Refund interest on self-assessment tax follows where the payment is later found not exigible and is returned.

Interest under Section 244A(1)(b) was payable on a self-assessment tax payment made under Section 140A when the amount was later found not exigible and refunded or adjusted against subsequent tax liability. The court treated the refunded character of the payment as bringing it within the statutory scheme for refund interest, and held that a later claim for interest did not by itself defeat entitlement. The assessee was therefore entitled to statutory interest on the returned amount, and the challenge to refund interest failed.

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Issues: (i) Whether interest under Section 244A(1)(b) of the Income-tax Act, 1961 was payable on the amount remitted by the assessee as self-assessment tax in anticipation of tax liability and later adjusted towards advance tax/refund.

Analysis: The amount was paid on 28.06.1996 under Section 140A of the Income-tax Act, 1961 in anticipation of possible tax, interest, and penalty consequences. The refund proceedings and the assessments giving effect to the appellate orders showed that the amount was not ultimately liable to tax and was adjusted against subsequent liabilities. In that situation, the statutory scheme of Section 244A(1)(b) governed the grant of interest on refund in any other case, and the fact that the claim for interest was made later did not defeat the entitlement. The interest claim was therefore supported by the refunded character of the payment and by the statutory mandate governing refund interest.

Conclusion: Interest under Section 244A(1)(b) was payable on the refunded amount, and the assessee's claim was rightly accepted.

Final Conclusion: The challenge to the grant of refund interest failed, and the assessee's entitlement to statutory interest on the returned amount stood affirmed.

Ratio Decidendi: Where a tax payment made under Section 140A is ultimately refunded as not being exigible, interest under Section 244A(1)(b) follows as a statutory consequence, and a delayed claim for such interest does not by itself extinguish the entitlement.

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