In these appeals, assessee had challenged common order of CIT(A)-III, Pune, dt. 30th Jan., 1995 for asst. yrs. 1989-90, 1990-91 and 1991-92, respectively. As most of issues in these appeals are identical, hence these appeals were heard together and are now being disposed of by this common order for sake of convenience. In all these three appeals, by separate applications dt. 22nd Dec., 2004, t h e assessee has prayed for admitting additional grounds which are as under: (a) In ITA No. 4868/Mum/1995, assessee has taken following additional ground: "That on facts and in circumstances of case, on grant of further interest under s. 244A as prayed for, appellant would be entitled to interest for delay in grant of interest and hence AO may please be directed to allow interest on delay in grant of interest under s. 244A." (b) In ITA No. 4869/Mum/1995, following additional grounds are taken by assessee: "1. That on facts and in circumstances of case, appellant is entitled for exclusion of interest on tax-free debentures and NSC in computing book profit as per provisions of s. 115J and hence AO may please be directed to exclude interest on tax-free debentures and NSC in computing book profit as per provisions of s. 115J of Act. That on facts and in circumstances of case, on grant of further interest under s. 244A as prayed for, appellant would be entitled to interest for delay in grant of interest and hence AO may please be directed to allow interest on delay in grant of interest under s. 244A." (c) In ITA No. 4870/Mum/1995, assessee has taken following additional ground: "That on facts and in circumstances of case, on grant of further interest under s. 244A as prayed for, appellant would be entitled to interest for delay in grant of interest and hence AO may please be directed to allow interest on delay in grant of interest under s. 244A." On admission of additional grounds, we have heard learned Authorised Representative of assessee and learned Departmental Representative for Revenue. learned Authorised Representative submitted that additional grounds taken by assessee are purely legal grounds for decision of which all facts are on record. He relied on precedent in case of National Thermal Power Co. Ltd. vs. CIT (1999) 157 CTR (SC) 249: (1998) 229 ITR 383 (SC). On other hand, learned Departmental Representative vehemently opposed admission of additional grounds taken by assessee. We have heard rival submissions of parties on admission of additional grounds. We have also carefully considered additional grounds taken by assessee in all these three appeals. We are of opinion that additional grounds taken by assessee are purely legal grounds in view of decision of Supreme Court in case of National Thermal Power Co. Ltd. (supra), if additional grounds taken by assessee are legal grounds and if facts are on record, though said grounds were not taken before lower authorities, same can be admitted. We, therefore, admit additional grounds taken by assessee. Now, we are taking up appeal relating to asst. yr. 1989-90 being ITA No. 4868/Mum/1995. In concise grounds filed by assessee, four grounds are taken, but first issue is whether CIT(A) erred in upholding action of AO for granting interest under s. 244A(1) of Act from date on which TDS certificates were furnished by assessee. facts of this case are in narrow compass. assessee, public limited company filed its return of income on 28th Dec., 1989. return filed by assessee was initially processed under s. 143(1)(a) of Act vide intimation dt. 30th March, 1990. AO worked out amount refundable at Rs. 7,57,129. AO did not give credit in respect of claim of assessee regarding TDS. Subsequently, assessee s case was taken up for scrutiny and completed under s. 143(3) of Act vide order dt. 27th Feb., 1992. It appears that while filing return, assessee has filed Form No. 30 claiming total refund of Rs. 57,01,613. As per assessee pre-paid taxes include amount of TDS which was Rs. 27,35,132. assessee did not furnish original TDS certificates but only photocopies of those certificates were furnished. As assessee did not furnish original TDS certificates while processing return under s. 143(1)(a), amount in respect of TDS was not considered for giving credit. assessee furnished original TDS certificates on 19th Sept., 1990. AO granted interest to assessee but that interest was computed only from date of furnishing of original TDS certificates by assessee, i.e. from 19th Sept., 1990 and not from 1st April, 1989. AO passed order under s. 154 dt. 30th Oct., 1990 and directed to give credit in respect of TDS certificates amounting to Rs. 27,35,132. As assessee was not granted interest under s. 244A(1) of Act, same was challenged before CIT(A). CIT(A) was of opinion that due t o late filing of TDS certificates, provisions of s. 244A(2) are attracted and hence, AO was right in invoking s. 244A and has rightly excluded interest for period from 1st April, 1989 to 18th Sept., 1990. At same time, CIT(A) was of view that AO should have referred question regarding period to be excluded to CIT for final decision. He, therefore, directed AO to do needful in matter and allow interest as per directions of CIT(A). Now, assessee has challenged finding of CIT(A) before us. We have heard learned Authorised Representative for assessee and learned Departmental Representative for Revenue. In this case, it is not disputed that there is delay on part of assessee in furnishing original TDS certificates. At same time, there is no dispute regarding genuineness of TDS certificates nor whether assessee is eligible for credit. Now, s. 244A(2) reads as under: (2) If proceedings resulting in refund are delayed for reasons attributable to assessee, whether wholly or in part, period of delay so attributable to him shall be excluded from period for which interest is payable, and where any question arises as to period to be excluded, it shall be decided by Chief CIT or CIT whose decision thereon shall be final." Sec. 244A provides for interest on refund of any amount that becomes due to assessee and said section is made applicable from asst. yr. 1989-90. As per provisions of sub-s. (2), if proceedings resulting in refund are delayed for reasons attributable to assessee then that dispute is to be decided by Chief CIT or CIT whose decision thereon shall be final. In this case, assessee filed Form No. 30 and along with that xerox copies of TDS certificates were filed. As far as nature of TDS is concerned, it is one of modes of collection of tax from persons from whose income deduction is made and amounts to levy on such persons as much as direct assessment would be. We are concerned herein with legislative intent depriving assessee if due to his conduct, proceedings resulting in refund are delayed for reasons attributable to assessee, then assessee is not entitled for interest under s. 244A on refund due for period of delay. On plain reading of language used in sub-s. (2) what is important is proceedings "in which refund is determined". Merely because original TDS certificates are not filed but there is no other controversy regarding genuineness of payment or whether assessee i s eligible for credit, then whether that can be said to be proceedings which are contemplated by sub-s. (2) of s. 244A of Act. Sec. 199 deals with credit to be given which puts condition for giving credit that person claiming credit should furnish certificate issued to him under s. 203 of Act. In this case, return filed by assessee was processed by AO on 30th March, 1990. At that time, as original certificates were not furnished by assessee, credit was not given, but it cannot be said that there was delay in processing return of income under s. 143(1)(a) which was attributable to assessee. Sec. 199 puts obligation on assessee to furnish original certificates for purpose of verification whether credit is rightly claimed or not. Determination of total income of assessee is first stage and thereafter only tax liability of assessee is worked out. proceedings contemplated under s. 244A(2) is that proceedings where total income of assessee is determined. There may be some controversy or dispute in respect of credit to be given to person when claim is made under s. 199. In this case, when conditions prescribed under s. 199 are fulfilled, i.e. (i) deduction is made in accordance with provisions of Chapter XVII of IT Act, and (ii) tax deducted is paid to Central Government, and once certificates furnished to him under s. 203 are produced, then credit can be given to assessee. In this case, there is no dispute regarding fulfilment of fundamental conditions. Merely there is delay in furnishing original TDS certificates. In our opinion, on facts of this case, delay in furnishing original TDS certificates cannot be treated as delay in respect of proceedings resulting in refund. We are of opinion that direction of CIT(A) to AO that he should refer matter to CIT is not as per law and not sustainable. We, therefore, set aside orders of CIT(A) on this issue and direct AO to grant interest to assessee from 1st April, 1989 till date of furnishing of original TDS certificates. next issue is whether assessee is entitled for interest under s. 244A(3) r/w s. 244A(1) from first day of assessment year to date on which refund was actually received by him. We have heard rival submissions of parties. In this case, assessee has challenged regular assessment made under s. 143(3) vide order dt. 27th Feb., 1992 by filing appeal before CIT(A) and CIT(A) disposed of appeal filed by assessee vide his order dt. 25th Feb., 1994 giving some relief to assessee. AO passed orders giving effect to order of CIT(A) which is dt. 15th March, 1994. From perusal of copy of order which is attached with appeal memo it is seen that AO has directed as under: "In view of ground No. 12 as directed by CIT(A) allow interest under s. 244A upto date of issue of refund order." grievance of assessee is that though AO passed order giving effect to order of CIT(A) on 15th March, 1994, refund was granted to it only in month of June, 1994. learned Authorised Representative relied on precedent in case of Jay Bros. Investment & Trading Co. (P) Ltd. vs. Dy. CIT (2002) 74 TTJ (Mumbai) 748. In that case, after considering relevant circular issued by CBDT, it is held that "therefore, it is proper to assume that words when refund is granted in s. 244A means date of signing income-tax refund order i.e. refund voucher". Respectfully following legal principles laid down by co-ordinate Bench of Tribunal, we direct AO to grant interest to assessee upto date of signing of refund voucher after verification as per provisions of law. next issue is whether assessee is entitled for interest under s. 244A of Act on interest on refund if there is delay in giving refund to assessee. We have heard rival submissions of parties. We have also carefully considered principles laid down in precedents relied on by learned Authorised Representative as well as learned Departmental Representative. CBDT has explained scope and effect of s. 244A in Circular No. 549, dt. 31st Oct., 1989 [(1990) 82 CTR (St) 1] as under: "Payment of interest by Department for delay in grant of refund due to assessee: old provisions regarding payment of interest by Department.: o l d provisions in IT Act, which provided for payment of interest by Department on refunds due to assessee, were contained in following sections of Act: (i) Sec. 214, relating to payment of interest to assessee on excess amount paid as advance tax. (ii) Sec. 243, relating to payment of interest to assessee for delay in granting refund after claim for refund was made or after refund was determined. (iii) Sec. 244, relating to payment of interest to assessee for delay in granting refund as result of appeal, etc. insertion of new s. 244A in lieu of ss. 214, 243 and 244.: Under provisions of s. 214, interest was payable to assessee on any excess advance tax paid by him in financial year from 1st day of April next following said financial year to date of regular assessment. In case refund was not granted within three months from end of month in which regular assessment was completed, s. 243 provided for further payment of interest. Under s. 244, interest was payable to assessee for delay in payment of refund as result of order passed in appeal, etc. from date following after expiry of three months from end of month in which such order was passed to date on which refund was granted. rate of interest under all three sections was 15 per cent per annum. These provisions, apart from being complicated, left certain gaps for which interest was not paid by Department to assessee for money remaining with Government. To remove this inequity, as also to simplify provisions in this regard, amending Act, 1987, has inserted new s. 244A in IT Act, applicable from asst. yr. 1989-90 and onwards, which contains all provisions for payment of interest by Department for delay in grant of refunds. rate of interest has been increased from earlier 15 per cent per annum to 1.5 per cent per month or part of month comprised in period of delay in grant of refund. amending Act, 1987, has also amended ss. 214, 243 and 244 to provide that provisions of these sections shall not apply to asst. yr. 1989-90 or any subsequent assessment years." Sec. 244A which is brought on statute book w.e.f. asst. yr. 1989-90 reads as under: "244A. (1) Where refund of any amount becomes due to assessee under this Act, he shall, subject to provisions of this section, be entitled to receive, in addition to said amount, simple interest thereon calculated in following manner, namely: (a) where refund is out of any TCS under s. 206C or paid by way of advance tax or treated as paid under s. 199, during financial year immediately preceding assessment year, such interest shall be calculated at rate of one and one half per cent for every month or part of month comprised in period from 1st day of April of assessment year to date on which refund is granted: Provided that no interest shall be payable if amount of refund is less than ten per cent of tax as determined under sub-s. (1) of s. 143 or on regular assessment; (b) in any other case, such interest shall be calculated at rate of one and one half per cent for every month or part of month comprised in period or periods from date or, as case may be, dates of payment of tax or penalty to date on which refund is granted. Explanation For purposes of this clause, date of payment of tax or penalty means date on and from which amount of tax or penalty specified in notice of demand issued under s. 156 is paid in excess of such demand. (2) If proceedings resulting in refund are delayed for reasons attributable to assessee, whether wholly or in part, period of delay so attributable to him shall be excluded from period for which interest is payable, and where any question arises as to period to be excluded, it shall be decided by Chief CIT or CIT whose decision thereon shall be final. (3) Where, as result of order under sub-s. (3) of s. 143 or s. 144 or s. 147 or s. 154 or s. 155 or s. 250 or s. 254 or s. 260 or s. 262 or s. 263 or s. 264 or order of Settlement Commission under sub-s. (4) of s. 245D, amount on which interest was payable under sub-s. (1) has been increased or reduced, as case may be, interest shall be increased or reduced accordingly, and in case where interest is reduced, AO shall serve on assessee notice of demand in prescribed form specifying amount of excess interest paid and requiring him to pay such amount; and such notice of demand shall be deemed to be notice under s. 156 and provisions of this Act shall apply accordingly. (4) provisions of this section shall apply in respect of assessments for assessment year commencing on 1st day of April, 1989, and subsequent assessment years." Earlier, provisions for granting interest on amount refundable to assessee were contained in ss. 214, 243 and 244 of Act. As ss. 214 and 244 have ceased to apply from asst. yr. 1989-90, it is not necessary for examining provisions of said section, but some discussion may be required for interpreting issue in light of provisions of s. 244A. apex Court by judgment in case of CIT vs. Narendra Doshi (2002) 174 CTR (SC) 411: (2002) 254 ITR 606 (SC) had impliedly approved legal principles laid down by Gujarat High Court in case of D.J. Works vs. Dy. CIT (1992) 102 CTR (Guj) 2: (1992) 195 ITR 227 (Guj) and Chimanlal S. Patel vs. CIT (1994) 119 CTR (Guj) 293: (1994) 210 ITR 419 (Guj) as Revenue has not challenged decision of Gujarat High Court in respect of payment of interest on interest due to assessee. Now, in recent judgment in case of Sandvik Asia Ltd. vs. CIT (2004) 189 CTR (Bom) 226: (2004) 267 ITR 78 (Bom) wherein asst. yrs. 1977-78, 1978-79, 1981-82 and 1982-83 are involved, Hon ble Supreme Court has examined provisions of ss. 214, 237, 240, 243, 244 and relevant case law on issue and held as under: "In view of express provisions of IT Act, 1961, assessee is entitled to compensation by way of interest for delay in payment of amounts lawfully due to assessee which are withheld wrongly and contrary to law. Government is liable to pay interest, at rate applicable to excess amount refunded to assessee, on interest amount which becomes due under s. 214(1). Sec. 214(1) itself recognizes in principle liability to pay interest on amount of tax paid in excess of amount of assessed tax and which is retained by Government. Interest on excess amount is payable at rate specified therein from first day of year of assessment to date of regular assessment. Once interest becomes due, it takes same colour as excess amount of tax which is refundable on regular assessment. Supreme Court in Modi Industries Ltd. Etc. Etc. vs. CIT (1995) 128 CTR (SC) 361: (1995) 216 ITR 759 (SC) has clarified that advance tax has to be treated as paid pursuant to order of assessment and hence interest is payable thereon but under s. 244. Interest is payable on amount to be refunded under s. 244(1) within three months from decision of appellate or other authority specified in s. 240. expression "amount" in earlier part of s. 244(1A) refers not only to tax but also to interest; it is neutral expression and it cannot be limited to tax paid in pursuance of order of assessment. Even assuming that there is no provision for payment of compensation, compensation for delay is required to be paid as Act itself recognizes in principle liability of Department to pay interest when excess tax was retained and same principle should be extended to cases where interest was retained. CIT vs. Narendra Doshi (2002) 174 CTR (SC) 411: (2002) 254 ITR 606 (SC) was clearly decision on merits albeit proceeding on assumption that there was no provision in Act granting interest on unpaid interest. There is no question of delay being "justifiable", and even if Revenue takes erroneous view of law, that cannot mean that withholding of monies is "justifiable" or "not wrongful". There is no exception to principle for allegedly "justifiable" withholding. When claims of authority are found to be unsustainable or erroneous by Courts it follows that authority has acted wrongfully in sense of not in accordance with law and compensation to party deprived must follow. Sec. 240 which was inserted by Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1st April, 1989, will not apply to assessment years prior to that date. Sec. 240 clearly lays down that what is relevant is whether any amount has become due to assessee, and further that phrase "any amount" will also encompass interest. For asst. yr. 1977-78 for which assessee had paid advance tax, assessee was granted refund of tax on basis of assessment order and was asked to pay additional tax after rectification. CIT(A) gave substantial relief and assessee received refund only of excess amount paid as advance tax. assessee was not granted interest on amounts refundable. For asst. yr. 1978-79, assessee was granted refund of tax on basis of assessment order but no interest was paid on refund. After CIT(A) gave substantial relief assessee received refund only of excess amount paid as advance tax. But no interest was granted. For asst. yr. 1981-82, assessee was granted refund as well as interest on amount under s. 214. After CIT(A) granted substantial relief assessee was allowed interest only under s. 214 but no interest was granted under ss. 214(1A) and 244(1A). For asst. yr. 1982-83, assessee paid further tax on assessment, but CIT(A) gave substantial relief and assessee received refund of excess tax paid but no interest was granted under s. 214 or s. 244. Pursuant to order of Supreme Court, Department granted interest upto 27th March, 1998 but Department refused interest on interest. assessee filed writ petitions in High Court challenging orders; but High Court dismissed petitions. On appeal to Supreme Court: Held accordingly, reversing decision of High Court, that assessee was entitled to interest on amounts of interest paid under s. 214 and/or s. 244, and that Department was bound to grant interest which had accrued for those periods. But since counsel for assessee conceded that interest on interest should be paid from 31st March, 1986 to 27th March, 1998, Supreme Court granted interest for this period by way of compensation, which was to be at nine per cent." As far as provisions of s. 244A are concerned, legislature has used words "where refund of any amount becomes due to assessee under this Act". It means that refund does not only consist of "tax" refundable to assessee, but also interest due on said "tax" which has become payable by virtue of provisions of this Act to assessee and which is not paid and there is delay in payment of said interest that will constitute refund. Act has conferred right on assessee to claim interest on amount of "tax" which is refundable to him which is paid in excess of demand and statute has also prescribed time-limit for payment of tax as well as interest due on said tax. In our opinion, term "refund" used in s. 244A comprised of element of "tax" and also "interest due" on that particular amount of tax which has been delayed by Department. It is true that in cases of Sandvik Asia Ltd. (supra), Narendra Doshi (supra), D.J. Works (supra), old ss. 214, 243, 244 were under consideration, but it makes no difference for applying principles laid down in said decision to s. 244A as it is for applying principles laid down in said decision to s. 244A as it is substituted for ss. 214,243 and 244. After considering language used by legislature in s. 244A, legislature has enlarged provision by giving clear benefits to assessee. We, are therefore, of opinion that principles applicable to earlier provisions in respect of payment of interest by Department on delayed amount of tax refundable and interest due thereon are also applicable to s. 244A of Act. precedent relied on by learned Departmental Representative in case of Sandvik Asia Ltd. (supra) has been reversed by Hon ble Supreme Court in Sandvik Asia Ltd. vs. CIT (2006) 200 CTR (SC) 505: (2006) 280 ITR 643 (SC) and hence, ratio of that decision cannot be applied to facts of this case. We, therefore, respectfully following legal principles laid down by Hon ble Supreme Court in case of Narendra Doshi (supra) and recent decision in case of Sandvik Asia Ltd. (supra), hold that assessee is entitled on interest due included in amount of refund where there is delay in refunding same or giving same to assessee. We, therefore, set aside order of CIT(A) on this issue and direct AO to grant interest on interest due to assessee on amount of tax refundable till date of signing of refund voucher. In ITA No. 4869/Mum/1995 relating to asst. yr. 1990-91, issue which arises for our consideration is whether CIT(A) erred in upholding action of AO in computing interest due under s. 244A(1) of Act upto date of order giving effect to CIT(A) s order. In this case also, assessee has challenged regular assessment made by AO under s. 143(3) vide order dt. 16th March, 1992 by filing appeal before CIT(A). CIT(A) disposed of assessee s appeal vide his order dt. 25th Feb., 1994. AO passed order giving effect to order of CIT(A) on 15th March, 1994. identical issue has been decided by us in assessee s appeal for asst. yr. 1989-90 being ITA No. 4868/Mum/1995. Adopting our reasoning for deciding said issue, we hold that CIT(A) was not justified in rejecting claim of assessee. We, therefore, set aside order of CIT(A) on this issue and direct AO to grant interest to assessee under s. 244(1) of Act till date of signing refund order i.e., refund voucher. Hence, ground No. 1 taken by assessee is allowed. next issue is whether AO should have treated difference between income as arrived at on income computed under s. 115J as depreciation not allowed to them and accordingly, enhanced closing WDV of assets and consequently, should have enhanced opening WDV for purpose of computing depreciation and this issue arises in ground No. 2 taken by assessee. learned Authorised Representative of assessee was fair enough to submit that this issue is covered against assessee in ITA No. 2876/Mum/1994. Though learned Authorised Representative has agreed to file copy of said order, nothing has been filed but as oral submission is made by learned Authorised Representative, this issue is decided against assessee and ground No. 2 stands rejected. next issue is whether assessee is entitled to interest under s. 244A of Act for delay in granting interest due. We have already dealt with this issue in ITA No. 4868/Mum/1995 for asst. yr. 1989-90. For reasons given on this issue in said appeal, we hold that assessee is entitled for interest on amount of interest due on refund if there is delay on part of AO to refund same. We, therefore, direct AO to grant interest on amount of interest due which was belatedly refunded to assessee. next issue in this appeal is whether while computing book profit under s. 115J, amount of tax-free debentures and NSC should be excluded. This issue emerges for our consideration in additional ground taken by assessee in asst. yr. 1990-91. We have heard rival submissions of parties. We have also perused paper book filed by assessee. assessee has placed copy of computation statement which is at page Nos. 1 to 4 of paper book. While working out book profit, AO has reduced book profit by following amounts: (i) Interest on debentures exempt from tax under s. 10(15)(iv)(h) of Act Rs. 72,85,770 (ii) Interest on NSCs exempt under s. 10(15) Rs. 4,070 assessee filed its return of income for asst. yr. 1990-91 on 4th March, 1991 declaring total income of Rs. 1,51,50,340 as computed under s. 115J i.e., 30 per cent of book profit. assessee s assessment was completed under s. 143(3) vide order dt. 16th March, 1992. AO determined total income of assessee at Rs. 2,57,45,400. assessee challenged assessment order made under s. 143(3) dt. 16th March, 1992 before CIT(A). CIT(A) disposed of appeal filed by assessee vide his order dt. 25th Feb., 1994. AO passed order giving effect to order of CIT(A). assessee has succeeded in getting relief of Rs. 1,30,56,082 and after giving effect to order of CIT(A), AO determined income of assessee at Rs. 1,26,88,058 vide order dt. 15th March, 1994. copy of order giving effect to order of CIT(A) is placed at p. 21 of paper book. On perusal of said order of AO, we find that there is not even whisper about computation of book profit under s. 115J and said order is not challenged in this appeal also. From perusal of order of AO giving effect to order of CIT(A) dt. 15th March, 1994, we find that this issue is not at all arising from said order. As issue before us is not arising out of order of AO which was passed in giving effect to order of CIT(A) dt. 15th March, 1994, this ground becomes infructuous and is liable to be rejected. Hence, we dismiss additional ground taken by assessee relating to this issue. In assessee s appeal ITA No. 4870/Mum/1995 relating to asst. yr. 1991-92, first issue which arises for our consideration is whether CIT(A) has erred in upholding action of AO in computing interest due under s. 244A(1) of Act upto date of order giving effect to order of CIT(A). We have already decided identical issue in asst. yr. 1989-90 in ITA No. 4868/Mum/1995 holding that assessee is entitled for interest upto date of signing of refund voucher. Following our reasoning on this issue in ITA No. 4868/Mum/1995, we hold that assessee is entitled for interest under s. 244A(1) of Act upto date of signing of refund order/voucher. We, therefore, set aside order of CIT(A) on this issue and direct AO to grant interest to assessee upto date of signing of refund order/voucher after verification. next issue is whether assessee is entitled for interest for delay in granting of interest belatedly. We have already decided this issue in assessee s appeal in ITA No. 4868/Mum/1995. Following our observations and reasons on this issue, we hold that assessee is entitled for interest on interest belatedly refunded to assessee. In result, assessee s appeals ITA Nos. 4868 and 4869/Mum/1995 are allowed and ITA No. 4869/Mum/1995 is partly allowed. *** ETERNIT EVEREST LTD. v. DEPUTY COMMISSIONER OF INCOME TAX