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 three-Judge Bench asked to reconsider Sandvik Asia — and it did not overrule it: it held that Sandvik Asia had been misquoted and misinterpreted by assessees and by the Revenue alike.
• 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.
• Vodafone Idea Ltd v ACIT (Delhi HC, 2026) High CourtHelps taxpayerNo later treatment found
  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 taxpayerNo later treatment found
  I have a stay on my demand and they still adjusted my refund against it. Can they do that?
  Not on these facts. The Revenue conceded that a refund of Rs. 14,80,270 for AY 2025-26 had been set off against the AY 2018-19 demand even though recovery of that demand stood stayed under s.220(6), and the Court found force in the submission that the action was illegal and arbitrary and the authorities' recourse perfunctory, directing the refund to be released with s.244A interest within four weeks. It gave no reasons beyond accepting that submission: it did not hold that adjustment is a mode of recovery, did not consider s.245, and did not formally quash the adjustment.
• Honeywell Technology Solutions Lab P Ltd v DCIT High CourtHelps taxpayerNo later treatment found
  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.
• ACIT v Satwashil Vasant Mane High CourtHelps taxpayerHigh Courts differ
  Form 5 was issued and a refund became due to me, but the department sat on it for two years and now refuses interest, citing section 7 of the 2020 Act. Can I get interest?
  Yes. The Kerala High Court held there is no absolute prohibition in the Direct Tax Vivad se Vishwas Act, 2020 on a declarant claiming interest; what section 7 excludes is interest under section 244A of the Income-tax Act on the excess pre-declaration payment. Because section 5(2) obliges the declarant to pay within fifteen days, the department is equally bound to refund the excess within a reasonable time, and where the delay is solely the Revenue's fault the Court can award reasonable interest under section 3 of the Interest Act, 1978. The Revenue's writ appeal was dismissed.
• Ansaldo Energia SPA v DCIT High CourtCuts both waysHigh Courts differ
  Can I get section 244A interest on the amounts the department adjusted against my Vivad se Vishwas liability, or refunded to me under the scheme?
  No. The Madras High Court held that the Explanation to section 7 of the Direct Tax Vivad se Vishwas Act, 2020 expressly denies a declarant interest under section 244A on the excess amount refunded, and that section 7 is a complete code — if the case is to be settled under the Act, no section 244A interest is available. Two of the four writ petitions were dismissed and the batch disposed of with directions.
• 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 taxpayerJudgment not reachable
  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 taxpayerNo later treatment found
  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 taxpayerNo later treatment found
  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.
• 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.
• M/s Gie Jewells v PCIT High CourtHelps departmentNo later treatment found
  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.
• Gujarat State Fertilisers & Chemicals Ltd v Dy CIT High CourtHelps departmentNo later treatment found
  The department paid my s.244A interest years late. Can I claim interest on that delayed interest?
  The Gujarat High Court said no, and answered the question in favour of the Revenue. Applying the Supreme Court's clarification in CIT v. Gujarat Fluoro Chemicals, it held that since Parliament inserted s.244A to provide for interest on refunds, it is only that statutory interest that an assessee may claim from the Revenue, and no other interest on such statutory interest.
• 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.
• Computer Modelling Group Ltd. v. ACIT — for a year after 1 April 2012, the proviso to s.209(1)(d) is not attracted where tax was in fact deducted at source ITATHelps taxpayerNo later treatment found
  My non-resident client's Indian customers did deduct tax at source, but the Assessing Officer has still charged s.234B interest for an assessment year after 2012-13, saying the Finance Act, 2012 proviso removes the s.209(1)(d) credit. Is that right?
  No. The Delhi Tribunal held that the proviso inserted in s.209(1)(d) by the Finance Act, 2012 with effect from 1 April 2012 'would apply only in a scenario where person responsible for deducting tax has paid or credited such income without deduction of tax', and that where the income was received by the assessee after deduction of tax at source the proviso is not applicable. Reading s.209(1)(d) with its proviso, it held that where in the case of a non-resident company the tax deductible at source has been paid, it is not permissible for the Revenue to charge interest under s.234B for an alleged failure to pay advance tax, and it allowed the ground for both assessment year 2012-13 and assessment year 2019-20.
• Unnikrishnan V S v ITO (International Taxation) — an ESOP benefit accrues where the qualifying services were rendered, so a non-resident who was granted options for work done in India is taxed here on exercise ITATHelps departmentNo later treatment found
  My client is a non-resident now. He exercised options granted years ago while he worked in India, and his employer deducted tax. Can he claim the perquisite did not accrue in India, or take treaty protection?
  No, on these facts — and this is stage one, the perquisite on exercise under s.17(2)(vi). The Tribunal held that the benefit accrued and arose in India at the time the options were GRANTED, in consideration of services rendered in India, even though s.17(2)(vi) brings it to tax only in the year of exercise. Article 15 of the India-UAE treaty gave no protection because the employment to which the benefit related was exercised in India, and the taxpayer's own authorities pointed the other way. Both appeals were dismissed.
• 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.
• Statutory position — s.234D: interest on a refund granted under s.143(1) that regular assessment shows should not have been granted — the rate, the period, the reduction under sub-section (2), and Explanation 2 for assessment years commencing before 1 June 2003 CBDT Circulars & InstructionsCuts both ways
  We were given a refund when the return was processed under s.143(1). On scrutiny the Assessing Officer has now raised a demand and has also charged interest under s.234D on the refund. Is that right, for how long does the interest run, and can he do it for an assessment year that is older than the section itself?
  Yes, on the conditions in sub-section (1). Section 234D charges simple interest where a refund is granted to the assessee under s.143(1) and either (a) no refund is due on regular assessment, or (b) the amount refunded under s.143(1) exceeds the amount refundable on regular assessment. The rate is one-half per cent, on the whole or the excess amount so refunded, for every month or part of a month comprised in the period from the date of grant of refund to the date of such regular assessment. The section was inserted by the Finance Act, 2003 with effect from 1 June 2003, and the words "one-half per cent" were substituted for "two-third" by the Taxation Laws (Amendment) Act, 2003 with effect from 8 September 2003 — both recorded in footnotes printed against the section. Sub-section (2) provides that where, as a result of an order under s.154, s.155, s.250, s.254, s.260, s.262, s.263 or s.264, or an order of the Settlement Commission under s.245D(4), the refund granted under s.143(1) is held to be correctly allowed either in whole or in part, the interest chargeable under sub-section (1) shall be reduced accordingly. Explanation 1 makes a first-time assessment under s.147 or s.153A a regular assessment for the purposes of the section. Explanation 2, which the later editions of the section print and the earlier ones do not, reads: "For the removal of doubts, it is hereby declared that the provisions of this section shall also apply to an assessment year commencing before the 1st day of June, 2003 if the proceedings in respect of such assessment year is completed after the said date." Which amending Act inserted Explanation 2, and from what date, is not established here — the editions of the section that print it carry no footnotes, and the editions that carry footnotes do not print it.
• CBDT Circular No. 9/2001 dated 9 July 2001 — on a regular assessment under section 172(7) the non-resident is liable to interest under sections 234B and 234C and entitled to interest under section 244A; Circular No. 730 withdrawn CBDT Circulars & InstructionsCuts both ways
  Our foreign shipping client elected under section 172(7) for a regular assessment and is now getting a refund. The Department says no interest is payable on it because of an old Board circular. Is that circular still good?
  It is not. Circular No. 9/2001 dated 9 July 2001 withdrew Circular No. 730 dated 14 December 1995 as "no longer legally tenable" in the light of the Supreme Court's decision in A.S. Glittre D/5 I/S Garonne v. CIT, and clarified that on a regular assessment under s.172(7) the non-resident assessee is liable to pay interest under sections 234B and 234C and is also entitled to receive interest under s.244A, as the case may be. Circular No. 730 had said the opposite: that an assessee exercising the s.172(7) option was neither liable to interest under ss.234B and 234C nor entitled to interest under s.244A.

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.