C.N. Ramachandran Nair, J.
1. These original petitions are filed by various petitioners challenging levy of interest under Section 234A and Section 234B of the IT Act (hereinafter called 'the Act'). The interest charged under Section 234A for non-filing or belated filing of returns and under Section 234B for non-payment or short payment of advance tax are with reference to income assessed under Section 143(1) or on regular assessment under the Act. According to the petitioners, the levy and demand of interest is against the decision of the Patna High Court in Ranchi Club Ltd. v. CIT : [1996]217ITR72(Patna) which is confirmed by the Supreme Court in the decision in CIT v. Ranchi Club Ltd. : [2001]247ITR209(SC) . The above two decisions are rendered in the context of interest levied under Section 234A of the Act and based on Expln. 4 to the said section which now stands omitted by Finance Act, 2001 with retrospective effect from 1st April, 1989. Even though the interest levied on petitioners is not consistent with the law as stated by the Patna High Court confirmed by the Supreme Court in the abovereferred decisions, the demand of interest based on assessed, income is perfectly in order by virtue of the amendment to the Act by Finance Act, 2001 whereunder Expln. 4 was omitted from Section 234A and Expln. 1 was substituted by the new Explanation specifically providing for levy of interest with reference to tax assessed under Sub-section (1) of Section 143 or regular assessment. Since the relevant amendments came into force after the filing of writ petitions, petitioners have amended the original petitions challenging the retrospectivity given to the impugned amendment w. e. f 1st April, 1989.
2. I have heard counsel appearing for the petitioners and standing counsel appearing for the respondent. The petitioners have relied on the abovereferred decision of the Patna High Court confirmed by the Supreme Court and contended that interest could be charged only based on income returned by the assessee and not based on the assessed income. In support of their challenge against retrospective amendment, they have relied on decisions of the Supreme Court in Lohia Machines Ltd. v. Union of India (1985) 44 CTR (SC) 328 : (1985) 2 SCC, R.C Tobacco (P) Ltd. v. Union of India : 2005(188)ELT129(SC) , Shii Prithvi Cotton Milk Ltd. v. Broach Borough Municipality : [1971]79ITR136(SC) and Lalitaben v. Gordhanbhai Bhaichandbai : AIR1987SC1315 . The petitioners contended that the legislative amendment with retrospective effect made to overcome the decision of the Supreme Court is invalid, particularly in the absence of a validation provision. On the other hand, counsel for the respondents contended that by virtue of the decision of the Supreme Court in National Agricultural Co-operative Marketing Federation of India Ltd. and Anr. v. Union of India and Anr. : [2003]260ITR548(SC) upholding the validity of retrospective amendment to Section 80P of the Act, the impugned amendments are valid. The specific case of the respondents is that amendment is only clarificatory and it is not intended to reverse any decision of the Patna High Court confirmed by the Supreme Court. The counsel for the respondent also has relied on the decision of the Punjab and Haryana High Court in Raj Kumar Singalv. Union of India wherein the High Court has upheld the constitutional validity of the amendment impugned by the petitioners in these original petitions.
3. In order to appreciate the contentions raised, the relevant provisions after the impugned amendment and the provisions prior to the amendment are extracted hereunder:
Section 234A. (1) Where the return of income for any assessment year under Sub-section (1) or Sub-section (4) of Section 139, or in response to a notice under Sub-section (1) of Section 142, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one and one-half per cent [w. e. f. 1st June, 2001 one and one fourth per cent) for every month or part of a month comprised in the period commencing on the date immediately following the due date, and,-
(a) where the return is furnished after the due date, ending on the date of furnishing of the return; or
(b) where no return has been furnished, ending on the date of completion of the assessment under Section 144,
on the amount of the tax on the total income as determined under Sub-section (1) of Section 143 or on regular assessment as reduced by the advance tax, if any, paid and any tax deducted or collected at source.
Explanation 1 : In this section, 'due date' means the date specified in Sub-section (1) of Section 139 as applicable in the case of the assessee.
Explanation 2 : In this Sub-section, 'tax on the total income as determined under Sub-section (1) of Section 143' shall not include the additional income-tax, if any, payable under Section 143.
Explanation 3 ; Where, in relation to an assessment year, an assessment is made for the first time under Section 147, the assessment so made shall be regarded as a regular assessment for the purposes of this section.
Explanation 4 omitted with retrospective effect from 1st April, 1989 by Finance Act, 2001 was as follows:
Explanation 4 : In this Sub-section, 'tax on the total income as determined under Sub-section (1) of Section 143 or on regular assessment' shall, for the purposes of computing the interest payable under Section 140A, be deemed to be tax on total income as declared in the return.
Section 234B. (1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under Section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of Section 210 is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of one and one-half per cent [w. e. f. 1st June, 2001 one and one-fourth per cent) for every month or part of a month comprised in the period from the 1st day of April next following such financial year to the date of determination of total income under Sub-section (1) of Section 143 [and where a regular assessment is made, to the date of such regular assessment, on an amount) equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax.
The following Expln. 1 is substituted by Finance Act, 2001 with retrospective effect from 1st April, 1989.
Explanation 1 : In this section, 'assessed tax' means the tax on the total income determined under Sub-section (1) of Section 143 or on regular assessment as reduced by the amount of tax deducted or collected at source in accordance with the provisions of Chapter XVif on any income which is subject to such deduction or collection and which is taken into account in computing such total income.'
From 1st. April, 1989 : The Explanation as printed above was substituted with retrospective effect from 1st April, 1989 by the Finance Act, 2001. The Explanation prior to the substitution was as follows:
Explanation : In this section, 'assessed tax' means,-
(a) for the purposes of computing the interest payable under Section 140A, the tax on the total income as declared in the return referred to in that section;
(b) in any other case, the tax on the total income determined under Sub-section (1) of Section 143 or on regular assessment,
as reduced by the amount of tax deducted or collected at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income.
4. From the main clause of Sub-section (1) to Section 234A itself it is clear that interest is to be charged with reference to the income determined under Sub-section (1) of Section 143 or on regular assessment as reduced by advance tax if any paid and any tax deducted or collected at source. What led to the abovereferred decision of the Patna High Court confirmed by the Supreme Court is on account of Expln. 4 provided to Section 234A prior to its deletion by the impugned amendment. In fact interest referred to in the Expln. 4 which existed in Section 234A prior to its deletion by the amendment has nothing to do with the said section. Therefore, simultaneous to deletion of Expln. 4 from Section 234A, the Explanation is brought under Section 140A of the Act. The substitution of Explanation to Section 234B is also intended to clarify the same position. The impugned amendments are therefore not for the purpose of reversing the decision of the Supreme Court as claimed by the petitioners, but are intended for the purpose of removal of doubt. An Explanation is generally provided to explain and clarify the scope of section. By the impugned amendment the legislature only changed the basis on which decisions are rendered and therefore, after the amendments the decisions do not represent the law on the amended provisions. The Supreme Court while upholding the amendment to Section 80P of the Act with retrospective effect from 1st April, 1968 in National Agrl. Co-op. Mkg. Federation's case (supra) held that a test of length of time covered by retrospective operation cannot by itself necessarily be a decisive test. The question to be considered is whether the retrospectivity of the legislation leads to be a new levy causing an unforeseen financial burden on the affected persons Similarly in R.C. Tobacco (P) Ltd.'s case (supra) also the Supreme Court has held that what the Court has to consider while considering the validity of retrospectivity of the legislation is whether it is ex facie discriminatory, or so unreasonable or confiscatory that happens to be violative of Articles 14 and 19 of the Constitution of India. In this context the Court held that the factors generally considered relevant are the context in which retrospectivity was contemplated, the period of such retrospectivity and the degree of any unforeseen or unforeseeable financial burden imposed for the past period. Apart from the solitary case decided by the Patna High Court and upheld by the Supreme Court, no other cases are reported challenging levy of interest based on assessed income. In fact no case has come to this Courtwhereunder interest demanded originally based on the unamended provisions were modified based on the amendment. In other words, even prior to the amendment interest was being charged under Section 234A and Section 234B on assessed income and not on income returned by the assessee. Therefore, in practice, amendment has only sought to achieve a clarification consistent with the understanding of the law by the Department as well as the assessees generally. The decision of the Patna High Court upheld by the Supreme Court was only an exceptional case. Moreover, simultaneous to the impugned amendment, the limitation period for revision of assessment for levy of interest is not increased by any corresponding amendment. Standing counsel reported that, practically no case was reopened in Kerala based on the amendment because interest originally levied based on the unamended provisions were also with reference to assessed income. Above all, if there is any justifying circumstance for non-filing or belated filing of return or for non-payment or short-payment of advance tax, the Chief CIT is vested with powers under the circular issued by the Board of Direct Taxes to waive interest under Section 234A and Section 234B of the Act. Therefore, I do not find the retrospective effect of the amendment is in any way arbitrary or oppressive as the levy is not absolute and is subject to cancellation or reduction by the Chief CIT based on waiver applications which the petitioners or any assessee can file. I am also in agreement with the abovereferred decision of the Punjab & Haryana High Court wherein the Division Bench held that the amendment is calculated to clarify the ambiguity that was felt in the original provisions. In the circumstances, the original petitions are devoid of any merit and are dismissed.