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2012 (9) TMI 517 - HC - Income TaxChargeability of interest u/s 234D - excess refund made on the assessee - assessee contested no interest apply to refunds granted prior to 1/06/2003 even in respect of assessments completed after the cut-off date of 1/06/2003 - Held that:- As there was no provision of interest on the grant of refund under Section 143(1) it became necessary to provide for the same by having a charging provision. This was done by section 234D in respect of all pending assessments in which refund was given. Thus even if, a refund has already been granted the same would be subject to the provisions of section 234D A declaratory amendment in an Explanation 2 to section 234D which specifically provides that it shall also apply to an assessment year commencing before 1/06/2003. The only qualifying criterion is that proceedings in respect of such assessment is completed after 1/06/2003. Once the Explanation is held to be retrospective in relation to the assessment years commencing before 1/6/2003 it would not be open to restrict the operation of section 234D only with effect from 1/6/2003. Under the Act what is brought to tax is not the income of the assessee in the assessment year but the income of the assessee in the previous year. The liability to tax arises on account of the Finance Act which fixes the rate at which the tax is to be paid. The law to be applied is as existing on the 1st day of April of the previous year - in favour of revenue.
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