Law:

Section:

Section 244, read with section 240, of the Income-tax Act, 1961 – Refunds – Interest where no claim is needed – Assessment years 1956-57 to 1958-59 – An amount of tax became refundable as a result of appellate decision for assessment years in question – Refund was not granted within period of six months from date of appellate order – Meanwhile section 244 was amended whereby interest on delayed payment of refund was raised from 4 per cent to 6 per cent – Revenue contended that since law has been changed only from 1-4-1965, interest at enhanced rate would be payable only from 1-4-1965 and not from expiry of six months from date of appellate order – Whether purpose and object of aforesaid amendment was to provide for interest in all cases where refund had not been actually made before 1-4-1965, from date of expiry of six months from date of order referred to in section 240 - Held, yes – Whether, therefore, interest at rate of 6 per cent was to be provided on refund to assessee from date of expiry of six months from date of appellate order – Held, yes FACTS An amount of tax became refundable as a result of the appellate decision for the assessment years in question. The refund was not granted within period of six months from date of appellate order. Meanwhile section 244 was amended by the Finance Act, 1965 w.e.f. 1-4-1965 by raising the rate of interest on delayed payment of refund from 4 per cent to 6 per cent. The assessee claimed interest at 6 per cent from the expiry of six months from the date of the appellate order. The revenue, however, contended since the law had been changed only from 1-4-1965, the interest at the enhanced rate would be payable only from that date, and not from the expiry of six months from the date of the appellate order. On reference: HELD Section 244(1) refers to section 240. Section 240 imposes an obligation on the Income-tax Officer to refund the excess tax that had been collected as a result of an order of the Appellate Assistant Commissioner or as a result of any order passed in appeal or other proceedings under this Act. The section does not speak of any other order to be passed by the Income-tax Officer directing the refund. The…

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