Law: Income Tax Act, 1922

Section: 66(7)

Income-tax-Refund-Interest-Refund consequent to Supreme Court decision-Paid within six months of date of order entitling refund-Interest from date of payment to date of refund-Whether payable-Assessment under old Act-Refund under new Act---- Provision applicable-Income-tax Act, 1961, S. 240 & 297(2)(c), (2)(i)-Indian Income-tax Act, 1922, S. 66(7). Consequent to the decision of the Supreme Court in the assessee's case the assessee became entitled to a refund of a substantial amount which was paid within six months of the date of the order entitling the petitioner to refund. The claim of the petitioner for interest on the amount of refund from the date of payment to the date of refund was disallowed. The assessee thereupon filed a writ petition in the High Court. Held, that as the assessment was completed before the commencement of the new Act of 1961 and the refund, in consequence of the Supreme Court decision, fell due after the commencement of the new Act, section 297(2)(i) of the Income-tax Act, 1961, applied. Therefore, the interest payable on such refund was governed entirely by the provisions of the new Act of 1961 relating to interest payable on refunds and as the refund was granted within six months of the order directing refund, there was no liability on the part of the department to pay interest.   JUDGMENT VEERASWAMI, J.---We are of opinion that the conclusion of the Commissioner of Income-tax, Madras, is correct, though his reasoning is not acceptable. The petitioner is a public limited company doing business in general insurance. In respect of the assessment year 1954-55, the claim for depreciation written off of buildings, air conditioning plants, lifts, etc., was allowed only to the extent of 1/5th. The result of the assessee's appeal was that the entirety of the depreciation was disallowed and the charge was enhanced. The Tribunal restored the first order with which this Court on a reference had concurred. The Supreme Court in Pandyan Insurance Co. Ltd. v. Commissioner of Income-tax ((1965) 55 I T R 716 (S C)) however. held that the petitioner was entitled to the allowance of the entire amount of depreciation which had been…