Section 234D:
Interest on excess refund.
1 (1) Subject to the other provisions of this Act, where any refund
is granted to the assessee under sub-section (1) of section 143, and—
(a) no refund is due on regular assessment; or
(b) the amount refunded under sub-section (1) of section 143 exceeds the amount refundable on
regular assessment,
the assessee shall be liable to pay simple interest at the rate of 2
one-half per cent. on the whole or the
excess amount so refunded, for every month or part of a month comprised in the period from the date of
grant of refund to the date of such regular assessment.
(2) Where, as a result of an order under section 154 or section 155 or section 250 or section
254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission
under sub-section (4) of section 245D, the amount of refund granted under sub-section (1) of section
143 is held to be correctly allowed, either in whole or in part, as the case may be, then, the interest
chargeable, if any, under sub-section (1) shall be reduced accordingly.
3
Explanation 1.—Where, in relation to an assessment year, an assessment is made for the first time
under section 147 or section 153A, the assessment so made shall be regarded as a regular assessment for
the purposes of this section.
4
Explanation 2.—For the removal of doubts, it is hereby declared that the provisions of this section
shall also apply to an assessment year commencing before the 1st day of June, 2003 if the proceedings in
respect of such assessment year is completed after the said date.
Notes:
1. Ins. by Act 32 of 2003, s. 91 (w.e.f. 1-6-2003).
2. Subs. by Act 54 of 2003, s. 15, for “two-third per cent.” (w.e.f. 8-9-2003).
3. The Explanation numbered as Explanation 1 by Act 23 of 2012, s. 88 (w.e.f. 1-6-2003).
4 Ins. by s. 88, ibid. (w.e.f. 1-6-2003).