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ii) Interest u/s 214(1) of the Act at 12% p.a. on Rs. 34,78,800/-

for the period 1.4.1978 to 27.3.1981 (u/s 143(3)) 12,17,580

iii) Int. u/ss 244(1A) on Rs.

       34,78,800/- (R.O. issued on 23/4/1986)

From 1.4.1981 to 30.9.1984 @ 12%			          		14,61,096

From 1.10.1984 to 31.3.1986 @ 15%			            		7,82,730
								       ------------------
								          42,38,846

Interest granted on 28.11.1986					1,73,940
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Interest payable to the assessee				         40,84,906

27/3/1998
								 Sd/-
							(Surinder Jit Singh)
						 Dy. Commissioner of Income Tax
							   Spl.Rg.2, Pune"

Mr. Mohan Parasaran submitted that in the present case, the Assessing Officer did not grant interest to the assessee as per his claim and the Assessing Officer's stand was upheld by the C.I.T. Pune vide his order dated 28.02.1990 under Section 264 and it can be seen that the order under Section 264 passed by the CIT is as per the position of law as it then was and before the decision of this Court and that the decision of Modi Industries Ltd. Case (supra) had been given in 1995 and this Court has only clarified the position regarding payment of interest under Sections 214 and 244(1A). This Court's decision was received on 29.09.1997. Under such circumstances, it cannot be said that the Department had wrongfully withheld the assesse's money without any authority of law and naturally such a conclusion cannot be drawn. The C.I.T. Pune had considered and judiciously interpreted the provisions of Sections 214 and 244 (1A) as per the established position of law as on that date i.e. 28.02.1990 and on the assessee's reference this Court had issued directions after seven years i.e. on 29.09.1997 which should have been expeditiously complied with as the monies were refunded to the assessee after the direction of this Court, the question of granting interest for the period the matter was sub judice, does not really arise. Mr. Mohan Parasaran has not cited or relied on any other judgment except Modi Industries Ltd. Case (supra). It was further submitted that interest payable on the refund amount under Section 244(1) is a simple interest at the rate specified therein and neither compound interest nor interest on interest is payable and that under Section 244(1A) no further interest will be payable under Section 244(1) for the same period and on the same amount and that there is no provision in the Act for payment of interest on interest.

The High Court through a detailed analysis and study of relevant case law correctly rejected the alternative claim of the appellant by following the decision of this Court in the case of Modi Industries case (supra), wherein the scope of Section 214 of the Act was discussed and it was held that there is no right to get interest on refund except as provided by statute. This Court was pleased to pass the order of remand on 30.4.1997 directing the Commission of Income Tax Pune, to consider the Revision Petition in the light of the decision in the case of Modi Industries. By order dated 29.9.1997, the Commissioner of Income Tax, Pune, directed the payment of interest according to the decision in Modi Industries case and in pursuance thereto the Dy. Commissioner of Income Tax (SR-2), Pune, passed order dated 27.3.1998 giving effect to the order of the CIT dated 29.9.1997 and granted interest to the tune of Rs. 40,84,906/- in addition to Rs. 1,73,940/- which had already been paid on 28.11.1986, thereby totalling the interest amount to Rs. 42,38,846/-. This interest was calculated strictly as per the provisions of Section 214 read with Section 244(1A) of the Act. Hence it is vehemently denied that the Department has ever enjoyed any funds of the appellant rather in all fairness and in strict accordance with the statute, the interest on the refund has been paid to the appellant.