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Proviso to section 66(7) of the Indian income-tax act, 1922 [corresponding to section 240 of the income-tax act, 1961]-Refund-On taxes over paid-Whether assessee entitled to interest from date when assessed tax had been paid and not from date of order of high court or appellate authority reducing assessment-Held, yes Facts For the assessment years 1946-47 to 1948-49 and 1950-51, the assessee became eligible to refund of taxes paid by him, by virtue of answers to the references to the High Court. The Commissioner eventually issued directions for refund on 4-3-1976 with interest at the rate of 6 per cent per annum. The Commissioner directed that (a) for the assessment year 1950-51, interest was payable only from 30-6-1970 when the Tribunal passed an order under section 66(5) of the 1922 Act in conformity with the of the High Court, and (b) for the other years, interest would be payable from 3-9-1971 when the ITO received his directions to give effect to the Court's order. The refundable amounts were adjusted in respect of arrears due for some subsequent years and the Commissioner permitted payment of interest only up to the dates of such adjustment. On reference : Held Under proviso to section 66(7), interest would have to be paid from the time when there was over-payment. The order of High Court or other appellate authority which reduces the assessment only reflects an over-payment when payment of the assessed tax has already been made. It does not mean that the over-payment is only from the date of such order of the appellate authority or the High Court. The proviso to this section also indicates that the Commissioner is given a discretion to fix up the rate of interest. He cannot curtail the period for which interest is to be paid and postpone it to a date subsequent to the date of actual payment which, as a result of the High Court's order, has become an over-payment. The assessee was, accordingly, entitled to interest from the date when the assessed tax for the said years had been paid up to the date of adjustment towards subsequent years. JUDGMENT Srinivasa Iyengar, J.- The question involved in this writ petition is about the period for which interest was…

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