Refund interest continues until actual payment, and exclusion for assessee-caused delay must be decided by the designated authority.

Interest on income-tax refund under Section 244A runs until the date of actual grant of refund unless the Revenue proves that the proceedings resulting in the refund were delayed for reasons attributable to the assessee. On the facts, the delay in remittance reflected administrative and system failures, not any established default by the assessee, so exclusion of interest was not justified. Section 244A(2) further requires the attributable-period question to be decided by the designated senior authority, not by the Assessing Officer. The rejection of interest was quashed and the Revenue was directed to compute and pay refund interest for the permissible period.

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Issues: (i) Whether interest on refund under Section 244A of the Income-tax Act, 1961 was payable up to the date of actual grant of refund; (ii) whether the Assessing Officer could deny such interest by invoking Section 244A(2) on the ground that the delay in credit of refund was attributable to the assessee.

Issue (i): Whether interest on refund under Section 244A of the Income-tax Act, 1961 was payable up to the date of actual grant of refund.

Analysis: Section 244A(1) makes interest on refund payable until the date on which the refund is granted. The exception in Section 244A(2) applies only where the proceedings resulting in the refund are delayed for reasons attributable to the assessee. On the facts, the refund stood determined in the processing under Section 143(1) and the assessment under Section 143(3), and there was no finding that those proceedings were delayed for reasons attributable to the assessee. Post-determination delay in actual remittance does not by itself attract the exclusion under Section 244A(2). The record also showed systemic and administrative failure rather than any proved default by the assessee.

Conclusion: The assessee was entitled to interest on the refund till the date of actual payment, and the refusal to grant such interest was unsustainable.

Issue (ii): Whether the Assessing Officer could deny such interest by invoking Section 244A(2) on the ground that the delay in credit of refund was attributable to the assessee.

Analysis: Section 244A(2) specifically vests the decision on exclusion of the attributable period in the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, whose decision is final. The impugned order was passed by the Assessing Officer, who had no jurisdiction to decide exclusion of period under that provision. The factual basis for attributing the delay to the assessee was also inconsistent with the material on record, which indicated approval delay, repeated failed refund attempts, and re-routing through the system despite subsequent bank validation.

Conclusion: The Assessing Officer lacked jurisdiction to deny interest under Section 244A(2), and the attribution of delay to the assessee was not established.

Final Conclusion: The impugned rejection of interest on refund was quashed, and the Revenue was directed to compute and pay interest on the refund for the period allowed by the Court.

Ratio Decidendi: Interest on refund runs until actual grant of refund unless the Revenue proves that the proceedings resulting in refund were delayed for reasons attributable to the assessee, and exclusion under Section 244A(2) must be decided by the authority designated therein.

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