The assessee filed a revision application before the Commissioner for grant of interest which was paid along with the penalty. The Commissioner held that section 244 was substituted with effect from April 1, 1989 by section 244A, that since the penalty was imposed on August 4, 1989, the refund arose after April 1, 1989 section 244A applied and not section 244 and that there was no provision under the Act for payment of interest on interest and rejected the application. On a writ allowing the petition the Court held that  section 240 made no distinction between refund of tax or penalty paid and refund on other amounts collected. The assessee did not claim interest on interest which was due but had claimed interest on the amount which was paid as interest under section 220(2) which formed part of refund due to it. The Assessing Officer had wrongly demanded the amount of the interest under section 220(2) and the assessee had paid interest on outstanding amount of penalty. On deletion of penalty by the Tribunal, the assessee was entitled to refund of amount of penalty paid and also the interest thereon paid under section 220(2). Therefore, the amount of interest paid by the assessee under section 220(2) was part of the refund envisaged under section 240 and the assessee was entitled to interest on such amount under the provisions of section 244(1A). The Commissioner is  directed   to grant the  interest on the refund under section 244 instead of section 244A and also grant interest on the refund of amount of interest recovered under section 220(2)(AY.1984-85)