Section 234D — the law in short
What the courts have decided on section 234D, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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CIT-II v Gujarat State Financial Services Ltd
High CourtHelps department
My Tribunal order cancelling s.234D interest relied on Ekta Promoters. Is that still worth anything after the 2012 amendment?
No. The Gujarat High Court held that the Special Bench view in Ekta Promoters — that s.234D operates only from AY 2004-05 — is incorrect, and followed the Bombay High Court in Indian Oil Corporation that Explanation 2 is declaratory. Where excess refund has been granted, s.234D applies even for earlier assessment years if the assessment was framed after 1 June 2003.
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CIT v Indian Oil Corporation Ltd
High CourtHelps department
My assessment for an early year was completed after 1 June 2003 but the s.143(1) refund was issued before that date. Can they charge me s.234D interest on it?
Yes. Explanation 2 to s.234D, inserted by the Finance Act 2012 with retrospective effect from 1 June 2003, is declaratory, so s.234D reaches an assessment year commencing before 1 June 2003 provided the assessment proceeding was completed after that date. The date on which the s.143(1) refund was actually granted is irrelevant; what fixes liability is the date the assessment was completed.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.