Section 244A(1A) of the Income Tax Act
Income-tax Act, 2025: s.437
Section 244A(1A) falls under section 244A of the Income-tax Act, 1961, which corresponds to section 437 (Interest on refunds) of the Income-tax Act, 2025.
Read section 437 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 244A(1A) is CIT v. Pfizer Ltd. (330 ITR 62), cited in 78 of the 32 judgments on BharatTax that turn on this section.
Leading authorities on Section 244A(1A)
An insurance claim received on stock in trade constitutes business income and is not an independent source of income.
An assessee is not entitled to interest on interest under section 244A of the Income-tax Act, particularly regarding interest granted on a refund.
A tax refund must first be adjusted towards interest payable under Section 244A, with the balance then appropriated against the principal tax amount. This approach does not lead to interest on interest.
Under Section 244A, the "amount due" for a refund includes both the principal tax and the interest accrued thereon up to the date the refund is granted. If the revenue fails to pay the full amount of refund, it is liable to pay further interest on the outstanding balance of this total refund, which does not constitute "interest on interest".
When a refund is due to an assessee under Section 244A, the amount must first be adjusted towards the interest payable on such refund, with the balance then adjusted against the tax amount refundable. This follows the principle of Section 140A(1) and means "any amount" in Section 244A includes accrued interest.
When a refund is granted to an assessee, it must first be adjusted against the correct amount of interest due. Any remaining portion of the refund should then be adjusted against the balance tax liability. This ensures proper calculation of further interest payable to the assessee under Section 244A.
Tax paid on self-assessment falls under the residuary clause of Section 244A(1)(b) for refund interest, payable from the date of self-assessment tax payment until the refund date.
Section 115JB of the Income Tax Act does not apply to banking companies governed by the Banking Regulation Act, 1949, prior to the amendment made by the Finance Act, 2012. This is because such companies were not subject to the provisions of Section 115JB before this amendment.
