Section 244(1A) — the law in short
What the courts have decided on section 244(1A), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Sandvik Asia Ltd v CIT
Supreme CourtHelps taxpayer
Can I still rely on Sandvik Asia to claim interest on the interest due on my refund?
No — and the entry that used to say so was wrong. A three-Judge Bench of the Supreme Court in CIT v. Gujarat Fluoro Chemicals (18 September 2013), sitting on a reference that doubted this decision, did NOT overrule it. It held that this decision had been "misquoted and misinterpreted by the assessees and also by the Revenue" alike, and that what this Court had actually done was direct the Revenue to pay compensation for an inordinate delay of twelve to seventeen years — "not an interest on interest". So: this decision stands. What does not stand is the reading of it as authority for compounding interest on statutory interest under s.244A.
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Modi Industries Ltd v CIT
Supreme CourtCuts both ways
My assessment was reduced in appeal and more advance tax turned out to be excess. Does section 214 interest run to the date of the revised assessment?
No. The Supreme Court, resolving a conflict that had divided almost every High Court, read regular assessment in section 214 as the first assessment order made by the Income-tax Officer under section 143 or section 144. Interest under section 214(1) therefore runs from 1 April following the financial year to the date of that first assessment, and the excess is measured against the tax determined by it, not against the tax as reduced later in appeal or revision. Excess tax thrown up by an appellate or revisional order is dealt with by the refund provisions instead, in particular section 244(1A).
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
