JUDGMENT : K.S. Jhaveri, J. 1. This Tax Appeal u/s. 260A of the Income-tax Act, 1961 is filed against the order dated 30.12.2005 passed by the Income Tax Appellate Tribunal, Ahmedabad in ITA No. 2388/Ahd./2000 raising the following substantial question of law for our determination: "Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that interest u/s. 234B should be charged on the amount after considering refund of Rs. 59,38,056/- which was issued on passing intimation u/s. 143(1)(a) of the I.T. Act?" 2. The assessee is a public company engaged in the business of manufacture of detergents and intermediate industrial products. For the A.Y. 1994-95, the assessee filed its return on 23.11.1994 declaring total income of Rs. 20,39,77,990/-. The return was processed u/s.143(1)(a) and ultimately, the assessment order was passed on 08.01.1997. Against the said order, the assessee preferred appeal before the CIT(A). The CIT(A) partly allowed the appeal vide order dated 22.12.1998. However, being aggrieved by the order of CIT(A), the Revenue preferred appeal before the Tribunal. The said appeal was allowed vide order dated 30.12.2005. Hence, this Tax Appeal at the instance of assessee. 3. Mr. B.S. Soparkar, learned counsel appearing for the assessee, submitted that the assessee had paid advance tax aggregating Rs. 9.00 Crores and S.A. Tax aggregating Rs. 1.60 Crores. After deducting the taxes and TDS amount, there was a refund of Rs. 60,22,161/-. The A.O. issued intimation u/s. 143(1)(a) of the Act and refund was worked out for Rs. 59,38,056/-. Thereafter, the assessment order u/s. 143(3) of the Act was passed on 08.01.1997 determining income of Rs. 26,15,69,680/-. After the order of CIT(A), the income was revised to Rs. 23,14,72,720/-. In the assessment order, interest u/s. 234B was charged on the higher amount on account of the withdrawal of the refund of Rs. 59,38,056/-. However, the Tribunal seriously erred in holding that interest u/s. 234B should be charged on the balance amount after considering refund of Rs. 59,38,056/- issued on passing intimation u/s. 143(1)(a) of the Act. 3.1 In support of his submission, Mr. Soparkar placed reliance upon a decision of the Apex Court in the case of CIT v. Reliance Energy Ltd., [2013] 358 ITR 371 (SC) wherein, it has been held that where assessment was completed prior to 01.06.2003, the provisions of Section 234D could not be applied. 3.1 In support of his submission, Mr. Soparkar placed reliance upon a decision of the Apex Court in the case of CIT v. Reliance Energy Ltd., [2013] 358 ITR 371 (SC) wherein, it has been held that where assessment was completed prior to 01.06.2003, the provisions of Section 234D could not be applied. 3.2 Learned counsel Mr. Soparkar also placed reliance upon a decision of this Court in the case of CIT v. Gujarat State Financial Services Ltd., [2014] 49 taxmann.com 221 (Gujarat) wherein, the following observations have been made in Para-5.6 of the said decision: "5.6 This very issue came up for scrutiny before the Bombay High Court in the case of Commissioner of Income-tax v. Indian Oil Corporation Ltd., reported in 2010 TAXMAN 466 and the Bombay High Court has held that addition of explanation (2) to section 234D of the Act by Finance Act, 2012, with retrospective effect from June 01, 2003, is made applicable even to the period under assessment year 2004-2005. In respect of excess refund granted to the assessee under section 143(1) of the Act, the interest was payable by the assessee even if it was received prior to June 01, 2003, so long as the proceedings of the concerned assessment year for which the refund was granted was completed after June 01, 2003. The Bombay High Court held the explanation 2 to section 234D of the Act as declaratory/clarificatory in nature. The same being declaratory/clarificatory, the same was held to be applied with retrospective effect. In the words of the Bombay High Court: (21) The question therefore is whether the words in section 234D has a past signification. We think it does. Explanation 2 in fact supports this view. In view of the declaratory amendment to Section 234D of the Act by the addition of Explanation 2 thereto any doubt with regard to the word is having a past signification has been set at rest. In fact the context in which the word has been used also supports the view that it has a past signification. The Legislature was obviously aware that refunds must have been made in respect of previous assessment years. Despite this, the amendment did not exclude such cases from the operation of the section. A grant of refund under section 143(1) is in the nature of a provisional refund and is subject to the final determination under section 143(3). The Legislature was obviously aware that refunds must have been made in respect of previous assessment years. Despite this, the amendment did not exclude such cases from the operation of the section. A grant of refund under section 143(1) is in the nature of a provisional refund and is subject to the final determination under section 143(3). This grant of refund is pending the conclusion of the final assessment under section 143(3) in respect of the year for which the refund is granted. The classification done in section 234D is on the basis of the date of the completion of assessment proceedings prior to 1/06/2003 on the one hand and post 1/06/2003 on the other. The classification is not on the basis of the date of grant of refund under section 143(1) of the Act. The classification on the basis of the completion of assessment proceedings is not a subject matter of challenge before us. Therefore, the date of grant of refund is immaterial to determine the applicability of section-234D of the Act. In the circumstances the submission of the respondent that section 234D of the Act only applies to refunds granted prior to 1/06/2003 is not acceptable. (22) It must be borne in mind that refund which is granted under section 143(1) of the Act to an assessee is qua an assessment proceeding for a particular assessment year. The refund granted is qua an assessment year. The refund emanates from assessment proceedings for a particular assessment year. The refund granted cannot be divorced from the assessment year or the assessment proceeding. Consequently to hold that interest on such refund would only run from 1/06/2003 would be to curtail the plain meaning of Explanation 2 to Section 234D. (23) Section 143(4) also supports our view. It reads as under:- "Section 143 Assessment -...... The refund granted cannot be divorced from the assessment year or the assessment proceeding. Consequently to hold that interest on such refund would only run from 1/06/2003 would be to curtail the plain meaning of Explanation 2 to Section 234D. (23) Section 143(4) also supports our view. It reads as under:- "Section 143 Assessment -...... xxx xxx xxx (4) Where a regular assessment under sub-section (3) of this section or section 144 is made,- (a) any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular assessment; (b) if no refund is due on regular assessment or the amount refunded under sub-section (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly." It is clear therefore, that excess refund determined under section 143(3) of the Act is deemed to be tax payable by the assessee. However, as there was no provision of interest on the grant of refund under Section 143(1) of the Act it became necessary to provide for the same by having a charging provision. This was done by section 234D of the Act in respect of all pending assessments in which refund was given. Thus even if, a refund has already been granted, the same would be subject to the provisions of section 234D of the Act. Under section 234D(1) where the refund under section 143(1) is in excess of the amounts refundable on regular assessment, interest on the excess amount would be payable. In any case after the introduction of Explanation 2 there can be no doubt that even where refund is granted prior to 1/06/2003 the same would carry interest provided the proceedings for assessment are completed after 1/06/2003. The respondent has not contended that the Explanation 2 to section 234D of the Act is not retrospective. Their only contention is that it would not apply to refunds granted prior to 1/06/2003 even in respect of assessments completed after the cut-off date of 1/06/2003. This submission ignores the fact that Explanation 2 which is declaratory in nature clarifies that the section would apply to an assessment year even before 1/06/2003 provided the proceedings in respect of such assessment years are not completed by the cut off date i.e. 1/06/2003. This submission ignores the fact that Explanation 2 which is declaratory in nature clarifies that the section would apply to an assessment year even before 1/06/2003 provided the proceedings in respect of such assessment years are not completed by the cut off date i.e. 1/06/2003. xxx xxx xxx (26) A statute could be retrospective in operation being expressly stated or by necessary implication. The case of the revenue is that section 234D as introduced on 1st June, 2003 was retrospective in operation by necessary implication. However, as doubts were raised about its retrospectivity, the same was clarified by adding an explanation to section 234D by Finance Act, 2012. Under the Act what is brought to tax is not the income of the assessee in the assessment year but the income of the assessee in the previous year. The liability to tax arises on account of the Finance Act which fixes the rate at which the tax is to be paid. The law to be applied is as existing on the 1st day of April of the previous year. In support the Counsel for the respondent relied upon the decision of the Supreme Court in Karimthuravi Tea Estate Ltd. v. State of Kerala, 60 ITR 262, Maharajah of Pithapurm v. CIT, 13 ITR 221 (PC) and CIT v. Scindia Steam Navigation Co. Ltd., 42 ITR 539. The aforesaid decisions are not relevant for our purpose particularly, in view of the fact that Explanation 2 to section 234D of the Act as introduced by the Finance Act, 2012 being declaratory in nature would be retrospective. This amendment make it clear that it shall apply assessment years even prior to 1/06/2003." 4. Mr. Nitin Mehta, learned Standing Counsel for the Revenue, took us through the provisions of Section 143(4) of the Act and submitted that in light of this provision, the assessee is bound to pay interest u/s. 234B of the Act. 4.1 In support of the above submission, reliance was placed on a judgment of this Court in the case of Jt. Nitin Mehta, learned Standing Counsel for the Revenue, took us through the provisions of Section 143(4) of the Act and submitted that in light of this provision, the assessee is bound to pay interest u/s. 234B of the Act. 4.1 In support of the above submission, reliance was placed on a judgment of this Court in the case of Jt. CIT v. Sumit Industries Ltd., (2015) 229 Taxman 0369 (Gujarat) wherein, it has been held that prerequisite condition for applicability of S. 234B was that assessee was liable to pay tax u/s. 208 and expression "assessed tax" was defined to mean tax on total income determined u/s. 143(1) or 143(3) as reduced by amount of tax deducted or collected at source and there was no exclusion of S. 115J/115JA in levy of interest u/s.234B. 4.2 Reliance was also placed on a judgment of the Apex Court in the case of CIT v. Bhagat Construction Co. Pvt. Ltd., (2015) 235 Taxman 0135 (SC) wherein, it has been held that under the provisions of Section 234B, the moment an assessee who was liable to pay advance tax, failed to pay such tax or where the advance tax paid by such an assessee was less than 90 per cent of the assessed tax, the assessee becomes liable to pay simple interest at the rate of one per cent for every month or part of the month and thus, levy of such interest is automatic when the conditions of s. 234B are met. 5. We have heard learned counsel for both the sides and perused the documents on record. In the present case, the assessee paid advance tax aggregating Rs. 9.00 Crores for the A.Y. 1994-95. There was a refund of Rs. 60,22,161/-, after deducting the amounts of tax payable and TDS. The Assessing Officer issued intimation u/s. 143(1) of the Act and the refund was worked out at Rs. 59,38,056/-. For the said A.Y., the assessment u/s. 143(3) of the Act was completed on 08.01.1997. 6. Considering the aforesaid aspects of the case, we are of the opinion that the provision of Section 234D of the Act would not be applicable in this case since the assessment was completed in January 1997. The provision of Section 234D would have applied if the assessment had been completed after 01.06.2003. 6. Considering the aforesaid aspects of the case, we are of the opinion that the provision of Section 234D of the Act would not be applicable in this case since the assessment was completed in January 1997. The provision of Section 234D would have applied if the assessment had been completed after 01.06.2003. In our view, the issue on hand is squarely covered by the decision of this Court in CIT v. Gujarat State Financial Services Ltd.'s case (supra). Hence, the Tribunal committed serious error in law in holding that interest u/s. 234B should have been charged in the present case. 7. Insofar as the judgment rendered in Sumit Industries' case (supra) relied upon by learned Standing Counsel Mr. Mehta is concerned, the same would not apply to the case on hand since that case pertained to payment of interest u/s. 234B and 234C in respect of tax determined on the basis of Sections 115JA and 115JB of the Act. Whereas, in this case, the issue relates to refund on passing intimation u/s. 143(1) of Act. Further, the decision of Apex Court in Bhagat Construction's case (supra) will also not apply to the present case since in that case advance tax was not paid. Therefore, both the decisions relied upon by the learned Standing Counsel will not be of any help to the Revenue. 8. In view of the above discussion, we answer the question in the negative, i.e. in favour of the assessee and against the Revenue. The appeal stands disposed of accordingly. No order as to costs.