TMI Blog2011 (9) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Act on November 30, 2002. On June 24, 2003, a notice under section 143(2) of the Act was issued to the assessee. In response to the same, the assessee produced all the material documents and after hearing the assessee and scrutinizing the documents produced by the assessee, the Assessing Officer passed the assessment order under section 143(3) of the Income-tax Act on March 30, 2004. The Assessing Officer, while giving effect to the order, levied interest under section 234D of the Income-tax Act. Challenging the same, the assessee filed an appeal before the Commissioner of Income-tax (Appeals), who partly allowed the appeal. Aggrieved by that portion of the order passed by the Commissioner of Income-tax (Appeals) holding against the assessee, the assessee filed an appeal before the Income-tax Appellate Tribunal and the Tribunal partly allowed the appeal. Challenging the same, the Revenue has filed the above tax case appeal. 3. We have heard the learned counsel appearing on either side and perused the entire materials available on record. 4. Learned counsel appearing for the appellant submitted that though the Assessing Officer had charged interest only for the period a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... October 30, 2001, admitting a total income of Rs. 22,74,54,579. Again, the assessee filed a revised return on March 27, 2003, admitting a total income of Rs. 18,99,10,630. The Assessing Officer, after processing the same under the provisions of the Act, passed the assessment order under section 143(3) of the Act on March 30, 2004. Since in this tax case appeal we are called upon only to decide as to whether the payment of interest for excess refund, as provided for under section 234D of the Income-tax Act, can be levied in respect of the assessment years prior to the introduction of the said section or not, we are not going into any other points raised, discussed and decided by the authorities below. 8. To decide this issue, it is necessary to extract section 234D of the Income-tax Act, which deals with interest on excess refund. The said section reads as follows : "234D.(1) Subject to the other provisions of this Act, where any refund is granted to the assessee under sub-section (1) of section 143, and- (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, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the fact that it is not effective from the beginning of the financial year. On the other hand, this provision on interest will apply to all cases of refund granted under section 143(1) but interest could be levied only with effect from June 1, 2003. Even though refund in this case was granted while sending intimation under section 143(1) on June 28, 2000, and regular assessment under section 143(3) was completed converting the refund to demand of tax on January 22, 2004, interest could be demanded only for the period from June 1, 2003, till January 22, 2004, which is what is done by the Assessing Officer. The Revenue has no answer to query as to whether interest under section 234D could be levied in cases of regular assessment completed under section 143(3) prior to June 1, 2003, leading to demand of refunded amount as tax determined on regular assessment. Therefore, the Commissioner of Income-tax's order under section 263 was rightly found to be untenable by the Tribunal. However, the finding of the Tribunal that section 234D is applicable only from the assessment year 2004-05 onwards is vacated. The view taken by the Assessing Officer that section applies from June 1, 2003, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st April of a financial year must apply for that year. Further, since the law that has to be applied is the law as it stands on the 1st April of a financial year, any amendments in the Act, which come into force after 1st April of a financial year, would not apply to the assessment for that year, even if the assessment is actually made after the amendments come into force". On the basis of the above observation made, the Kerala High Court answered the question of law framed in that case in the following manner (headnote) : "The amendment sought to be relied on was an amendment to the Income-tax Rules, 1962. The notification amending the rule came into effect only on July 24, 1980, and the amendment did not have retrospective operation. The provisions relating to depreciation as they stood on April 1, 1980, had to be applied in the instant case. The assessee was not, therefore, entitled to depreciation at the rate of 40 per cent." 13. In the case reported in Yuvaraj International v. CIT [2000] 244 ITR 641 (Mad), one of the questions that came up for consideration before this court was, "whether the Tribunal was right in holding that rule 6AA of the Income-tax Rules, which c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "It is well settled that the Income-tax Act as it stands amended on the first day of April of any financial year must apply to the assessment of that year. Any amendments in the Act which come into force after the first day of April of a financial year, would not apply to the assessment for that year, even if the assessment is actually made after the amendments come into force." 15. In the case reported in J. K. Synthetics Ltd. v. CTO [1994] 94 STC 422 (SC) ; [1994] 119 CTR 222 (SC), the hon'ble Supreme Court of India, while interpreting the charging section vis-a-vis the machinery section with regard to the provision for levy of interest, has held as follows : "Ordinarily, the charging section which fixes the liability is strictly construed but that rule of strict construction is not extended to the machinery provisions which are construed like any other statute. The machinery provisions must, no doubt, be so construed as would effectuate the object and purpose of the statute and not defeat the same. But it must also be realised that provision by which the authority is empowered to levy and collect interest, even if construed as forming part of the machinery provisions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn was processed under section 143(1) on November 30, 2002, and the notice under section 143(2) was issued on June 24, 2003. In response to the said notice, the representatives of the assessee appeared before the officials of the Department and the case has also been discussed with them and in the course of hearing, the assessee filed a revised statement of income and, ultimately, the assessment order came to be passed on March 30, 2004. 19. Section 234D was amended and it came into force with effect from June 1, 2003. As per section 234D(1), "subject to the other provisions of the Act, where any refund is granted to the assessee under sub-section (1) of section 143 and no refund is due on regular assessment ; or 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 at the rate of one-half 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". 20. In the case on hand, though previously, the amount has been refunded to the assessee, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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