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Issues:
1. Interpretation of provisions under the Companies (Profits) Surtax Act and Income-tax Act regarding the payment of interest on refunds. 2. Determination of whether interest should be paid to the assessee for the period between tax payment and refund under section 244(1A). 3. Consideration of the applicability and interpretation of Circular No. 209 issued by the Central Board of Direct Taxes. 4. Analysis of the second proviso to section 244(1A) and its impact on the liability for interest payment. Analysis: The judgment of the High Court of Madras involved a dispute regarding the payment of interest on refunds to an assessee under the provisions of the Companies (Profits) Surtax Act, 1964, and the Income-tax Act, 1961. The Revenue sought a direction for reference on the question of law concerning the entitlement of the assessee to interest under section 244(1A) of the Income-tax Act. The Commissioner of Income-tax had directed the withdrawal of interest paid to the assessee, considering it prejudicial to the Revenue's interests. However, the Tribunal held that the assessee was entitled to interest from the date of tax payment to the date of refund, deducting only one month as per the proviso in section 244(1A). The Tribunal's decision was based on the interpretation that section 244(1A) is an independent provision, and the exclusion of interest payment for one month applies regardless of the timeliness of the refund. The Tribunal referred to Circular No. 209, expressing the view that interest is payable to the assessee irrespective of the refund timing. The High Court declined to direct a reference, supporting the Tribunal's interpretation of section 244(1A) and emphasizing a taxpayer-favorable construction. The Court highlighted the difference between sections 244(1) and 244(1A) in determining the assessee's entitlement to interest, ultimately upholding the Tribunal's decision and dismissing the Revenue's petitions. The Court rejected the Revenue's argument that interest liability arises only for delayed refunds beyond one month from the order date, emphasizing the legislative intent to grant interest to the assessee from the tax payment date, except for a one-month period. The judgment underscored the importance of interpreting tax provisions favorably for taxpayers and upheld the Tribunal's decision as correct based on the clear language of section 244(1A). Consequently, the Court dismissed the tax case petitions and awarded costs to the prevailing party.
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