Madras H.C : Interest under section 234D cannot be charged in respect of refund granted prior to the insertion of section 234D, when the regular assessment was completed only subsequent to the insertion of section 234D

High Court Of Madras

CIT vs. Fisher Sanmar Ltd.

Assessment Year : 2002-03

Section : 234D

Mrs. Chitra Venkataraman And Ms. K.B.K. Vasuki, JJ.

Tax Case (Appeal) No. 202 Of 2007

July 23, 2013

JUDGMENT

Mrs. Chitra Venkataraman, J. – This tax case (appeal), preferred by the Revenue against the order of the Tribunal, was admitted on the following substantial questions of law :

“1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that interest under section 234D cannot be charged in respect of refund granted prior to the insertion of section 234D, when the regular assessment was completed only subsequent to the insertion of section 234D ? and

2. Whether, on the facts and in the circumstances of the case, no interest can be charged even for the period subsequent to the introduction of section 234D, merely on the ground that the refund was granted prior to its introduction ?”

2. The assessment relates to the assessment year 2002-03. The assessment was completed on March 28, 2005. Learned standing counsel brought to our attention the decision of this court in CIT v. Infrastructure Development Finance Co. Ltd. [2012] 340 ITR 580/[2013] 33 taxmann.com 622 (Mad.), in favour of the Revenue. Since the regular assessment in the reported decision was completed on March 30, 2004, and section 234D came into operation on and from June 1, 2003, prior to the completion of the regular assessment, the assessee was liable to pay interest on the excess refund amount received as contemplated under section 234D of the Income-tax Act.

Following the above judgment of this court, the tax case stands allowed. No costs.

[Citation : 361 ITR 296]