Refund, period of limitation of three months, how to compute - Income Tax - 514/CBDT

INSTRUCTION NO. 514/CBDT Dated : Feburary 24, 1973 Section(s) Referred: 244 Statute: Income - Tax Act, 1961 Section 244 provides that interest would become payable if the Income-tax Officer does not grant the refund within a period of three months from the end of the month in which the appellate order by which a refund becomes due is passed. The question however arises whether in a case where the original assessment has been set aside by Appellate Assistant Commissioner, the interest should be payable after three months of the date of Appellate Assistant Commissioner's order or from the date when the assessment was reframed by the Income Tax Officer. In this connection, the position is clarified as under:- The order passed in appeal might take different forms. There would be no difficulty when the order itself directs that a particular sum should be refunded. Similarly, a tax would become refundable as a consequence of the appellate order if all that is required is recomputation of the tax due on the basis of the instruction given in the appellate order, such as the deletion of certain additions or the allowing of certain deductions and the like. When the entire assessment is set aside, then except in the case of tax deducted at source and the like, the moneys payable on the basis of the assessment as such would become refundable. On the other hand, if the appellate authority directs the Income-tax Officer to make certain enquiries and to come to a decision on a particular point and refund becomes due only if the Income-tax Officer comes to a particular decision, then the refund cannot be said to be due as a result to the appellate order, but only as a result of the further enquiry and decision. In that event, the time for refund would commence from the date the Income-tax Officer comes to the particular conclusion.