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Issues: Whether interest under section 14A(7) of the Excess Profits Tax Act, 1940 was payable on the amount refunded to the assessee pursuant to the appellate and rectification orders.
Analysis: Section 14A(7) directs payment of interest on excess tax paid under provisional assessment from the date of payment of such excess tax to the date of the order of refund. The expression "regular assessment" was held to include not only the initial assessment under section 14 but also assessment orders passed to give effect to appellate directions. Where a refund arises only after appellate or rectification proceedings, the assessee remains entitled to interest on the refunded amount for the relevant period. The refusal to grant interest on the refunded sum was found to be inconsistent with the statutory scheme.
Conclusion: Interest was payable on the refunded amount of Rs. 1,08,579, and the denial of such interest was held to be illegal.
Final Conclusion: The assessee succeeded in establishing entitlement to statutory interest on the entire refunded tax amount under the provisional assessment scheme.
Ratio Decidendi: For purposes of section 14A(7), "regular assessment" includes the final assessment made effective through appellate or rectification orders, and interest on excess tax is payable from payment of the excess amount until the refund order.
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