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Issues Involved: Determination of entitlement to interest on refunded amount u/s 244 of the new Act for assessments completed under the old Act after the commencement of the new Act.
Summary: The judgment by the High Court of GAUHATI involved the question of whether interest should be paid on the amount refunded to assessees assessed under the old Act after the commencement of the new Act. The assessees had filed returns for the assessment year 1960-61, with assessments made after the new Act came into force. The appeals against the assessments were allowed in 1967, and refunds were made in 1972, leading to the issue of interest entitlement. The assessees contended that u/s 244 of the new Act, they were entitled to interest on the refund, citing section 297(2)(i) of the new Act to support their case. The Revenue argued that the law applicable to assessments is that which was in force during the assessment year, unless expressly provided otherwise. They referred to previous judgments to support their stance that no interest was payable under the old Act, hence no entitlement for the assessees. The court considered whether interest on refunded amounts could be considered part of assessment proceedings, referring to the Income-tax (Removal of Difficulties) Order, 1962, which included proceedings related to refund claims as part of assessments. The court ultimately ruled in favor of the assessees, stating that interest should be granted to them. They highlighted previous cases where interest was awarded in similar contexts, emphasizing that citizens are entitled to interest due to delays even without specific statutory provisions. The court decided that interest would accrue after three months from when the refund became payable, following the guidelines of section 244 of the new Act. The rate of interest payable would be as applicable under the new Act at the relevant time. The judgment made the rule absolute in favor of the assessees, with each party bearing their own costs.
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