Law:

Section:

Section 244(1), read with section 297(2)(i) of the Income-tax Act, 1961 - Refunds - Interest on delayed refunds - Assessment years 1958-59 and 1959-60 - Whether assessee was entitled to interest on delayed refunds under section 244(1) read with section 297(2)(i) even though assessments in question were made under the Indian Income-tax Act, 1922 - Held, yes FACTS The assessments for the assessment years 1958-59 and 1959-60 were completed under section 23(3) of the Indian Income-tax Act, 1922 before the commencement of the 1961 Act. However, on account of appeals and references, the assessments became final only in 1971. Amounts of refund were received by the assessee in 1973. The assessee requested for interest on delayed refunds. The ITO rejected the request by the assessee on the ground that the assessments for both the years were originally completed under the 1922 Act and there was no provision in the said Act for granting of interest on delayed refunds. On appeal, the AAC and the Tribunal held that the provisions of section 244(1) were applicable to the case and the assessee was entitled to interest on delayed refunds. On reference, the revenue contended that section 244 requires to be read with section 240 and section 240 is applicable in a case where refund becomes due as a result of an order passed under the 1961 Act. According to the revenue, as in the instant case refund had fallen due as a result of an order under the 1922 Act, section 240 was not applicable and, therefore, the assessee was not entitled to interest. HELD If the revenue's interpretation of section 240 was accepted, section 297(2)(i) would become redundant. Sections 297 (2)(i) and 244 are to be read together and in harmony. Once it is held that section 297(2)(i ) governs the case, provisions of section 244 relating to payment of interest on delayed refund would become applicable. Therefore, the provisions of section 297(2)(i) read with sections 244 and 240 were applicable to the instant case. The assessee was, therefore, entitled to interest on delayed refund. CASE REVIEW Jain Bros. v. Union of India[1970] 77 ITR 107 (SC)followed and relied upon. CASES REFERRED TO Pandyan Insurance Co.…

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