1. We are of opinion that the conclusion of the Commissioner of Income-tax, Madras, is correct, though his reasoning is not acceptable. The petitioner is a public limited company doing business in general insurance. In respect of the assessment year 1954-55, the claim for depreciation written off of buildings, air conditioning plants, lifts, etc., was allowed only to the extent of 1/5th. The result of the assessee's appeal was that the entirety of the depreciation was disallowed and the charge was enhanced. The Tribunal restored the first order with which this court on a reference had concurred. The Supreme Court in Civil Appeal No. 816 of 1963, Pandyan Insurance Co. Ltd. v. Commissioner of Income-tax : 55ITR716(SC) . however, held that the petitioner was entitled to the allowance of the entire amount of depreciation which had been written off in its accounts in the previous year relevant to the assessment year. On December 16, 1964, the Tribunal passed a consequential order under Section 66A(4). As a result, the petitioner became entitled to a refund of a substantial amount which was paid on January 31, 1955, which was within six months of the date of the order entitling the petitioner to refund. The petitioner thereafter claimed interest from January 31, 1955, to the date of refund under the proviso to Sub-section (7) of Section 66 of the Income-tax Act, 1922, at 6 per cent. on the amount of tax paid in excess. The Commissioner disallowed the claim, and this petition is to quash the order.
2. The petitioner relies on Section 297(2)(c) and contends that, since the reference to this court and the appeal to the Supreme Court were all under the provisions of the earlier Act, it should necessarily follow that the assessee would be entitled to the benefit of the refund provisions therein. It is also said that none of the Sections 240 to 244 in the new Act will apply as they all relate to proceedings under its provisions. We do not think that the argument is sound. This is a case where the assessment was completed before the commencement of the Act. We do not accede to the argument that the assessment should be taken to have been completed only when the Supreme Court rendered its judgment. Further, the refund in consequence of the Supreme Court's judgment fell due after the commencement of the new Act. The first requisites for the application of Section 297(2)(i) are, therefore, satisfied. That being the case, this provision is clear that to such a case the provisions of the new Act relating to interest payable by the Central Government on refunds shall apply. In view of this provision, the intention of which appears to be that the interest on refund in respect of the assessment completed before the commencement of the new Act and on refund which fell due after its commencement, should entirely be governed by the provisions of the new Act, the words ' other proceedings under this Act ' in Section 240 and the following sections should be understood accordingly. That is because this group of sections is designed to apply under the scheme of the Act to appeals or proceedings under the provisions of the new Act, but where the matter relates to an assessment completed before the commencement of the new Act, and the refund became due after the commencement of the Act, those provisions are qualified by Section 297(2)(i), so as to make them apply to such a situation. On that view, since the refund indisputably had been made within six months of the order which directed it, there is no liability on the part of the department to pay interest. That was the view of the Commissioner, but we confirm it on the reasoning we have outlined supra,
3. The petition is dismissed with costs. Counsel's fee, Rs. 250.