This is departmental appeal against order of Commissioner (Appeals) and relates to assessment year 1977-78. grounds are as under: "1. On facts and in circumstances of case, Commissioner (Appeals) IX, New Delhi, erred in holding that interest under section 214 was admissible. 2. On facts and in circumstances of case, Commissioner (Appeals) IX, New Delhi, erred in holding that interest under section 244(1) was also admissible on refund which comprised of interest under sections 214 and 244(1A)." 2. original assessment in this case was made on income of Rs. 8,50,52,900. At time of completion of assessment, there was no occasion to consider allowance of interest under section 214 of Income- tax Act, 1961 ('the Act') to assessee as advance tax paid was not sufficient to cover demand raised by ITO. assessee had filed appeal before Commissioner (Appeals), who by order dated 7-3-1981 allowed certain relief to assessee. ITO gave effect to order of Commissioner (Appeals) on 31-3-1981. 3. assessee approached ITO with application under section 154 o f Act and requested for correction of those mistakes. ITO passed rectification order on 27-3-1982 and worked out total relief allowed by Commissioner (Appeals) at Rs. 3,08,65,132 which reduced total income to Rs. 5,41,87,768. ITO then proceeded to work out assessee's liability and adjusted advance tax paid and found that there was refund of Rs. 3,52,593 after adjustment of advance tax paid by assessee. Apart from above, credit was given for other collections as adjustments. ITO further worked out interest under section 244(1A) of Act at Rs. 8,71,456 and worked out total refund at Rs. 16,47,145, after adjustment of refunds already adjusted earlier. 4. assessee filed appeal before Commissioner (Appeals) and took following grounds: "(i) not allowing interest under section 214 of Act in respect of amount of Rs. 3,52,593 which represents part of advance tax paid by appellant, (ii) calculating interest under section 244(1A) of Act up to date of appellate order only whereas same should have been calculated up to date of refund vouchers, and (iii) not granting interest under section 244(1) of Act on full amount of refund due as result of appellate order." 5. Commissioner (Appeals) upheld assessee's contention that interest under section 214 was to be allowed at time of giving effect to Commissioner (Appeals) order. He relied on decision of Madras High Court in case of Rayon Traders (P.) Ltd. v. ITO [1980] 126 ITR 135 Calcutta High Court in cases of Chloride India Ltd. v. CIT [1977] 106 ITR 38 and General Fibre Dealers Ltd. v. ITO [1979] 116 ITR 40. He noted decision of Kerala High Court in case of N. Devaki Amma v. ITO [1980] 122 ITR 272 but in view of other decisions, he held that interest under section 214 was admissible up to date of grant of refund as provided under section 214(2). 6. On other two grounds Commissioner (Appeals) held that interest under section 244(1A) was to be allowed up to date of refund voucher and he further held that interest under section 244(1) was to be, allowed on full amount of refund, due as result of appellate order. 7. It is in above circumstances that department has come in appeal and has raised grounds which are given in paragraph 1 above. 8. departmental representative has submitted that provisions of section 214(1) was very clear and it provides for payment of interest by Government from 1st April following financial year in which advance tax was paid to date of regular assessment. It was contended that regular assessment was first assessment made by ITO and section 214 did not assessment was first assessment made by ITO and section 214 did not contemplate grant of interest up to date of refund after passing of appellate order in case. It was contended that interest under section 214 has to be paid only on date of regular assessment and not on happening of any other event like passing of appellate order or reduction of demand by any other proceeding. It was contended that advance tax losses its character after regular assessment is made and after that it assumes character of regular payment, to which provisions of section 214 are not applicable. He submitted that there were certain decisions on question of meaning of words 'regular assessment' and certain High Courts have held that interest under section 214 was payable after passing of appellate order. He, however, kly relied on decision of Delhi High Court in case of National Agricultural Co-operative Marketing Federation of India Ltd. v. Union of India [1981] 130 ITR 928. In this case it was held that expression 'regular assessment' in section 214 should be construed as referring only to first or initial regular assessment and not to subsequent modifications thereof. In this case it was further held that payment of advance tax has material significance only till initial regular assessment is made add thereafter it had no separate existence by itself but gets merged in tax demand payable by assessee. Delhi High Court had further held that when regular assessment is made in first instance, advance tax paid earlier is treated as having been paid in pursuance of regular assessment and in satisfaction thereof. advance tax paid earlier gets converted into payment on date of initial assessment of tax due for assessment year. Relying on above judgment, it was stated that Commissioner (Appeals) should not have allowed interest under section 214 beyond date of regular assessment or after taking into consideration appellate orders. 9. In support of other ground, departmental representative submitted that Commissioner (Appeals) had in last sentence of his order directed that interest under section 244(1) was admissible on full amount of refund due as result of appellate order. It was pointed out by departmental representative that extent of refund to assessee consisted of interest under section 214 or interest under section 244(1A), no further interest could be allowed under section 244(1). This, he submitted, would amount to allowance of interest on interest, which was not admissible under law. It was pointed out that though Commissioner (Appeals) has not used words interest on interest, his order would result in such grant of interest and this was not legally correct. It may be mentioned that departmental appeal is not directed against order of Commissioner (Appeals) in respect of grant of interest under section 244(1) till date of refund voucher. 10. learned counsel for assessee submitted that on first ground, matter was covered by decision of Delhi High Court which had been relied upon by departmental representative. He submitted that though Delhi High Court had held that expression 'regular assessment' in section 214 referred only to first or initial regular assessment, they have also held that reading sections 214(2) and 244(1A) together, interest is payable on refund of advance tax due to assessee from date of initial payment not only up to date of initial assessment but right up to date on which refund was actually made. He further pointed out that in present case all payments by way of advance tax have been made after 31-3-1975. It was, therefore, contended by him that interest under section 214 has rightly been allowed as result of order giving effect to order of Commissioner (Appeals) and such interest is payable up to date of refund. 11. On other question, learned counsel referred to provisions of section 244(1). He pointed out that interest under that sub-section was on all refunds and there was no description of refund and interest, if any, which has become payable would also be part of refund. He, therefore, submitted that if ITO has not allowed any interest which is due to assessee under law, ITO is bound to pay him further interest on whole amount of refund under section 244(1A). In this connection, he drew our attention to various dates on which various orders had been passed and also explained assessee's claim in respect of interest. He contended that section 244 does not exlude possibility of interest on interest, if such interest has become due as refund to assessee. 12. We have carefully considered rival arguments and we have gone through various judgments in this connection. There is no doubt that regarding scope of section 214, there has been considerable difference of opinion between High Courts. This difference of opinion has been brought out in judgment of Bombay High Court in case of CIT v. Carona Sahu Co. Ltd. [1984] 146 ITR 452. This is judgment of Full Bench of Bombay High Court. In this judgment Bombay High Court has dissented from judgment of Kerala High Court in case of N. Devaki Amma and decision of Calcutta High Court in case of Chloride India Ltd. They have further partly overruled their earlier decision in case of Associated Cement Cos. Ltd. v. CIT [1983] 141 ITR 318 (Bom.). Their Lordships of Bombay High Court have held that expression 'regular assessment' in section 214(1) can be only initial assessment made by assessing, officer and in this connection they made reference to section 214. High Court held that assessee was entitled to get interest under section 214 on excess amount of advance tax determined only by first order of regular assessment and not on any subsequent revision of assessment on basis of appellate order. They referred to earlier decision in case of Sarangpur Cotton Mfg. Co. Ltd. v. CIT [1957] 31 ITR 698 (Bom.) and decision of Allahabad High Court in case of Lala Laxmipat Singhania v. CIT [1977] 110 ITR 289 and have further referred to decision of Delhi High Court in case of National Agricultural Co-operative Marketing Federation of India Ltd. We have referred to above decision to bring out controversy in this matter. Their Lordships further held that section 214(2) did not extend date for grant of interest up to issue of refund voucher. It has been pointed out that section 214(2) refers to refunds granted in Chapter XVII of Act and not to refund which are granted under Chapter XIX of Act dealing with refunds. 13. We would have been called upon to go into various judgments on this matter and would have come to specific conclusion but we have before us t h e decision of Delhi High Court in National Agricultural Co-operative Marketing Federation of India Ltd.'s case which decides controversy in first ground raised by department. As pointed out above, Delhi High Court has also held that regular assessment means initial assessment and not any other order passed later on. In this connection, they have taken into consideration other provisions including provisions of section 215 of Act. Delhi High Court held that if assessee's claim of interest had depended only on interpretation of above expression, their Lordships would have had to reject claim. However, their Lordships considered provisions of section 214(2) as well as section 244(1A) and held that assessee becomes entitled to interest up to date on which refund is made. Their Lordships have considered provisions as follows: "The second provision to which we would like to refer is provision contained in section 244(1A) which has also been extracted earlier. This is new provision introduced by Finance Act of 1975. It provides that where payments of tax are made by assessee after March 31, 1975, he would be entitled to interest in respect of such payments to extent they are refunded on being found to be in excess of amount of tax ultimately found due as result of appeal, revision, reference or rectification. Such interest is payable from date of payment of excess amounts right up to date of refund. This has altered previous position as stated in earlier part of discussion. It would be recalled that while dealing with interpretation of expression 'regular assessment', we have laid emphasis on important consideration that it would be anomalous for assessee to obtain interest on advance tax paid by him between date of first assessment and its subsequent revision while assessee who has paid tax on first assessment being made is not entitled to any such interest. present provision amends this position and enables assessee to get interest on tax paid by him in pursuance of original assessment after March 31, 1975. If we review position regarding interpretation of section 214 in light of this provision, one of two results will have to follow. One will be that expression 'regular assessment' should be construed as referring to revised regular assessment and if this interpretation is adopted then both assessees one who paid tax in advance, and one who pays it in pursuance of initial assessment, will be equally placed, with small difference that former, apart from section 214(2), will get interest only till date of revised regular assessment while later will get it up to date of refund. In other words, interpretation which we have arrived at earlier would need to be revised. second alternative is to read this section harmoniously with provisions contained in Chapter XVII-C and in particular section 219. Acting on logic we have followed in our earlier discussion that payment of advance tax has material significance only till initial regular assessment is made and that thereafter it has no separate existence by itself by gets merged in tax demand payable by assessee, it would be seen that even payment of advance tax can be worked into provisions of section 244(1A). On language of section 219 advance tax paid is treated as payment of tax for assessment year and is given credit for at time of regular assessment. This means that when regular assessment is made in first instance advance tax paid earlier is treated as having been paid in pursuance of regular assessment and in satisfaction thereof. Thus, advance tax paid earlier will get converted into payment on date of initial assessment of tax due for assessment year. Carrying this fiction to its logical extent assessee must be held entitled to interest on amount of advance tax also to extent it is found refundable from date of excess payment right up to date of actual refund. In either view of matter, assessee placed in circumstances in which he is placed in present case, would be entitled to claim interest on excess advance tax paid by him from date of payment up to date of refund. In present case, though advance tax was originally paid during financial year 1972-73 initial assessment was made in 1976, and for reasons which we have mentioned above, this should be treated as having been converted into tax payment on date of initial regular assessment. Reading, therefore, sections 214 and 244(1A) together, assessee would be entitled to interest on refund due to him from date of initial payment right up to date on which refund is actually made. We are conscious that there is strain on language of section 244(1A) i n giving interpretation referred to above. We have also pointed out difficulties in way of interpretation of section 214(2) as solution to issue in present case. However, above interpretations of sections 214 and 244(1A) would be justified on principle of equity and equality. Moreover, in case of section 214(2) that would be only way of giving effect to provision. In case of section 244(1A), sense of artificiality in interpretation will disappear if we realise that we are only giving full and logical effect to statutory fiction contained in section 219. We have, therefore, come to conclusion that though words 'regular assessment' have to be interpreted as referring to initial regular assessment only, writ petitioner, in present case, was justified in claiming interest even beyond date of initial regular assessment. Strictly speaking, on our construction of relevant statutory provisions, he will be entitled to interest right up to date on which refund is made to him consequent on appellate order. However, he has limited his claim of interest only up to date on which assessment was revised consequent on order of AAC and this has to be accepted. We, therefore, allow writ petition, quash orders of ITO, AAC and Commission dated March 8, 1978, May 15, 1978 and May 31, 1971, respectively, and direct Commissioner to allow assessee interest on basis of claim made before him. word of explanation before we conclude. It will be seen that our ultimate decision to allow writ petition is based on sections 214(2) and 244(1A) and does not depend upon meaning of words, 'regular assessment', to discussion of which large part of this judgment has been devoted. We have, however, decided to retain earlier portions of judgment not merely to do justice to arguments before us which mainly revolved round language of section 214 but also because it seems to us that conclusion we have arrived at may appear incomplete without understanding of process by which we have come to place what may appear strained interpretation of sections 214(2) and 244(1A). That apart, discussion will still be of relevance for purposes of section 215 and for other situations. So we have decided to let whole discussion remain and to express our thoughts and conclusion on problem of interpretation that has given rise to such conflict of judicial decisions . . . ." From above discussion it would appear that their Lordships of Delhi High Court have held that reading sections 214 and 244(1A) together assessee would be entitled to interest on refund due to him from date of initial payment right up to date on which refund is actually made. Thus, according to their Lordships, interest under section 214 gets extended up to later date in view of provisions of section 214(2) and section 244(1A). There later date in view of provisions of section 214(2) and section 244(1A). There is some basic difference between section 214 and section 244(1A). While section 214 grants refund on advance tax paid found in excess of actual demand from 1st April following financial year, section 244(1A) refers to refund which is granted as result of appellate order and where amount had been paid by assessee after 31-3-1975. It is also provided that amount must have been paid in pursuance of order of assessment or penalty and such amount having been found in excess of amount which such assessee is found liable to pay as tax or penalty. According to their Lordships of Delhi High Court, whereas under section 214(1) interest works up to date o f regular assessment under section 214(2) read with section 244(1A), further interest has to be granted on excess worked out in accordance with provisions of section 244(1A). It may also be noted that interest under section 244(1A) would not be payable if refund is granted within month from date of passing order in appeal or other proceedings. According to decision of Delhi High Court, when advance tax is adjusted that can be treated as date of payment of tax and if part of such payment becomes refundable as result of appellate order, such refund is entitled to interest under section 244(1A). It may also be noted that section 244(1A) is not confined to advance tax but to all payments made and as according to Delhi High Court, advance tax is treated as regular payment on date of regular assessment, interest under section 244(1A) becomes payable on such payment from date of such adjustment. 14. We have shown above that interest under section 244(1A) as allowed by Commissioner (Appeals) is not in appeal before us. Having regard to ratio of decision of Delhi High Court in National Agricultural Co-operative Marketing Federation of India Ltd.'s case we hold that interest under section 214 has rightly been allowed by Commissioner (Appeals) up to date of grant of refund as result of passing of appellate order. 15. This brings us to second ground taken by department. department objects to grant of refund under section 244(1) on whole amount of refund due as result of appellate order. Specific mention has been made in ground to allowance of interest on interest under sections 214 and 244(1A). Though learned Commissioner (Appeals) has not said it in s o many words, this is how his order has been interpreted by both sides. This is confirmed by working of ITO and working of assessee placed before us. departmental representative has submitted that there is no justification for allowing interest on interest of any kind and there was no provision for such allowance. According to department, no interest whatsoever was admissible under section 244(1) in this case and whatever interest is due has to be paid under section 244(1A). 16. learned counsel for assessee, on other hand, has drawn our attention to assessee's working of interest under section 244(1) and in it he has worked out interest on interest under section 214 and also interest on additional interest under section 244(1A). According to learned counsel for assessee, such interest comes to Rs. 3,59,669. He submitted that this interest has become due under section 244(1) from 1-7-1981 after end of three months from 7-3-1981, i. e., date of appellate order up to date of grant of refund voucher, whenever it is granted. He has also referred to earlier order of Tribunal in IT Appeal No. 2378 (Delhi) of 1982 in assessee's case relating to assessment year 1971-72. 17. We have carefully considered rival contentions. For deciding this issue, we have to consider background of provisions of sections 244(1) and 244(1A). Under section 244(1) interest was payable by Central Government to assessees for period of delay in grant of refund in such cases beyond three months from end of month in which appellate order, etc., giving rise to refund is passed. Thus, prior to introduction of section 244(1A), person who pays disputed amount of tax found his money locked up with Government without interest as long as his appeal remained undecided. After appeal was disposed of, no interest was payable for three further months from end of month in which appellate order was passed. Thus, amount of excess payment remained with Government without payment of any interest. 18. It was on recommendation of Wanchoo Committee that sub- section (1A) was inserted in section 244 by Taxation Laws (Amendment) Act, 1975, with effect from 1-10-1975. This sub-section provides that interest at rate of 12 per cent per annum shall be payable on amount in excess for entire period from date of payment to date of refund minus one month. T h e conditions for earning this interest under section 244(1A) are that payments of disputed amount of tax was made as result of order of assessment or penalty duly passed and such payment must have been made on or before 1-4-1975. It has been specifically provided that where any interest is payable to assessee under this sub-section, no interest under sub-section (1) shall be payable to him in respect of amount so found to be in excess. Thus, insofar as excess payment found as result of appeal is concerned, section 244(1A) extended larger benefit to taxpayers and was in substitution of such interest under section 244(1). In other words, where larger benefit is given to assessee under section 244(1A) again interest has not to be allowed o n excess under section 244(1). In present case as all payments were made after 1-4-1975, interest became payable under section 244(1A) and, thus, no interest under sub-section (1) shall be payable in respect of amount found to be in excess. 19. On reading of provisions providing for interest whether it was under section 214 or section 244(1) or 244(1A), it is found that law has provided for payment of 'simple interest'. Thus, whenever interest has to be calculated, it has to be calculated according to provisions of that section up to date specified in that section but only simple interest has to be charged. There is no provision which justifies claim or grant of further interest under another sub-section on interest which is worked out under one sub-section. In case department does not grant refund to assessee on passing of appellate order, refund due continues earning interest till grant of refund. However, such interest is only simple interest under that provision. In our considered opinion, law having provided for grant of simple interest in all situations, there would be no justification for allowing further interest under section 244(1) on interest allowed under section 214 or section 244(1A). All provisions have to be read harmoniously and we have to give natural meaning to words 'simple interest' and also specific provision for non- allowance of interest under sub-section (1) when interest is payable under sub- section (1A) of section 244. We would, therefore, hold that Commissioner (Appeals) was not justified in directing allowance of interest under section 244(1) insofar as it related to allowance of interest on interest under sections 214 and 244(1A). This ground of department is, therefore, accepted. ITO is directed to work out interest under various provisions in accordance with directions in our order. 20. appeal is allowed in part. *** INCOME TAX OFFICER v. J.K. SYNTHETICS LIMITED