Question And Answer
Subject: Intrest u/s 244A and 234D for refund already granted under VSVS
Querist: Jagdish Vasania
Answered by:
Tags: , , ,
Date: December 18, 2021
Query asked by Jagdish Vasania


  1. Demand raised against the assessee after assessment u/s 143(3)
  2. First appeal preferred and order in favour of assessee.
  3. Amount refunded by department as no addition sustained for refund as well as demand paid along with interest u/s 244A.
  4. appeal preferred by the department against order of CIT appeal before Honourable ITAT
  5. Meanwhile assessee settled the dispute under VSVS by paying 50%
  6. Now revised form 3 received seeking to recover 244A interest already granted to assessee on earlier interest paid and also seeking to collect 234D interest @ 0.5% from date of refund to date of payment under VSVS.


  1. Whether department can recover 244A already granted and can also collect 234D on refund.
  2. I am aware of Bombay High Court judgement on similar issue in case of Cooperative Robobank U A. However the judgement leaves open 234D and 244(3).
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Answer given by

: As regards interest u/s,244A the Act is silent on this issue; it can be assumed that the interest does not have to be refunded. As the collection only refers to disputed tax amount and waives interest. If the interest is wrongly granted the revenue may pass an order for refund of interest . In Cooperative Rabobank U A. v. CIT [2021] 130 10 (Bom) (HC) held that Interest granted under section 244A of Income-tax Act cannot be recovered by revenue authority under Direct Tax Vivad se Vishwas Act, 2020, by adding same to amount of disputed tax payable by assessee.

In Cooperative Rabobank U A v. CIT ( 2021 ) 130 43 / 437 ITR 639 ( Bom ) ( HC) the court held that , there is no provision in DTVSV Act which authorises recovery of interest paid earlier by Department under section 244A of IT Act. Court also observed that It is also not necessary for us to dwell into whether the Revenue can take recourse to section 244A(3) of the IT Act. s

As regards interest u/s 234D , please refer S. 234D (2) which says that where as a result of an order u/s 154 or 155 or 250 or 254 or 260 or 262 or 263 or 264 etc is passed the amount of refund granted under Sub section 143(1) is held to be correctly allowed , either in whole or in part as the case may be then interest chargeable , if any ,under section sub -section (1) shall be reduced accordingly. Accordingly once the issue is settled under VSVSchme , the AO has to pass consequential order reducing the interest .
The assessee may have to file writ against the tax determined by the Designated Authority .

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