TMI Blog1985 (4) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... x. This contention was not accepted by the Income-tax Officer and the petitioner was required to deposit the amount of tax payable on the footing that the sale proceeds of the said logs were revenue receipts. The appeals preferred by the petitioner before the Appellate Assistant Commissioner as well as the second appeals preferred to the Income-tax Appellate Tribunal were dismissed. The appeals in respect of the assessment years 1950-51 and 1951-52 were dismissed by the Tribunal on November 17, 1962, and the appeal in respect of the assessment year 1953-54 was dismissed by the Tribunal on November 19, 1962. Pursuant to the application for reference made by the petitioner, certain questions of law were referred by the Tribunal to this court by its order dated August 2, 1963. These questions of law were answered by this court in Bombay Burmah Trading Corporation Ltd. v. CIT [1971] 81 ITR 777 (in Income-tax Reference No. III of 1963) on April 22/24, 1970 in favour of the petitioner. It was held by this court that on the facts and circumstances of the case, the receipts in question were of capital nature and not chargeable to income-tax. The cases were referred back to the Tribunal to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income-tax in respect of the period for which interest was to be paid, but the discretion lay with the Commissioner only in respect of the rate of interest which was payable. In arriving at this conclusion, the learned trial judge relied upon the decision of the Madras High Court in Ajax Products Ltd. v. CIT [1973] 91 ITR 327, with which the learned judge expressed his full agreement. Following the said decision, the learned judge took the view that the petitioner was entitled to interest from the respective dates of the orders of the Tribunal in respect of the appeals relating to the said assessment years, namely, November 17, 1962, and November 19, 1962, respectively, at the rate of 6 per cent. per annum till the date of payment. It is the correctness of this judgment which is sought to be assailed by the Department in this appeal. The submission of Mr. Jetly, learned counsel for the respondents to the petition (appellants herein), is that as far as the question of interest on the amount refunded is concerned, that question has to be decided in accordance with the provisions of the Income-tax Act, 1961, which came into force on April 1, 1962. It is pointed out by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as pointed out that the only question that arose for decision in the appeal before the Supreme Court was whether the assessee was entitled to claim interest on the refund which became due to him on the strength of the decision of the Supreme Court. The Supreme Court then observed as follows (at p. 580-81): " The assessment in this case was completed long before the Income-tax Act, 1961, came into force. Under these circumstances, this case clearly comes within the scope of section 297(2)(i) of the Income-tax Act, 1961, and not under section 66(7) of the Indian Income-tax Act, 1922. Under the new Act, there is no provision for payment of interest unless the same comes within the scope of section 243 of that Act. It is not the case of the assessee that the facts of this case come within the scope of section 243. " The facts of that case were that the assessee claimed relief under section 25(3) of the Indian Income-tax Act, 1922 (referred to hereinafter as " the Act of 1922 "). That claim was rejected by the Income-tax Officer and the Appellate Assistant Commissioner. The Tribunal granted relief in respect of business income but not with respect to rental income from the house pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill the time when the refund was actually paid. In our view, this submission cannot be sustained. Clause (c) of section 297(2) deals with a case where any proceeding is pending on the commencement of the Act of 196 1, namely, on April 1, 1962, before any income-tax authority, the Appellate Tribunal or any court by way of appeal, reference or revision. It is quite clear that the claim for interest made by the petitioner could not be said to be a proceeding by way of appeal, reference or revision nor was any such claim pending on April 1, 1962, and hence we fail to see how the provisions of clause (c) of sub-section (2) of section 297 can apply at all. Mr. Ganesh cited before us the decision of the Supreme Court in the case of CWT v. Vimlaben Vadilal Mehta [1984] 145 ITR 11, where it has been held that it is well settled that when an appeal is filed against an assessment order before the Appellate Assistant Commissioner, the assessment is thrown open and the appellate proceeding constitutes a continuation of the assessment proceeding. We fail to see what relevance this decision has to the question before us. Even assuming that the assessment was only concluded when the appeals of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been pointed out to us which would compel us to come to such a conclusion. We may also mention that before delivering this judgment, we heard Mr. Dwarkadas who is appearing for an assessee in a similar appeal which is on Board, although in that case the assessee represented by Mr. Dwarkadas is the appellant and not the respondent as herein. Mr. Dwarkadas drew our attention to the provisions of the Income-tax (Removal of Difficulties) Order, 1962. Clause 4 of this order, very briefly stated, provides that a proceeding by way of appeal, reference or revision in respect of any order made under the Act of 1922 shall be instituted and disposed of as if the repealing Act, namely, the Act of 1961, had not been passed. We fail to see how the provisions of this clause make any difference to the conclusion to which we have arrived. In the result, we are of the view that the learned trial judge was in error in coming to the conclusion that the question of interest was governed by the provisions of section 66(7) of the Act of 1922. He was probably led to this error by reason of the fact that the decision of the Supreme Court in the case of 0. RM. M. SP. SV. P. Panchanatham Chettiar [1975] ..... X X X X Extracts X X X X X X X X Extracts X X X X
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