My client's old assessment was set aside, a fresh assessment produced a large refund, and no interest was paid. For a year before 1989-90, which section gives him interest?
For assessments up to 1988-89 there is no single interest provision: section 214 runs only to the date of the regular assessment, section 244(1) runs from three months after the order under section 240, section 244(1A) is confined to amounts paid after 31 March 1975 in pursuance of an order of assessment or penalty, and section 243 runs from three months after the total income is determined or the refund claim is made. Where the refund followed a fresh assessment and was granted the very next month, none of them was attracted, and the claim failed.
Decided by the High Court (S.S. Saron J) on 2003-02-05, reported as [2003] 264 ITR 597 (P&H); High Court of Punjab and Haryana; assessment year 1973-74. It bears on section 243, section 244, section 214, section 219, section 240 of the Income Tax Act 1961, in Refunds, Interest & Condonation and How Tax Law Is Read matters.
Section 244A took over for assessment year 1989-90 onwards, so on any surviving old matter — a long-running appeal, a set-aside remand finally decided decades later, a recovery or rectification dispute on a pre-1989 year — the entitlement has to be built under the older sections, and they do not overlap neatly. This decision is a working map of the gaps. It also carries a second lesson that survives the change of regime: the Court accepted the principle that a wrong statutory label should not defeat a deserving claim, but the claim still failed, in part because the relief before the Commissioner had been sought only under section 214. The point of most general application is the treatment of a set-aside assessment: no refund was due on the original assessment at all, and the entitlement arose only on the fresh assessment made after the appellate order — the same result that clause (a) of the proviso to section 240 now produces expressly. The decision is against the assessee, so it is best used as a checklist of what has to be established rather than as authority to be cited for a client.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
Read aloud by your device. Press again to stop.
The petitioner was a statutory corporation established under the Warehousing Corporations Act 1962, deriving income from maintaining warehouses, a part of which was exempt under section 10(29). For assessment year 1973-74 the Income-tax Officer required advance tax on income including the exempt part, and the corporation deposited Rs 1,10,995 on 8 September 1972, Rs 1,10,995 on 14 December 1972 and Rs 9,67,683 on 13 March 1973. It returned its income claiming the exemption. An assessment was made on 30 January 1976 and a further Rs 1,87,762 was deposited on 10 March 1976 pursuant to it. That assessment was set aside in appeal, and a fresh assessment order was passed on 23 November 1978, following which a refund of Rs 12,52,556 was granted on 21 December 1978 without interest. The corporation claimed Rs 7,94,012 as interest at 12 per cent, relying before the Commissioner on section 214 and in the writ petition on sections 214(2), 219, 240 and 244(1A) read with the Taxation Laws (Amendment) Act 1975. The Commissioner declined the claim by order dated 5 May 1982 and the corporation moved the High Court.
The petition was dismissed with no order as to costs. The corporation was not entitled to interest. Section 219 does no more than provide that advance tax is treated as payment of tax for the relevant assessment year and creates no entitlement to interest on refund. The assessment of 30 January 1976 was the regular assessment for section 214, and interest under section 214 runs only to the date of that assessment and not to the date of refund. Section 244(1A) was not attracted because the principal deposits were made before 31 March 1975, and the Rs 1,87,762 paid on 10 March 1976 could not be treated as paid in pursuance of an order of assessment when the corporation itself contended that the order was non est. No refund arose on the 1976 assessment at all; the entitlement arose only on the fresh assessment of 23 November 1978, and the refund was granted on 21 December 1978, in the month following. The petitioner was accordingly not entitled to claim interest on delayed refund in terms of section 243(1)(a) or (b), the claim before the Commissioner having in any event been made only under section 214 (para 18).
The Court took each provision in turn. Section 219 was held to be a mechanism for treating advance tax as payment of tax and nothing more. On section 214 it applied Modi Industries Ltd. v. CIT: 'regular assessment' means the original assessment under sections 143 or 144, interest under section 214 on an excess standing to the assessee's credit is limited to the date of the order of assessment and not to the date of refund, and once advance tax is credited in the first assessment it loses its separate character and becomes payment of income-tax, any excess after adjustment falling to be refunded under Chapter XIX with interest, if any, under section 243 rather than section 214. The Court accepted that a claim otherwise well founded should not fail merely because a wrong provision was cited, but found that section 244(1A) could not be stretched to cover deposits made before 31 March 1975, which its opening words exclude, nor the March 1976 deposit which the corporation itself said was made under an order it treated as non est. Because the earlier assessment was set aside, no refund was due until the fresh assessment of 23 November 1978, and the refund made on 21 December 1978 followed within a month, leaving no room for interest under section 244(1) or section 243, whose triggers are measured in periods of three months from the end of the month of the relevant order, determination or claim.
The petitioner, in the circumstances, is not entitled to claim interest on delayed refunds in terms of section 243(1)(a) or (b) of the Act.
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppFor assessments up to 1988-89 there is no single interest provision: section 214 runs only to the date of the regular assessment, section 244(1) runs from three months after the order under section 240, section 244(1A) is confined to amounts paid after 31 March 1975 in pursuance of an order of assessment or penalty, and section 243 runs from three months after the total income is determined or the refund claim is made. Where the refund followed a fresh assessment and was granted the very next month, none of them was attracted, and the claim failed. This was decided by the High Court (S.S. Saron J) and bears on section 243, section 244, section 214, section 219, section 240 of the Income Tax Act 1961. It is reported as [2003] 264 ITR 597 (P&H); High Court of Punjab and Haryana; assessment year 1973-74. Section 244A took over for assessment year 1989-90 onwards, so on any surviving old matter — a long-running appeal, a set-aside remand finally decided decades later, a recovery or rectification dispute on a pre-1989 year — the entitlement has to be built under the older sections, and they do not overlap neatly. This decision is a working map of the gaps. It also carries a second lesson that survives the change of regime: the Court accepted the principle that a wrong statutory label should not defeat a deserving claim, but the claim still failed, in part because the relief before the Commissioner had been sought only under section 214. The point of most general application is the treatment of a set-aside assessment: no refund was due on the original assessment at all, and the entitlement arose only on the fresh assessment made after the appellate order — the same result that clause (a) of the proviso to section 240 now produces expressly. The decision is against the assessee, so it is best used as a checklist of what has to be established rather than as authority to be cited for a client. If it applies to you, the first step is this: Fix the assessment year first. For 1989-90 and later the interest question is governed by section 244A; only for earlier years do sections 214, 243 and 244 apply.
The petitioner was a statutory corporation established under the Warehousing Corporations Act 1962, deriving income from maintaining warehouses, a part of which was exempt under section 10(29). For assessment year 1973-74 the Income-tax Officer required advance tax on income including the exempt part, and the corporation deposited Rs 1,10,995 on 8 September 1972, Rs 1,10,995 on 14 December 1972 and Rs 9,67,683 on 13 March 1973. It returned its income claiming the exemption. An assessment was made on 30 January 1976 and a further Rs 1,87,762 was deposited on 10 March 1976 pursuant to it. That assessment was set aside in appeal, and a fresh assessment order was passed on 23 November 1978, following which a refund of Rs 12,52,556 was granted on 21 December 1978 without interest. The corporation claimed Rs 7,94,012 as interest at 12 per cent, relying before the Commissioner on section 214 and in the writ petition on sections 214(2), 219, 240 and 244(1A) read with the Taxation Laws (Amendment) Act 1975. The Commissioner declined the claim by order dated 5 May 1982 and the corporation moved the High Court. The matter was decided on 2003-02-05 by the High Court (S.S. Saron J). On those facts the High Court held as follows. The petition was dismissed with no order as to costs. The corporation was not entitled to interest. Section 219 does no more than provide that advance tax is treated as payment of tax for the relevant assessment year and creates no entitlement to interest on refund. The assessment of 30 January 1976 was the regular assessment for section 214, and interest under section 214 runs only to the date of that assessment and not to the date of refund. Section 244(1A) was not attracted because the principal deposits were made before 31 March 1975, and the Rs 1,87,762 paid on 10 March 1976 could not be treated as paid in pursuance of an order of assessment when the corporation itself contended that the order was non est. No refund arose on the 1976 assessment at all; the entitlement arose only on the fresh assessment of 23 November 1978, and the refund was granted on 21 December 1978, in the month following. The petitioner was accordingly not entitled to claim interest on delayed refund in terms of section 243(1)(a) or (b), the claim before the Commissioner having in any event been made only under section 214 (para 18).
The Court took each provision in turn. Section 219 was held to be a mechanism for treating advance tax as payment of tax and nothing more. On section 214 it applied Modi Industries Ltd. v. CIT: 'regular assessment' means the original assessment under sections 143 or 144, interest under section 214 on an excess standing to the assessee's credit is limited to the date of the order of assessment and not to the date of refund, and once advance tax is credited in the first assessment it loses its separate character and becomes payment of income-tax, any excess after adjustment falling to be refunded under Chapter XIX with interest, if any, under section 243 rather than section 214. The Court accepted that a claim otherwise well founded should not fail merely because a wrong provision was cited, but found that section 244(1A) could not be stretched to cover deposits made before 31 March 1975, which its opening words exclude, nor the March 1976 deposit which the corporation itself said was made under an order it treated as non est. Because the earlier assessment was set aside, no refund was due until the fresh assessment of 23 November 1978, and the refund made on 21 December 1978 followed within a month, leaving no room for interest under section 244(1) or section 243, whose triggers are measured in periods of three months from the end of the month of the relevant order, determination or claim. In the words reproduced by the source cited on this page: "The petitioner, in the circumstances, is not entitled to claim interest on delayed refunds in terms of section 243(1)(a) or (b) of the Act." The decision followed or applied Modi Industries Ltd. v. CIT, [1995] 216 ITR 759 (SC) — applied on the meaning of 'regular assessment' in section 214 and on the character of advance tax after adjustment.
It was decided by the High Court on 2003-02-05 and is reported as [2003] 264 ITR 597 (P&H); High Court of Punjab and Haryana; assessment year 1973-74. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 243, section 244, section 214, section 219, section 240, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The petition was dismissed with no order as to costs. The corporation was not entitled to interest. Section 219 does no more than provide that advance tax is treated as payment of tax for the relevant assessment year and creates no entitlement to interest on refund. The assessment of 30 January 1976 was the regular assessment for section 214, and interest under section 214 runs only to the date of that assessment and not to the date of refund. Section 244(1A) was not attracted because the principal deposits were made before 31 March 1975, and the Rs 1,87,762 paid on 10 March 1976 could not be treated as paid in pursuance of an order of assessment when the corporation itself contended that the order was non est. No refund arose on the 1976 assessment at all; the entitlement arose only on the fresh assessment of 23 November 1978, and the refund was granted on 21 December 1978, in the month following. The petitioner was accordingly not entitled to claim interest on delayed refund in terms of section 243(1)(a) or (b), the claim before the Commissioner having in any event been made only under section 214 (para 18). It arises in Refunds, Interest & Condonation and How Tax Law Is Read matters, on section 243, section 244, section 214, section 219, section 240 of the Income Tax Act 1961, and was decided by S.S. Saron J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. For a pre-1989 year, date every payment. Section 244(1A) reaches only amounts paid after 31 March 1975 in pursuance of an order of assessment or penalty, so advance tax and deduction at source paid earlier are outside it. Do not expect section 214 to carry interest to the date of refund; on Modi Industries it stops at the regular assessment, which is the original assessment under sections 143 or 144. Test section 243 arithmetically: identify the month in which the total income was determined, or in which the refund claim was made, and check whether the refund was in fact granted within three months of the end of that month. If it was, no interest arises. Do not argue that a payment was made in pursuance of an assessment order while simultaneously contending that the same order was non est — that inconsistency defeated the claim here. Raise every provision relied on before the revisional authority, not for the first time in the writ petition.
Searched for later treatment; none was found. That is not the same as a source affirming it. No judicial treatment of this judgment has been found. The only later document that names it is Farrukhabad Gramin Bank v ACIT (Agra Tribunal, 23 February 2006), and there the judgment appears only in the record of the advocate's submissions at paragraph 7.31 - 'The judgment of Punjab State Warehousing Corporation v. CIT (2004) 186 CTR (P&H) 247 : (2004) 138 Taxman 48 (P&H) was also relied upon', one of a list handed up with two Karnataka decisions. The Tribunal's own reasoning and order make no use of it. So there is no decision applying it and equally none overruling, doubting or confining it, and no Supreme Court challenge is traceable. Two further cautions for anyone relying on this entry. The judgment construes ss.243, 244 and 214 as they stood before the regime that s.244A replaced with effect from 1 April 1989, so for any assessment year from 1989-90 onwards the governing provision is s.244A and this decision is of historical interest only. That supersession follows from the statutory scheme rather than from any court's statement of it, which is why the status is recorded as no later treatment found rather than superseded by amendment; check the section as it stood for the year in question before relying on the judgment. And the decision is against the assessee on every limb, so it is best used as a checklist of what has to be established — which provision, which date, which order — rather than as authority to be cited for a client. The one proposition in it that travels is the treatment of a set-aside assessment: no refund was due on the original assessment at all, and the entitlement arose only on the fresh assessment made after the appellate order, which is the result that clause (a) of the proviso to s.240 now produces expressly. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
A limit on what this entry can be quoted for. The statutory extracts of sections 243 and 244, the whole of paragraph 18 and the disposal have been read verbatim, and paragraph 18 is the only part quoted. The account of the facts and of the reasoning at paragraphs 12 to 17 follows a close paraphrase rather than the exact words of the report; the figures, dates and chain of reasoning stated here are taken from that paraphrase. A reader who needs a precise sentence from paragraphs 12 to 17 should read the report itself before using it. A RATE WARNING. Section 243 as quoted in the judgment prescribes interest at 12 per cent per annum, which was the rate applicable to that period. The rate under section 243 changed over time, and the rate under the s.244A regime that replaced these provisions from 1 April 1989 is different again, so the percentage in this judgment must not be carried into a computation for any other year. THE SHAPE OF THE DECISION. Four provisions were considered and each failed for a different reason, which is what makes the entry useful as a map. Section 219 does no more than treat advance tax as payment of tax for the relevant assessment year and creates no entitlement to interest. Section 214, on Modi Industries Ltd. v. CIT, runs only to the date of the regular assessment — here 30 January 1976 — and not to the date of refund. Section 244(1A) was not attracted because the principal deposits were made before 31 March 1975, which its opening words exclude, and the Rs 1,87,762 paid on 10 March 1976 could not be treated as paid in pursuance of an order of assessment when the corporation itself said that order was non est. And nothing arose under section 244(1) or section 243 because no refund was due until the fresh assessment of 23 November 1978 and the refund was granted on 21 December 1978, within the month, while both provisions measure their triggers in periods of three months. One procedural point worth carrying: the Court accepted that a claim otherwise well founded should not fail merely because a wrong provision was cited, but it still recorded that the relief before the Commissioner had been sought only under section 214. Claim under every provision that could apply, and do it at the first stage. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The petition was dismissed with no order as to costs. The corporation was not entitled to interest. Section 219 does no more than provide that advance tax is treated as payment of tax for the relevant assessment year and creates no entitlement to interest on refund. The assessment of 30 January 1976 was the regular assessment for section 214, and interest under section 214 runs only to the date of that assessment and not to the date of refund. Section 244(1A) was not attracted because the principal deposits were made before 31 March 1975, and the Rs 1,87,762 paid on 10 March 1976 could not be treated as paid in pursuance of an order of assessment when the corporation itself contended that the order was non est. No refund arose on the 1976 assessment at all; the entitlement arose only on the fresh assessment of 23 November 1978, and the refund was granted on 21 December 1978, in the month following. The petitioner was accordingly not entitled to claim interest on delayed refund in terms of section 243(1)(a) or (b), the claim before the Commissioner having in any event been made only under section 214 (para 18).
TaxSphere, “Punjab State Warehousing Corporation v CIT”, https://taxnotice.vittsphere.com/caselaw/case/punjab-state-warehousing-243-244-interest-old-regime/ (validity last checked 2026-09-07)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
My refund was paid but the s.244A interest due on it was left out. Is the department liable to pay interest on that omitted interest, or is that the forbidden interest on interest?
Can I still rely on Sandvik Asia to claim interest on the interest due on my refund?
The assessment order taxes the year but the computation sheet has not given credit for the advance tax my client paid, or has credited it to the wrong year. What is the statutory basis for insisting on the credit?
We paid tax on each voyage under section 172(4) and then elected under section 172(7) for a regular assessment, which came out much lower and produced a refund. The Department has refunded the tax but refused interest, saying what we paid was not advance tax. Is that right?
