Statutory interest on tax refund cannot be withdrawn by rectification when entitlement under the Act is satisfied.

Statutory interest under section 244(1A) followed once the refund became payable, so the assessee's entitlement arose as a matter of law. The Income-tax Officer could not invoke section 154 to withdraw that interest because the original grant was not a mistake apparent from the record. The absence of an express direction in the Tribunal's order on interest did not defeat the statutory entitlement once the conditions of section 244(1A) were satisfied. The rectification order was therefore held unsustainable, and the issue was decided in favour of the assessee.

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Issues: Whether the assessee was entitled to interest under section 244(1A) of the Income-tax Act, 1961 on the refund arising from the earlier order, and whether the Income-tax Officer could invoke section 154 to withdraw such interest by treating the original grant as a mistake.

Analysis: The refund had become payable to the assessee and, on that footing, statutory interest under section 244(1A) followed as a matter of law. The original award of interest was therefore correct, and no mistake apparent from the record existed so as to justify rectification under section 154. The absence of an express direction in the Tribunal's order regarding payment of interest did not affect the assessee's statutory entitlement once the conditions of section 244(1A) were satisfied.

Conclusion: The assessee was entitled to interest under section 244(1A), and the rectification order under section 154 was not sustainable. The question was answered in favour of the assessee and against the Revenue.

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