- (1.) This appeal is preferred against the decision of the Andhra Pradesh High Court allowing the writ petition filed by the respondent-assessee and directing the Revenue to pay to the respondent interest on the amount of Rs. 84,562/- from September 7, 1969 to August 14, 1973 at the rate of 6 per cent per annum under Section 244(1) of the Income-tax Act, as prayed for by the respondent. The respondent is a limited company in liquidation and is represented by its Liquidators. On November 24, 1960, the respondent-company was taken over by the Government. The respondent received compensation therefore which amount was brought to tax by the Revenue. Original assessment was completed on January 31, 1966. The appeal preferred by the respondent was allowed by the Appellate Assistant Commissioner on 6th March, 1969. He set aside the assessment and directed the Income-tax Officer to complete the assessment afresh in the light of the directions given by him. In short, the Appellate Assistant Commissioner directed that the income of the respondent-assessee must be determined under Section 12-B of the Indian Income-tax Act, 1922 and not under S. 10(2)(vii) of the said Act.The respondent filed an appeal before the Tribunal questioning the correctness of the Appellate Assistant Commissioner's Order but it was dismissed on 20th September, 1971. The Income-tax Officer then took up the assessment proceeding and called upon the respondent to furnish certain particulars. The respondent furnished the particulars finally on 13th April, 1973 and the Income-tax Officer completed the assessment on 14th August, 1973. As a result of this assessment, a sum of Rs. 84,562/- was found refundable to the respondent. It was refunded in the same month. The respondent. laid a claim for interest under Section 244(1) of the Income-tax Act, 1961 for the period commencing on 6th March, 1969 (the date of the Appellate Assistant Commissioner's Order) to August, 1973 (the month in which the assessment was finalised pursuant to the remand order and the refund made). The claim was rejected by the Income-tax Officer, against which order the respondent filed a revision before the Commissioner under Section 264 which too was rejected. The Commissioner opined inter alia that the respondent having delayed furnishing the particulars called for, was not justified in asking for interest from the date of the Appellate Assistant Commissioner's Order. The assessee then approached the High Court of Andhra Pradesh by way of a Writ Petition No. 5167 o 1975 which has been allowed as aforestated.
(2.) Mr. Murthy, learned senior Advocate for the Revenue, assailed the correctness of the view taken by the High Court on the ground that it is in the teeth of the express provisions of Sections 240, 244(1), 237 and 243(1). He invited our attention to the proviso to Section 240 added by Direct Tax Laws (Amendment) Act, 1987 with effect from April 1, 1989, submitting that it was merely clarificatory of the pre-existing position. Counsel placed strong reliance upon the Full Bench decision of the Gujarat High Court in Saurashtra Cement and Chemical Industries Ltd. v. Income-tax Officer, (1992) 194 ITR 659, which interalia held that the aforesaid proviso is merely clarificatory. He also disputed the correctness of the decision of the Allahabad High Court in Purshottam Dayal Varshney v. Commr. of Income-tax, U.P., (1974) 94 ITR 187 : (1974 Tax LR 275) which was relied upon by the assessee before the High Court as well as before us. Learned counsel also brought to our notice that the Orissa High Court has followed the Allahabad view in Grantha Mandir v. Commr. of Income-tax, 172 ITR 287 : (1988 Tax LR 690) which, he submitted, is equally unsustainable.
(3.) For a proper appreciation of the contention raised herein, it is appropriate to notice a few provisions of the Act. Sections 237, 140 and 244(1) read as follows : "237. Refunds. - If any person satisfies the (Assessing) Officer that the amount of tax paid by him or on his behalf or treated as paid by him or on his behalf for any assessment year exceeds the amount with which he is properly chargeable under this Act for that year, he shall be entitled to a refund of the excess. 240. Refund on appeal, etc. - Where, as a result of any order passed in appeal or other proceeding under this Act, refund of any amount becomes due to the assessee, the (Assessing) Officer shall, except as otherwise provided in this Act, refund the amount to the assessee without his having to make any claim in that behalf : [Provided that where, by the order aforesaid, - (a) an assessment is set aside or cancelled and an order of fresh assessment is directed to be made, the refund, if any, shall become due only on the making of such fresh assessment; (b) the assessment is annulled, the refund shall become due only of the amount, if any of the tax paid in excess of the tax chargeable on the total income returned by the assessee.] (The proviso was added by Direct Tax Laws (Amendment) Act, 1987 w.e.f. April 1, 1989) 244. Interest on refund where no claim is needed. - (1) Where a refund is due to the assessee in pursuance of an order referred to in Section 240 and the [Assessing] Officer does not grant the refund within a period of [three months from the end of the month in which such order is passed], the Central Government shall pay to the assessee simple interest at [fifteen] per cent per annum on the amount of refund due from the date immediately following the expiry of the period of [three] months aforesaid to the date on which the refund is granted." (Prior to April 1, 1971 the period was six months. There has been a change in the rate of interest also.);