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Issues: Whether interest on the income-tax refund was governed by the Income-tax Act, 1961 or by the repealed Income-tax Act, 1922, and whether the assessee was entitled to interest on the refund.
Analysis: Section 297(2)(i) of the Income-tax Act, 1961 provides that where a refund in respect of a completed assessment falls due after the commencement of the new Act, the provisions of the new Act relating to interest on refunds apply. The refund in the present case became due only after the commencement of the 1961 Act, when the assessee succeeded on reference and the Tribunal passed the consequential order. The court treated section 297(2)(i) as a self-contained provision governing refunds, excluding resort to section 66 of the repealed Act for this purpose. Under section 244(1) of the 1961 Act, interest is payable only if the refund is not granted within six months from the relevant order. Here, the refund was made within that period.
Conclusion: The assessee was not entitled to interest under the repealed Act or under section 244(1) of the Income-tax Act, 1961, and the objection to the Commissioner's refusal failed.
Ratio Decidendi: Where a refund becomes due after the commencement of the Income-tax Act, 1961, section 297(2)(i) makes the refund and interest provisions of the 1961 Act exclusively applicable, and interest under section 244(1) is payable only if the refund is withheld beyond six months from the relevant order.
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