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Nirma Ltd. Versus Additional Commissioner of Income Tax

2016 (9) TMI 456 - GUJARAT HIGH COURT

Interest u/s.234B - whether interest should be charged on the amount after considering refund which was issued on passing intimation u/s.143(1)(a) of the I.T. Act? - Held that:- In the present case, the assessee paid advance tax aggregating ₹ 9.00 Crores for the A.Y. 199495. There was a refund of ₹ 60,22,161/, after deducting the amounts of tax payable and TDS. The Assessing Officer issued intimation u/s.143(1) of the Act and the refund was worked out at ₹ 59,38,056/. For the s .....

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cial Services Ltd.’s case [2014 (2) TMI 1218 - GUJARAT HIGH COURT] -. Hence, the Tribunal committed serious error in law in holding that interest u/s.234B should have been charged in the present case. - Decided in favour of the assessee - TAX APPEAL No. 33 of 2007 - Dated:- 21-7-2016 - KS JHAVERI AND G.R.UDHWANI, JJ. Mr BS Soparkar For Mrsswati Soparkar, Advocate for the Appellant Mr Nitin K Mehta, Advocate for the Opponent JUDGMENT ( Per : Honourable Mr.Justice KS Jhaveri ) 1. This Tax Appeal u .....

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f the I.T. Act? 2. The assessee is a public company engaged in the business of manufacture of detergents and intermediate industrial products. For the A.Y. 1994-95, the assessee filed its return on 23.11.1994 declaring total income of ₹ 20,39,77,990/. The return was processed u/s.143(1)(a) and ultimately, the assessment order was passed on 08.01.1997. Against the said order, the assessee preferred appeal before the CIT(A). The CIT(A) partly allowed the appeal vide order dated 22.12.1998. H .....

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intimation u/s.143(1)(a) of the Act and refund was worked out for ₹ 59,38,056/. Thereafter, the assessment order u/s.143(3) of the Act was passed on 08.01.1997 determining income of ₹ 26,15,69,680/. After the order of CIT(A), the income was revised to ₹ 23,14,72,720/. In the assessment order, interest u/s.234B was charged on the higher amount on account of the withdrawal of the refund of ₹ 59,38,056/. However, the Tribunal seriously erred in holding that interest u/s.234B .....

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n a decision of this Court in the case of CIT v. Gujarat State Financial Services Ltd., [2014] 49 taxmann.com 221 (Gujarat) wherein, the following observations have been made in Para5.6 of the said decision: 5.6 This very issue came up for scrutiny before the Bombay High Court in the case of Commissioner of Incometax v. Indian Oil Corporation Ltd., reported in 2010 TAXMAN 466 and the Bombay High Court has held that addition of explanation (2) to section 234D of the Act by Finance Act, 2012, with .....

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y/ clarificatory in nature. The same being declaratory/ clarificatory, the same was held to be applied with retrospective effect. In the words of the Bombay High Court : (21) The question therefore is whether the words in section 234D has a past signification. We think it does. Explanation 2 in fact supports this view. In view of the declaratory amendment to Section 234D of the Act by the addition of Explanation 2 thereto any doubt with regard to the word is having a past signification has been .....

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e conclusion of the final assessment under section 143(3) in respect of the year for which the refund is granted. The classification done in section 234D is on the basis of the date of the completion of assessment proceedings prior to 1/06/2003 on the one hand and post 1/06/2003 on the other. The classification is not on the basis of the date of grant of refund under section 143(1) of the Act. The classification on the basis of the completion of assessment proceedings is not a subject matter of .....

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r. 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 .. .. .. xxx xxx xxx (4) Where a regular assessment under sub section (3) of this s .....

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determined under section 143(3) of the Act is deemed to be tax payable by the assessee. However, as there was no provision of interest on the grant of refund under Section 143(1) of the Act it became necessary to provide for the same by having a charging provision. This was done by section 234D of the Act 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 of the Act. Under s .....

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r only contention is that it would not apply to refunds granted prior to 1/06/2003 even in respect of assessments completed after the cutoff date of 1/06/2003. This submission ignores the fact that Explanation 2 which is declaratory in nature clarifies that the section would apply to an assessment year even before 1/06/2003 provided the proceedings in respect of such assessment years are not completed by the cut off date i.e. 1/06/2003. xxx xxx xxx (26) A statute could be retrospective in operat .....

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x 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 support the Counsel for the respondent relied upon the decision of the Supreme Court in Karimthuravi Tea Estate ltd. v. State of Kerala 60 ITR 262, Maharajah of Pithapurm v. CIT 13 ITR 221 (PC) and CIT v. Scindia Steam Navigation Co. Ltd. 42 ITR 539. The aforesaid decisions are not relevant for our purpose particularly, .....

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ve submission, reliance was placed on a judgment of this Court in the case of Jt. CIT v. Sumit Industries Ltd., (2015) 229 Taxman 0369 (Gujarat) wherein, it has been held that prerequisite condition for applicability of S.234B was that assessee was liable to pay tax u/s.208 and expression assessed tax was defined to mean tax on total income determined u/s.143(1) or 143(3) as reduced by amount of tax deducted or collected at source and there was no exclusion of S.115J/115JA in levy of interest u/ .....

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art of the month and thus, levy of such interest is automatic when the conditions of s.234B are met. 5. We have heard learned counsel for both the sides and perused the documents on record. In the present case, the assessee paid advance tax aggregating ₹ 9.00 Crores for the A.Y. 199495. There was a refund of ₹ 60,22,161/, after deducting the amounts of tax payable and TDS. The Assessing Officer issued intimation u/s.143(1) of the Act and the refund was worked out at ₹ 59,38,056 .....

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