What the courts have decided on section 244, 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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CIT v M/s. Syndicate Bank
High CourtHelps taxpayer
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?
The Karnataka High Court held the department is liable, and that this is not interest on interest. Following the three-Judge Bench in CIT v. HEG Ltd., it held that the interest component partakes of the character of the 'amount' that becomes due to the assessee under s.244A, so an order of refund must include the interest payable, and if it does not, the Revenue is liable to pay interest on the shortfall.
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Punjab State Warehousing Corporation v CIT
High CourtHelps departmentNo later treatment found
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.
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.
