Section 244A refund interest is unavailable to a non-assessee deductor when the refund is returned outside the Act's machinery.

Section 244A interest on refund is available only where the refund is due under the Income-tax Act to an assessee or deemed assessee. A person who deducted tax without a statutory obligation to do so, and whose amount was returned pursuant to a circular rather than through the Act's refund machinery, does not qualify for statutory interest. The commentary distinguishes statutory refund rights under sections 237 and 244A from any broader claim for compensation, and states that a non-assessee deductor cannot invoke section 244A on those facts.

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Issues: Whether interest under section 244A of the Income-tax Act, 1961 is payable on a refund of tax deducted at source when the amount was refunded on the basis of a circular and the deductor was not an assessee under the Act.

Analysis: The definition of "assessee" in section 2(7) includes an actual assessee and a deemed assessee, while section 201 treats a person failing to deduct or pay tax as an assessee in default. The refund provisions in section 237 and the interest provision in section 244A operate where a refund is due under the Act to an assessee. On the facts, the appellant had deducted tax without any statutory obligation to do so, the amount was returned pursuant to the Board's circular, and the appellant did not fall within the category of assessee or deemed assessee for the purpose of claiming statutory interest. The appeal was therefore confined to statutory rights and not to any general claim for compensation.

Conclusion: Interest under section 244A was not payable to the appellant, and the claim for interest failed.

Ratio Decidendi: Statutory interest on refund is available only when the refund is due under the Act to an assessee or deemed assessee; a tax deductor who is not so covered cannot claim interest under section 244A on a refund made otherwise than under the refund machinery of the Act.

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