Section 244A

Section 244A — the law in short

What the courts have decided on section 244A, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• UOI v Tata Chemicals Ltd Supreme CourtHelps taxpayer
  I deducted tax under s.195 because the officer told me to, and the CIT(A) has now held it was not deductible. Do I get interest on the refund, or only the tax back?
  Yes, interest as well. The resident deductor is entitled not only to the refund of the tax deposited under s.195(2) but to have it refunded with interest from the date of payment of the tax. The Revenue was the appellant and its appeals were dismissed. The CBDT has since accepted the position by circular.
• Chironjilal Sharma HUF v Union of India Supreme CourtHelps taxpayerSuperseded by amendment
  Cash seized in a search was appropriated against a tax liability that the Tribunal later knocked out. The Department has paid me interest from the date of the assessment to the date of refund. Am I entitled to anything for the years before the assessment?
  Yes. The Supreme Court held that section 132B(4) governs the pre-assessment period in search and seizure matters while sections 240 and 244A govern the post-assessment period as per the order in appeal, and that there is no conflict between them — so interest for the pre-assessment period under section 132B(4) is payable in addition to, and not in substitution for, the interest already paid on the refund. On the provision as it then stood the assessee was held entitled to simple interest at 15 per cent per annum from the day after six months from the section 132(5) order to the date of the last regular assessment.
• CIT v Gujarat Fluoro Chemicals Supreme CourtCuts both ways
  The department owes me s.244A interest and has sat on it. Can I claim interest on that interest?
  No. Only the interest the statute itself provides may be claimed from the Revenue, and no other interest on that statutory interest. This is the Full Bench decision that overruled Sandvik Asia on the point.
• 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. A Full Bench of the Supreme Court in Gujrat Fluro has overruled it and held there is no interest on interest under s.244A, where only statutory interest is leviable. All that survives of Sandvik Asia is compensation for delay in granting interest on a refund under the older scheme of s.244(1A) read with s.240.
• Vodafone Idea Ltd v ACIT (Delhi HC, 2026) High CourtHelps taxpayerValidity unconfirmed
  The Tribunal allowed my appeal, the Assessing Officer has passed the appeal effect order and worked out the refund, but the CPC will not pay because the portal shows an outstanding demand on my PAN and on my group TANs. Is that lawful?
  No. Once an appellate authority (or the Assessing Officer giving effect to its order) finds an amount refundable, that becomes a vested and crystallised right, and the Assessing Officer or the CPC cannot withhold a rupee of it except by an order actually passed under section 245. Where the Revenue could not produce any such order, the Delhi High Court held that refusing the refund because of demands standing against the assessee's PAN and sister TANs was untenable in law, arbitrary, and violative of Articles 14, 19(1)(g) and 300A, and directed payment of Rs 53,09,56,470 with interest under sections 244A and 244A(1A) by a fixed date, with a further 1 per cent per month if the date was missed.
• Bedmutha Industries Ltd v ACIT High CourtHelps taxpayer
  The Assessing Officer refused me s.244A interest for the years the refund sat unpaid, saying my bank details were wrong. Can he do that on his own?
  No. Section 244A(2) allows a period to be excluded only where a question arises as to the period to be excluded, and that question must be decided by the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner — the Assessing Officer has no jurisdiction to decide it and deny interest on that basis. Further, the delay contemplated by s.244A(2) is delay in the proceedings resulting in the refund, meaning the s.143(1) intimation and the s.143(3) assessment, not administrative delay in remitting a refund already determined.
• Saurav Chachra v CBDT High CourtHelps taxpayerValidity unconfirmed
  I have a stay on my demand and they still adjusted my refund against it. Can they do that?
  No. The Orissa High Court held that adjustment is a mode of recovery, so setting a refund off against a demand whose recovery is stayed under s.220(6) does indirectly what the stay forbids directly. The refund was ordered released with s.244A interest within four weeks.
• Honeywell Technology Solutions Lab P Ltd v DCIT High CourtHelps taxpayerValidity unconfirmed
  The Tribunal decided my appeal years ago and the Assessing Officer still has not passed the order giving effect. What do I get besides the refund?
  You get the refund on the footing that your returned income has become final, plus additional interest under s.244A(1A) at three per cent per annum. The Karnataka High Court held that where the order giving effect is not passed within the three months allowed by s.153(5), the Assessing Officer becomes functus officio, the returned income stands, any tax collected above the tax on the returned income must be refunded, and the additional interest runs from the expiry of the s.153(5) period to the date the refund is granted.
• Genpact India P Ltd v DCIT High CourtHelps taxpayer
  My refund came out of an appeal effect order and was paid years late. Can the department refuse the extra interest by blaming its own portal?
  No. Where the refund arises from giving effect to an appellate order, the additional interest is statutory. It can be refused only in the one situation the Act allows, namely delay attributable to the assessee. A broken departmental portal, an amalgamation the department was told about, and the pandemic are not delays attributable to the assessee.
• Tata Communications Ltd v Dy CIT High CourtHelps taxpayer
  The department paid my refund but not the s.244A interest. Can I get interest on what is still unpaid?
  Yes. Once the accrued s.244A interest has become part of the sum refundable, withholding part of that sum is simply non-payment, and interest on the unpaid amount arises because of it — not as interest on interest. The department was directed to refund the entire amount due together with s.244A interest.
• Jindal Stainless Ltd v DCIT High CourtHelps taxpayer
  My appeal is pending. Can the department take my whole refund against the disputed demand, or only twenty per cent of it?
  Ordinarily only twenty per cent. Where an appeal against the demand is pending before the Commissioner (Appeals), the Board's Office Memorandum of 29 February 2016 as amended on 31 July 2017 permits adjustment of not more than twenty per cent of the disputed demand. Anything above that can be retained only if the case falls within the narrow exception in para 4B(a), and the department has to show that it does.
• Bharat Petroleum Corporation Ltd v ADIT High CourtHelps taxpayerValidity unconfirmed
  Does a stay granted under s.220(6) lapse after six months, freeing the department to adjust your refund?
  No. A stay under s.220(6) operates until the appeal is disposed of. Combined with the missing prior intimation under s.245, the adjustment was quashed and Rs 211.42 crore was ordered refunded with interest.
• Jet Privilege Pvt Ltd v DCIT High CourtHelps taxpayerValidity unconfirmed
  Your refund was adjusted against an old demand. Did they have to tell you first?
  Yes, and beforehand. Intimation under s.245 must be given before the set-off is effected — not at the same time, and not afterwards. Failure to do so made the adjustment wholly illegal, and the refund was ordered with interest.
• Tata Communications Ltd v Union of India High CourtHelps taxpayerValidity unconfirmed
  Your refund was adjusted against demands that were already stayed. Is that lawful?
  No. Section 245 requires previous intimation of the proposed adjustment, not simultaneous intimation — and the demands adjusted were covered by subsisting stay orders. The full refund was ordered paid within four weeks.
• GE Capital Mauritius Overseas Investments v DCIT High CourtHelps departmentSuperseded by amendment
  The s.241A order gives detailed reasons I say are legally wrong. Will the High Court quash it in a writ?
  Usually not. The Delhi High Court dismissed this petition, holding that in a challenge to a s.241A order the writ court will not determine the tax liability that the pending scrutiny is meant to determine. Its scrutiny is confined to whether there is any basis at all for the opinion that granting the refund would adversely affect the revenue; only in a gross case, where nothing at all controverts the return, will it quash the order. The year was AY 2018-19 and the provision was s.241A, which ceased to apply from 1 April 2023; for AY 2023-24 onwards the withholding power is s.245(2), and this reasoning about the limits of writ review reads across to an order under that provision.
• M/s Gie Jewells v PCIT High CourtHelps departmentValidity unconfirmed
  My client is a firm, not a company. It paid alternate minimum tax under s.115JC when it filed its return, along with the accountant's report. The Assessing Officer has charged interest under s.234B for not paying that tax as advance tax. Can advance tax provisions apply to AMT?
  Yes, on this Court's view. The Rajasthan High Court dismissed the assessee's appeals, holding that having retained the amount which was supposed to be paid under s.115JC, s.234B was rightly invoked, and that no substantial question of law arose from the Tribunal's treatment of s.115JC on the same footing as s.115JA and s.115JB for the purpose of the advance-tax obligation under s.208.
• Vijay Singh Kadan v CCIT High CourtHelps taxpayer
  The department adjusted my refund first and issued the s.245 notice afterwards. Does the later notice fix it?
  No. The Delhi High Court held that a notice issued after the adjustment cannot correct the fatal error of not giving the notice the section makes mandatory. It also rejected the department's description of what it had done as mere withholding pending verification, where the demand said to need verification was itself under appeal with a stay application pending, and ordered the withheld amount paid with statutory interest.
• CIT, Kolkata-I v Birla Corporation Ltd High CourtHelps taxpayerHigh Courts differ
  Part of my refund is self-assessment tax I paid under s.140A. The officer says no interest is payable on that. Is he right?
  No. The Calcutta High Court held that s.244A(1)(b) is a residuary clause that covers a refund of excess self-assessment tax paid under s.140A, and that interest runs from the date the tax was paid to the date the refund is granted — a starting point since narrowed by s.244A(1)(aa) for periods from 1 June 2016. The Explanation to clause (b) does not stand in the way, because it operates only where the tax was paid pursuant to a notice of demand under s.156.
• Court On Its Own Motion v CIT High CourtHelps taxpayer
  CPC has refused my TDS credit and adjusted the refund against an old demand. What did the Delhi High Court actually direct?
  Taking up the problem on its own motion, the Delhi High Court issued directions on both limbs. A TDS claim supported by the deductor's certificate is not to be rejected merely because the uploaded information does not tally, and unmatched challans are to be verified and corrected within a fixed time. And s.245 is a two-stage provision: prior intimation of the proposed adjustment, a reply from the assessee, consideration of that reply by the Assessing Officer, an order under s.245, and communication of the outcome. A computerised set-off without that sequence does not comply with the section.
• Girnar Investment Ltd v CIT High CourtHelps department
  The Commissioner (Appeals) wiped out my demand and the tax was refunded; then the Tribunal restored the assessment. Am I charged s.220(2) interest for the years in between?
  Yes, on this decision, and the reason matters. The Delhi High Court held that where an assessment is restored on appeal the original demand revives from inception, so interest under s.220(2) runs on the unpaid amount from the expiry of thirty days from the notice of demand, and an intervening appellate order in the assessee's favour — even one that wiped out the demand and produced a refund — makes no difference to the liability for interest. The boundary of the holding is that the assessee here had not paid the full demand: where the demand was satisfied in full and promptly, Vikrant Tyres Ltd. v. First ITO [2001] 247 ITR 821 (SC) holds that no interest can be charged, and this judgment distinguishes that case rather than displacing it.
• Bank of Baroda v ACIT ITATHelps taxpayer
  They paid me part of my refund and left the rest outstanding. Do I lose interest because they say the part paid covered the interest?
  The opposite. The Tribunal held that a refund already granted is to be adjusted first against the interest component of the refund and only the balance against the tax component, so that the tax still outstanding continues to carry interest under s.244A until it is actually paid. The rationale is symmetry with the Explanation to s.140A(1), which requires a payment made by an assessee to be adjusted first towards interest and then towards tax.
• CBDT Instruction No. 12/2013 on adjustment of refunds CBDT Circulars & InstructionsHelps taxpayerSuperseded by amendment
  Is there a departmental instruction I can quote when CPC adjusts my refund without notice?
  Yes. Instruction No. 12/2013 dated 9 September 2013 directs that the provisions of s.245 be strictly adhered to before any adjustment of refund is made. It follows the Delhi High Court's directions in Court On Its Own Motion v. UOI, W.P.(C) 2659/2012 dated 14 March 2013, and requires prior intimation, an opportunity to the assessee to respond, examination of that response by the Assessing Officer, and communication of the final adjustment, with the Assessing Officer to respond to CPC within 45 days of the communication.

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.