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Interest under 244 A

CA student (CA Final) (404 Points)

12 February 2017

We have received an order of assessment in which the officer has given refund of around 7 lacs for AY 2014-15 however not allowed interest under section 244A of the Act. Please advice action on above.

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Sanjay S (Chartered Accountant) (1375 Points)
Replied 12 February 2017

First of all, you may have to confirm the fact that you are in-fact eligible for interest u/s 244A.

In some cases, interest is not payable on refund granted. For instance:

1. No interest is payable if the excess payment is less than 10% of the tax determined on regular assessment or under section 143(1).

2. Refund of TDS wrongly deducted and remitted to the Government is not eligible for interest u/s 244A. [Universal Cables Ltd. v. CIT (2010) [MP]].

Anyway, once you have confirmed the eligibility of your assessee for interest on refund, you may have to intimate the Assessing officer through a letter pointing out the non-payment of interest u/s 244A.

There are many instances where interest u/s 244A gets wrongfully omitted by the department.

Also, read the CBDT instruction regarding such interest .... just FYI:-

Vide Instruction no. 2/2007, dated march 28,2007, the board has reminded all Assessing officers that while granting refund to the assessees, care should be taken to ensure that any interest payable under section 244A on the amount of refund due should be granted simultaneously with the grant of refund and there should in no case any omission or delay in the grant of such interest. Failure to do so will be viewed adversely by the board and the officer concerned will be held personally accountable, inviting appropriate action from the board.

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