C.N.Ramachandran Nair, J.

Of the two questions raised in the appeal filed by the revenue against the orders of the Tribunal disposing of the assessment appeal relating to the respondent for the assessment year 1998-1999, the first issue is whether the department is entitled to collect interest under Section 234D of the Income Tax Act. This issue stands decided by our decision reported in CIT vs. Kerala Chemicals & Proteins [323 ITR 584], wherein we have held the interest is payable only from the date of introduction of the provision, that is, 1.6.2003.

2. The next question raised is with regard to the date with reference to which the assessee is entitled to interest under Section 244A of the Income Tax Act on the refund paid to it. The assessing officer declined interest because the refund is attributable to an additional claim of deduction of provision for bad debt which was allowed by the first appellate authority. However, in appeal, the first appellate authority held that assessee is entitled to interest under Section 244A from 10.1.2001 and not from 1.4.1999 as claimed by the assessee in terms of Section 244A(1)(a) of the Act. The reason behind limiting the interest from 10.1.2001 by the CIT (Appeal) is that the assessee did not claim any deduction of provision for bad debt in the original return. But the claim was made in the course of assessment on 10.1.2001. According to the CIT (Appeal), the assessee is not entitled to any interest for period prior to the date on which the claim was made which lead to the refund. In second appeal, the Tribunal held the assessee is entitled for interest from 1.4.1999 onwards against which, the revenue has filed this appeal.

3. We have heard standing counsel appearing for the appellant and Adv. Sri.P.Balakrishnan appearing for the respondent.

4. The question to be considered is whether the statutory provisions entitle the department to limit the interest from the date of claim of deduction, the allowance of which lead to refund. Since our decision depends on the interpretation of the Section, we extract hereunder, the said section.

"244A. (1) Where refund of any amount becomes due to the assessee under this Act, he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely:-

(a) where the refund is out of any tax paid under section 115WJ or collected at source under section 206C or paid by way of advance tax or treated as paid under section 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of one-half per cent for every month or part of a month comprised in the period from the 1st day of April of the assessment year to the date on which the refund is granted:

Provided no interest shall be payable if the amount of refund is less than ten per cent of the tax determined under sub-section (1) of section 115WE or sub-section (1) of section 143 or on regular assessment.

(b) in any other case, such interest shall be calculated at the rate of one-half per cent for every month or part of a month comprised in the period or periods from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted.

(2) If the proceedings resulting in the refund are delayed for reasons attributable to the assessee, whether wholly or in part, the period of the delay so attributable to him shall be excluded from the period for which interest is payable, and where any question arises as to the period to be excluded, it shall be decided by the Chief Commissioner or Commissioner whose decision thereon shall be final."

5. The contention of the counsel for the revenue is that delay in refund is on account of delay in making the claim for deduction of bad debts and so much so by virtue of subsection (2) of Section 244A the department is entitled to decline interest to the asses