Sec. 244(1A) of Income-tax Act, 1961-Need for giving appeal effects, etc., promptly-Regarding - Income Tax - 209/1977

Sec. 244(1A) of Income-tax Act, 1961-Need for giving appeal effects, etc., promptly-Regarding Circular No. 209 Dated 11/1/1977 Subject: Sec. 244(1A) of Income-tax Act, 1961-Need for giving appeal effects, etc., promptly-Regarding. Section 244(1) of the Income-tax Act, 1961, provides that where a refund is due to the assessee as a result of any order passed in appeal, or other proceedings under the Act and the refund is not granted within a period of three months from the end of the month in which such order is passed, the assessee will be entitled to receive simple interest at 12% per annum on the amount of the refund due from the date immediately following the expiry of the aforesaid period of three months to the date on which the refund is granted. 2. Taxation Laws (Amendment) Act, 1975, has inserted a new sub-section (1A) in section 244 of the Income-tax Act, 1961, with effect from 1st October, 1975, providing that where any amount has been paid by the assessee in pursuance of any order of assessment or penalty and the assessee becomes entitled to a refund in respect of such amount or any part thereof, as a result of an appellate order or other proceedings under the Act, the Central Government shall pay interest on the amount so refundable from the date the disputed amount was originally paid to the date on which the refund is granted. This provision will be applicable only if the refund is arising out of orders in appeal or other proceedings passed on or after 1st October, 1975, and the payment has been made after 31st March, 1975. No interest will, however, be payable for a period of one month from the date of the order passed in appeal or other proceedings. In other words, where the refund is granted within one month of the date of the order giving rise to the refund, interest will be payable from the date of payment to the date of such order and where the refund is delayed for more than a month from the date of the order giving rise to the refund, interest will be payable for the period from the date of the payment to the date of granting the refund as reduced by one month. 3. Where the amount of tax or penalty has been paid in instalments, interest will be calculated on the amount of each such instalment or any part thereof, which is found to be in excess in appeal or other proceedings from the date on which such instalment was paid to the date on which the refund is granted. However, where interest is payable under the new sub-section (1A), no interest will be paid under sub-section (1) of section 244. 4. In this connection, it may also be noted that in view of the provisions in rule 119A of the Income-tax Rules, 1962, effective from 1st January, 1975, the period for which interest is to be calculated is rounded off to whole month and for this purpose any fraction of a month is ignored. Besides this, the amount of tax, penalty, etc., in respect of which interest is to be calculated, will be rounded off to the nearest multiple of one hundred rupees and for this purpose any fraction of one hundred rupees shall be ignored. 5. In view of the fact that in cases falling for consideration under section 244(1A) of the Income-tax Act, interest will have to be paid by the Central Government after one month itself from the date of the appellate or other order, it is of paramount importance to ensure that appellate, revisionary or other orders are received in time and given effect to with extraordinary promptness ensuring that in any case they are given effect to within a month of the date of the order. 6. The above provisions of the Act may be specifically brought to the notice of all the officers working in your charge.