JWALA PRASAD SIKARIA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AN interesting point of law has arisen for decision in these civil rules which are connected with the assessment year 1960-61. The point is whether interest has to be paid on the amount refunded to an assessee, who was assessed under the Indian Income-tax Act, 1922, hereinafter the "old Act", but after coming into force of the Income-tax Act, 1961, hereinafter the "new Act". The five petitions are by five different assessees, but a common question of law is involved. We have, therefore, heard these petitions together and are disposing of the same by this common order.

(2.) WHAT had happened was that the returns for the assessment year in question were filed on December 6, 1960. But the assessment came to be made after the commencement of the new Act. Demands of varying amounts were raised in the case of each assessee. The amount was realised from the assessees some time in 1965-66. On March 7, 1967, the appeals filed by them against the assessment were allowed and the demand was set aside. The amount paid by the assessees was refunded to them on July 7, 1972. The only question for our determination is whether they are entitled to interest on the refunded amount.

(3.) IT is urged by learned counsel that by virtue of Section 244 of the new Act, an assessee is entitled to interest on refund in case of delay in paying the amount of refund, if the assessment has been made under the new Act. IT is contended by referring to Section 297(2)(i) of the new Act that, if, in the present case, the assessment had been made before April 1, 1962, which is the date of commencement of the new Act, the assessee would have been entitled to payment of interest as refund became due after the passing of the appellate order on March 7, 1967, which was after the commencement of the new Act. Learned counsel contends that the assessees may not lose interest which is in the nature of compensation and not penalty as held in Central Provinces Manganese Ore Co. Ltd. v. CIT, 1986 160 ITR 961 only because due to some lapse or other reasons, the assessments were not completed before the commencement of the new Act, though returns were filed long before the commencement of the new Act We are in agreement with Shri Bhattacharjee when he says that the Legislature could not have taken the illogical step of allowing interest to those assessees whose assessments had been completed before the commencement of the new Act but denied the same to those who were assessed under the old Act after the commencement of the new Act. Such a provision would have been "illogical and unjust" as stated in a similar context in D'Souza (A. J.), CIT v. Bombay Burmah Trading Corporation Ltd., 1987 165 ITR 460 .