TMI Blog2005 (10) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... st for shortfall in payment of advance tax with effect from the 1st day of the assessment year, nothing is charged from the assessee for having utilized the refund amount till the date of regular assessment. Section 234D now provides in the Income-tax Act to charge interest on excess refund granted at the time of summary assessment. Sub-section (1) of section 234D provides that 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, then, the assessee shall be liable to pay simple interest at the rate of two-third 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. Thus, section 234D is to be construed as in operation with effect from 1-6-2003 i.e., any regular assessment made on or after 1-6-2003, interest u/s 234D if chargeable is to be levied irrespective of the assessment year or irrespective of the date when the refund was granted. Interest u/s 234D is not levied fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in failing to appreciate that the interest being compensatory in nature can be levied only for the period during which the Legislature has sought such compensation. The very fact that the said section is made operative from 1st day of June, 2003 indicates quite clearly that the Legislature expected the compensation only for the period commencing from 1st day of June, 2003. Thus, in the maximum, the learned CIT(A) could have upheld the levy of interest under section 234D only for the period commencing from 1-6-2003. However, he has erred in law in upholding the levy of interest under section 234D even for the, period prior to 1-6-2003 thereby offending the prospective nature of the amendment. (iii) The learned CIT(A) has misled himself while upholding the order of the Assessing Officer inasmuch as at one place he holds that the Assessing Officer is right in levy of interest while at another place (read 8) he holds that section 234D does not have application in case of grant of refund before, 1-6-2003. This contradiction clearly shows non-application of mind by the learned Commissioner and on this ground alone, his order deserves to be quashed. 2. The assessee-company filed its retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed is that in force in assessment year, unless otherwise provided expressly or by necessary implication. In Reliance Jute Industries Ltd. v. CIT [1979] 120 ITR 921 (SC), it was held that the assessment for one assessment year cannot, in absence of a contrary provision, be effected by the law in force in another assessment year. It is a universally accepted proposition that the law applicable in an assessment year will be the law as on 1st day of April of the assessment year. However, when an amendment is made from an intermediate date, i.e., not from the 1st day of April, the date from which an amendment becomes effective has been a matter of controversy in many cases and from the judicial decisions available on the issue, it is well established that even where the date from which the amendment is to take effect is clearly stated, if the amendment is of procedural nature, it should apply for all pending matters from the said date and in case of substantive law, which has been made effective from an intermediate date, it shall apply only from the next succeeding assessment year. Reliance for the above is placed on the decision of the Madras High Court in the case of Sree Karpagambal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Supreme Court in Govinddas' case [1976] 103 ITR 123. Section 139 of the Income-tax Act, 1961, imposed for the first time. a liability on the assessee to pay interest for delayed filing of income-tax return. Under the earlier Act of 1922, though penalty was provided in the case of a delayed submission or non-submission, of a return, interest could not be charged. Interest leviable under the Act of 1961, if not an additional tax, was certainly a new liability. The new Act also included provisions for the purpose, of computing such interest by prescribing dates from which the interest leviable would start to accrue. There was no such prescription in the earlier Act and the assessee had no obligation to take the required steps within such dates as under the Act of 1961. The language of section 139 neither expressly nor by necessary implication makes its operation retrospective. In our view, charging of interest under the Act of 1961 is not merely a matter of procedure by which it could be deemed to be retrospective. If the said section is given a retrospective effect, complications in computation of the interest to be charged will necessarily arise and the periods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or liability, construe sub-section (6) of section 171 as embracing a case where assessment of a Hindu undivided family is made under the provisions of the old Act. Here in the present case, the assessments of the Hindu undivided family for the assessment years 1950-51 to 1956-57 were completed in accordance with the provisions of the old Act which included section 25A and the Income-tax Officer, was, therefore, not entitled to avail of the provision enacted in sub-section (6) read with sub-section (7) of section 171 of the new Act for the purposes of recovering the tax or any part thereof personally from any members of the joint family including the petitioners. 3.4 He also relied on the following decisions in the matter of Central Excise Law where it has been held that applicability of interest under section 11AC of Central Excise and Tariff Act would not apply for wrongful removals of taking place prior to the date of insertion of section 11AC. (a) CCE v. Elgi Equipments Ltd [2001] (128) ELT 52 (SC). (b) CCE v. Supra Foundry Services (P.) Ltd [2001] (132) ELT 543 (Kar.). (c) Marcandy Prasad Radhakrishna Prasad (P.) Ltd. v. CCE [1998] (102) ELT 705 (Tribunal). (d) CCE v. M.P. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 143 exceeds the amount refundable on regular assessment. The assessee shall be liable to pay simple interest at the rate of (two-third) 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. 4.1 Section provides the assessee who receive the refund at the time of processing of return under section 143(1) and if ultimately in regular assessment i.e., assessment made either under section 143(3) or under section 144 (including assessment made for the first time under section 147), if no refund is due to the assessee, the assessee has to pay simple interest on the whole or excess amount so refunded from the date of grant of refund to the date of such regular assessment. 4.2 It is the contention of appellant that the section was introduced with effect from 1-6-2003 and since the relevant assessment year is assessment year 1998-99 i.e., the period commencing on 1-4-1998, provision is not applicable, as the provision contained in section 234D is a charging provision affecting the purse of the appellant. Lord Dunedin in Whitney v. IRC [1926] 10 Tax Cas. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rging provision. The machinery provision will apply from the date they are brought on the statute book whereas the charging section will be the provision as on the first day of the assessment year. Thus, the decision relied by learned counsel in the cases of Isthmian Steamship Lines, Reliance Jute Industries Ltd. and that of Hon'ble Madras High Court in Sree Karpagambal Mills Ltd.'s case will not apply in the present situation. 4.4 Heydon's rule which is a sound rule of construction of a statute firmly established in England as far back as in [1584] when Heydon's case has decided that for the true interpretation of all statutes in general, four things are to be discerned and considered: (1) what was the common law before the making of the Act, (2) what was the mischief and defect for which the common law did not provide, (3) what remedy the Parliament hath resolved and appointed to cure the disease of the Commonwealth, and (4) the true reason of the remedy; and then the office of all the judges is always to make such construction as shall suppress the mischief, and advance the remedy..... . Heydon's case has also been followed by the Supreme Court in a number of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant of refund to the date of such regular assessment. Thus, section 234D is to be construed as in operation with effect from 1-6-2003 i.e., any regular assessment made on or after 1-6-2003, interest under section 234D if chargeable is to be levied irrespective of the assessment year or irrespective of the date when the refund was granted. 4.6 Interest under section 234D is not levied for any default on the part of the assessee. It is levied merely because the assessee who claimed refund which was granted though not legally due to him. Thus, it is neither for non/delayed filing of return nor non/short demand of taxes etc. but merely to compensate the utilization of any sum during the period which the assessee was not legally entitled to use. All the decisions relied by learned counsel for assessee whether in respect of interest under section 139 or relating to interest payable under excise law, are accordingly distinguishable on facts of the present case. 4.7 There is no merit in the argument that interest even if chargeable should be only for the period commencing from 1-6-2003. What is to be seen is whether interest is chargeable when regular assessment is made on or after 1-6-200 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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