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Judgment
The following questions have been framed for consideration in this appeal under Section 260A of the Income Tax Act, 1961 :
�1. Whether, on the facts and in the circumstances of the case, the ITAT was justified in law in directing the AO not to charge interest u/s. 234-D for AY 1994-95 even though the assessment order u/s. 244-A(2) read with Section 254 of the IT Act, 1961 was passed on 31.12.2008, after the insertion of section 234-D by the Finance Act, 2003 w.e.f. 1.6.2003?
Whether, on the facts and in the circumstances of the case, the ITAT was justified in law in directing the AO not to charge interest u/s. 234-D for AY 1994-95 ignoring the intention of the legislation in introducing the provisions of section 234-D to compensate the department for the utilization of any sum during the period which the assessee was not legally entitled to use?�
Respondent/ assessee is a cooperative society (A Cooperative Bank) registered under the provisions of Madhya Pradesh Cooperative Society Act and filed it''s return of income for the assessment year 1994-95. For the said period, a sum of Rs.1,59,98,611/- was deducted at source by various persons and a T.D.S. Certificate was issued. The assessee enclosed all these T.D.S. Certificates along with return. On scrutiny of the T.D.S. Certificates, the assessing officer found that only certificate to the extent of Rs.58,95,431/- was correct, for which the credit was allowed. For the remaining, the T.D.S. Certificates were returned back and the assessee was directed to cure the defect. It was intimated to the assessee vide assessment order passed on 14.10.1997. The assessee re-furnished the certificates in March, 1998 and, therefore, initially, the amount was refunded along with interest under Section 244A amounting to Rs.31,62,142/-.
Subsequently, vide order dated 8.2.2002, the assessing officer withdrew the interest on the ground that the delay was attributable to the appellant. The matter went to the Commissioner of Appeals and Tribunal on more than two occasions . Initially, remands were made and finally, the appeals of the department were allowed both by the Commissioner of Appeals and the Tribunal and it was found by the authorities that in view of the provisions of Section 234-D inserted w.e.f. 1st day of June, 2003, for the assessment year 1994-95, for which assessment was completed on 27.3.1997 i.e prior to insertion of Section 234-D, the provisions of levying of interest would not be applicable. The orders concurrently passed by the Commissioner Appeals and the Tribunal are challenged in this appeal mainly on the ground that after remand of the matter, the assessing officer passed the final order only on 31.12.2008 in the matter of levying of interest and as Section 234-D was inserted w.e.f. 1.6.2003, the order passed in the matter of levying of interest 31.12.2008 will not be effected by insertion of Section 234-D w.e.f. 1.6.2003.
Having heard learned counsel for the parties, we are of the considered view that Section 234-D was inserted w.e.f. 1.6.2003 and would be applicable only for the assessment year commencing after the year 2004-05 onwards and not to an earlier assessment. In the case in hand, the assessment is for the year 1994-95 and in fact except for the question of levying of interest, the entire assessment was completed and the assessment order passed on 27.3.1997. That being so, the learned Tribunal and the Commissioner, Appeals have not committed any error, as the provisions of Section 234-D would not have retrospective effect.
Accordingly, we answer the questions by holding that the Income Tax Appellate Tribunal was justified in law in directing for not charging interest under Section 234-D for the assessment year 1994-95 for the simple reason that the final assessment for this year was completed on 27.3.1997 and the order passed on 31.12.2008 only was with regard to refund of interest.
Accordingly, both the questions as framed herein above are answered against the revenue and it is held that the Tribunal was justified in law in directing the assessing officer in not charging interest.
The appeal stands disposed of in terms thereof.