Refund interest under section 244(1A) is unavailable on section 216 interest, as it is not tax within the statute.

Interest under section 244(1A) of the Income-tax Act is confined to refunds of tax or penalty paid pursuant to an assessment or penalty order made on or after 1 April 1975. Interest charged under sections 215, 216 or 217 is treated as additional tax for some purposes, but it is not 'tax' within section 2(43). As the refunded amount in question represented interest charged under section 216, it did not satisfy the statutory conditions for grant of interest on refund, and the claim for interest under section 244(1A) was rejected.

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Issues: Whether interest under section 244(1A) of the Income-tax Act, 1961 is admissible on refund of interest charged under section 216 of the Income-tax Act, 1961.

Analysis: The entitlement under section 244(1A) was held to depend on payment of disputed tax or penalty pursuant to an assessment or penalty order, made on or after 1 April 1975, with refund arising in appeal or other proceedings. Interest charged under sections 215, 216 or 217 was treated as additional tax, but not as 'tax' within the meaning of section 2(43). As the amount refunded represented interest charged under section 216, it did not satisfy the statutory conditions for grant of interest on refund under section 244(1A).

Conclusion: Interest under section 244(1A) is not allowable on refund of interest charged under section 216 of the Income-tax Act, 1961; the claim was rejected and the issue was decided against the assessee.

Ratio Decidendi: Section 244(1A) applies only to refund of tax or penalty paid pursuant to an assessment or penalty order, and not to refund of interest charged under section 216, which is not 'tax' within section 2(43).

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