2007 (4) TMI 209

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.... The reference relates to the assessment years 1962-63, 1970-71 and 1971-72. Briefly stated the facts giving rise to the present reference are as follows: On giving effect to the Appellate Tribunal's order dated June 30, 1976, for the assessment years 1962-63, 1970-71 and 1971-72, a refund of Rs. 11,44,656 became due to the assessee. This refund was withheld three times in terms of section 241 of the Act till December 31, 1977, and then till July 31, 1978, and lastly till October 31, 1978, vide orders passed by the Commissioner of Income-tax on September 30, 1977, May 15, 1978, and July 31, 1978, respectively. Interest of Rs. 3,54,733 was allowed to the assessee vide order under section 254 of the Act dated May 21, 1979. Subsequent....

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....was upheld and the Department's appeals were dismissed. We have heard Sri R. K. Upadhyaya, learned standing counsel appearing for the Revenue and Sri Yashwant Verma, learned counsel appearing for the respondent-assessee. Learned standing counsel appearing for the Revenue submitted that on a plain reading of sub-section (2) of section 244 of the Act, it is absolutely clear that interest starts running after the expiry of three months from the end of the month in which the order under section 241 of the Act is passed by the Commissioner of Income-tax and as in the present case the Commissioner of Income-tax had passed three orders one on September 30, 1977, the second on May 15, 1978, and the third on July 31, 1978, withholding the refu....

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....led by the existing sections 241 and 244(2) of the Act and two views were conceivable therefore, rectification proceedings were not valid. We have given our anxious consideration to the various pleas raised by learned counsel for the parties and find that it is not in dispute that to give effect to the Tribunal's order dated June 30, 1976, which was passed relating to the assessment years 1962-63, 1970-71 and 1971-72 refund of Rs. 11,44,656 became due to the assessee. This refund of Rs. 11,44,656 was withheld under section 241(2) of the Act by three orders dated September 30, 1977, May 15, 1978, and July 31, 1978. Under sub-section (2) of section 244 of the Act interest for a period of three months from the end of the month in which the ....