TMI Blog2014 (2) TMI 1218X X X X Extracts X X X X X X X X Extracts X X X X ..... rior to June 01, 2003, so long as the proceedings of the concerned assessment year for which the refund was granted was completed after June 01, 2003. We have respectfully chosen to follow the aforesaid decision of the Bombay High Court and, therefore, the order of the Tribunal in the instant case following the decision the case of Ekta Promoters (P.) Ltd. (2008 (7) TMI 452 - ITAT DELHI-E ) holding the provision of section 234D of the Act applicable only with effect from 2004-2005 and further holding that the interest under this section is not chargeable for earlier assessment years, even though the assessment has been framed after June 01, 2003, is not held to be a correct law and, accordingly, the Revenue's appeal deserves to be allowed. Answering the substantial question of law in favour of the Revenue that in all those matters where excess refund has been granted by the Revenue, the provision of section 234D of the Act will apply and even in the case of earlier assessment years where the assessments were framed after June 01, 2003, the interest will be chargeable in accordance with law - Decided against assessee - Tax Appeal Nos. 897, 1675, 1941,2297 of 2010 and 246 & 93 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same on the ground that such levy of interest is mandatory. 4.6 When the matter travelled to the Tribunal, it cancelled the interest following its own decision of earlier years. Hence, the present appeals. 5. We have heard the learned Senior Counsel Mr. M.R. Bhatt, who has strenuously argued in favour of the Revenue and Mr. M.J. Shah, learned counsel for the respondent-assessee. 5.1 We notice that section 234(D) of the Act provides for interest for excess refund, where any refund is granted to the assessee under sub-section (1) of section 143 of the Act, the assessee is made liable to pay simple interest at the rate of % from the date of grant of refund to the date of such regular assessment. 5.2 Profitable it would be to reproduce the provision of section 234D at this stage : 234D : Interest on excess refund - (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, the assessee shall be liable to pay simple interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said case was granted 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 01, 2003 till January 22, 2004, which is what is done by the Assessing Officer. We do not find any justification for the Commissioner to give any retrospectivity to section 234D which is what he has done by directing the Assessing Officer to revise the assessment levying interest from the date of refund. In fact, the Commissioner has no authority to give retrospective operation to a substantive provision of law providing for interest. The Revenue has no answer to our query as to whether interest under section 234D could be levied in cases of regular assessment completed under section 143(3) of the Act prior to June 01, 2003, leading to demand of refunded amount as tax determined on regular assessment. We are, therefore, of the view that the Commissioner's order under section 263 was rightly found to be untenable by the Tribunal. However, we vacate the finding of the Tribunal that section 234D is applicable only from the assessment year 2004-05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision providing for imposition of interest is a substantive provision. In the absence of a contract or a usage providing for a payment of interest, interest can be levied only under law and it cannot be recovered by way of a wrong deduction of the amount. Therefore, the liability to pay interest emanates from the statutory provision. It is also equally well settled that unless a substantive provision is made retrospectively either by express words or by implication, it has to be considered as prospective only. A liability, which was not in law earlier, is sought to be foisted on a taxpayer. In those circumstances, when the Courts were called upon to interpret those provisions, it is not open to the Courts to interpret them as retrospectively and foist liability on the taxpayer which he is not liable on the date of such refund. 5.6 This very issue came up for scrutiny before the Bombay High Court in the case of CIT v. Indian Oil Corpn. Ltd. [2012] 210 Taxman 466/25 taxmann.com 284 and the Bombay High Court has held that addition of explanation (2) to section 234D of the Act by Finance Act, 2012, with retrospective effect from June 01, 2003, is made applicable even to the perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar. The refund granted is qua an assessment year. The refund emanates from assessment proceedings for a particular assessment year. The refund granted cannot be divorced from the assessment year or the assessment proceeding. Consequently to hold that interest on such refund would only run from 1/06/2003 would be to curtail the plain meaning of Explanation 2 to Section 234D. (23) Section 143(4) also supports our view. It reads as under :- Section 143 - Assessment - .. .. .. ** ** ** (4) Where a regular assessment under sub section (3) of this section or section 144 is made,- (a) any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular assessment; (b) if no refund is due on regular assessment or the amount refunded under sub section (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly . It is clear therefore, that excess refund determined under section 143(3) of the Act is deemed to be tax payable by the assessee. However, as there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articularly, in view of the fact that Explanation 2 to section 234D of the Act as introduced by the Finance Act, 2012 being declaratory in nature would be retrospective. This amendment make it clear that it shall apply assessment years even prior to 1/06/2003.' 5.7 It can also be noted that the Bombay High Court has in terms held that the decision of the Tribunal in ITO v. Ekta Promoters (P.) Ltd. [2008] 113 ITD 719 (Delhi) (SB) was not correct, by holding that till such time, the assessment proceedings are completed in respect of relevant assessment year, the Amended Act would be applicable to the pending proceedings. For all the pending proceedings in regard to which the refund has been provided under section 143(1) of the Act, which are not concluded and finalized, the refunds are held to be granted under section 143(1) of the Act as finally determined when final assessment is passed under section 143(3) of the Act. Explanation 2 to section 234D of the Act applies thus to the pending proceedings, where the assessment in respect of assessment year is not completed on June 01, 2003. The Court held that the provision for charging interest in every case was a part of substan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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