 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 shall be reduced accordingly. Explanation (2) was inserted by the Finance Act, 2012 with retrospective effect from 01.6.2003, which declared that the provisions of Section 234D shall also apply to an assessment year commencing before 01.6.2003, if the proceedings in respect of such assessment year is completed after t....
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....ment year 2004-05 only and accordingly no interest could be charged for the earlier assessment years even though the regular assessments for such years were framed after 01.6.2003 or refund was granted for those years after the said date. The Memorandum would state that the said decision is not in conformity with the legislative intent of the said provision namely Section 234D of the Act and accordingly clarified that the provisions of Section 234D of the Act would be applicable to any proceeding, which is completed on or after 01.6.2003 irrespective of the assessment year to which it pertains. 19. Thus, what is important to note is that the provision namely Section 234D of the Act was made applicable to any proceedings, which have completed on or after 01.6.2003 irrespective of the assessment year, to which, it pertains. In our considered view, Explanation (2) cannot be read in isolation from Sub-Section (2) of Section 234D of the Act and the entire Section should be read as a whole. If we adopt such a procedure, the correct legal position emanates because the charging provision is Sub-Section (1) of Section 234D of the Act. In the said Sub-Section namely Sub-Section (1), in thre....