THE COMMISSIONER OF INCOME TAX vs. ZUARI INDUSTRIES LTD

The learned Counsel appearing for the appellant submitted that in the present case, the assessment year was admittedly, 2001-02 during which the assessment was done and Revenue passed an order of refund. Provisions of Section 234 (D) of IT Act were amended w.e.f. 1/06/2003 and the regular assessment was done on 29/03/2004. 3. The Assessing Officer, while exercising his powers under Section 234 (D), directed the Assessee to deposit the amount refunded earlier, with interest. The order was challenged in appeal by the Assessee, before the Commissioner of Income Tax. The Commissioner partly allowed the appeal by directing the Assessing Officer to charge interest under Section 234 (D) from 1/06/2003 till 31/03/2004. 4. Assessee as well as Revenue, both filed appeal before the Income Tax Appellate Tribunal (ITAT). The appeal of the Assessee was allowed and appeal filed by Revenue was dismissed.

The learned Counsel for the appellant submits that the provisions of levy of tax in respect of the amendment of Income Tax Act, are to be interpreted differently than the provisions relating to grant of interest, which is in the nature of compensation. In the facts of the case, according to learned Counsel, the amount of refund was enjoyed by the Assessee for certain period. The Assessing Officer directed the Assessee to refund the said amount on which the Assessee was directed to pay interest. The learned Counsel placed reliance on the Special Bench judgment of ITAT, Delhi in the case of INCOME TAX OFFICER V/s. EKTA PROMOTERS (P) Ltd. (2008) 113 ITD 0719 (DELHI).

The learned Counsel Shri Sonak placed reliance on the cases of T.S. BALARAM, INCOME TAX OFFICER V/s. M/s. VOLKART BROTHERS reported in 1971(2) SCC 526, THE KARIMTHARUVI TEA ESTATE LTD., V/s. THE STATE OF KERALA (AIR 1966 SC 1385 (V 53 C 267), M/s. RELIANCE JUTE AND INDUSTRIES LTD. V/s. C.I.T., WEST BANGAL, CALCUTTA (1980) 1 SCC 139 and GOVIND DAS & OTHERS V/s. THE INCOME TAX OFFICER & ANOTHER (1976) 1 SCC 906, based on which, the Counsel submitted that the amendment to the Act could not be implemented retrospectively. The amendment could not be taken into consideration merely because the Assessee was assessed after the date of amendment. The Counsel further submitted that the Assessing Officer committed error in exercising his powers under Section 234 (D) and that the issue was debatable. There is no error apparent.

The learned Counsel for the appellant, on instructions, submitted that the Revenue did not challenge the order passed by the Special Bench of ITAT.

We find substance in the submission advanced by the learned Counsel appearing for the respondent that any amendment in the Act coming into force after amendment to the Income tax Act, could not be implemented and given effect to retrospectively. In the facts of the case, the subject assessment was done for 2001-02 assessment year and the regular assessment was done on 29/03/2004, obviously after the said amendment, which was given effect to from 1/06/2003. In the light of the ratio laid down in the judgments cited supra, we are not convinced to interpret the provisions relating to tax and interest differently.

We do not find any substantial question of law. The appeal stands dismissed. NARESH H. PATIL, J. N. A. BRITTO, J. NH