Completed assessment under the 1961 Act defeats pre-Act refund interest claim, while excess profits tax interest was allowed.

An assessment completed by the Income-tax Officer before the commencement of the Income-tax Act, 1961 was treated as a completed assessment under section 297(2)(i), even though appeals remained pending, so the claim for interest on an income-tax refund was governed by the 1961 Act and the corresponding claim under the repealed 1922 Act did not survive. By contrast, interest on refund of excess profits tax was considered under the separate statutory scheme in the Excess Profits Tax Act, 1940, which incorporated the relevant interest provision. On the special facts, relief was granted directly in the appeal and payment of the quantified amount with pendente lite and future interest was ordered.

---

---

Issues: (i) Whether interest on refund of income-tax was governed by the Indian Income-tax Act, 1922 or by section 297(2)(i) of the Income-tax Act, 1961; (ii) whether interest on refund of excess profits tax was recoverable and could be granted in these proceedings.

Issue (i): Whether interest on refund of income-tax was governed by the Indian Income-tax Act, 1922 or by section 297(2)(i) of the Income-tax Act, 1961.

Analysis: The expression "assessment completed before the commencement of this Act" in section 297(2)(i) was held to cover an assessment where the Income-tax Officer had passed the assessment order before the 1961 Act came into force, even though appellate proceedings were pending. The earlier decision in Panchanatham Chettiar was treated as controlling, and the claim for interest on the income-tax refund was therefore governed by the 1961 Act rather than the repealed 1922 Act. Once the case fell within section 297(2)(i), the claim to interest under section 66(7) of the 1922 Act could not survive.

Conclusion: The claim for interest on the income-tax refund was rightly rejected and the decision was against the assessee on this issue.

Issue (ii): Whether interest on refund of excess profits tax was recoverable and could be granted in these proceedings.

Analysis: The claim for excess profits tax interest stood on a distinct footing because section 21 of the Excess Profits Tax Act, 1940 incorporated the relevant interest provision from section 66(7) of the 1922 Act. Although the maintainability of a civil suit and the scope of the exclusion of civil court jurisdiction were discussed, the matter was not finally decided on that technical question. In the special circumstances of the case, and to avoid further litigation, relief was granted directly in the appeal by directing payment of the quantified amount with interest.

Conclusion: The assessee succeeded on this issue and the amount representing interest on the excess profits tax refund was ordered to be paid.

Final Conclusion: The appeal succeeded only in part: the claim relating to income-tax refund interest failed, while the claim relating to excess profits tax refund interest was allowed and a decree was made for payment of that sum with pendente lite and future interest.

Ratio Decidendi: For the purposes of section 297(2)(i) of the Income-tax Act, 1961, an assessment completed by the Income-tax Officer before the commencement of the 1961 Act is a completed assessment even if appeals are pending, and the corresponding claim for interest under the repealed 1922 Act does not survive; a distinct statutory claim for refund interest may nevertheless be granted where the court gives complete relief on the special facts of the case.

---