very interesting dispute is involved in this appeal. Some penalty was levied upon assessee under s. 271(1)(a) of IT Act and same was paid along with some interest under s. 220(2) of IT Act. Later penalty appears to have been deleted and assessee sought for refund along with interest under s. 244(1A). ITO calculated amount of interest on principal amount of penalty levied but refused to allow interest on amount of interest paid by assessee under s. 220(2). On appeal CIT (A) was of opinion that interest paid under s. 220 also becomes refundable consequent to cancellation of penalty with reference to which interest is charged. Accordingly interest had also to be allowed on amount paid under s. 220 because it because refudabie under s. 240. He therefore, directed ITO to allow interest with reference to amount paid under s. 220(2). Revenue has come up in second appeal before us. We have heard representatives of parties at length in this appeal. contention of departmental representative was based upon language of s. 244(1A), which reads as under: "Where whole or any part of refund referred to in sub-s. (1) is due to assessee as result of any amount having been paid by him after 31st March, 1975, in pursuance of any order of assessment or penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be excess of amount which such assessee is liable to pay as tax or penalty, as case may be, under this Act, Central Government shall pay to such assessee simple interest at rate specified in sub-s. (1) on amount so found to be in excess from date on which such amount was paid to date on which refund is granted." According to him, interest was liable to be calculated only on amounts recovered from assessee as tax or penalty and not by way of interest. On other hand, assessee's contention was that under s. 240 of IT Act, where as result of any order passed in appeal or other proceeding under this Act, refund of any amount becomes due to assessee, ITO shall except as otherwise provided in this Act, refund amount to be assessee without his having made any claim in this behalf. Such amount, according to him would include interest and, therefore, assessee would be entitled to interest on whole of such amount (inclusive of interest under s. 244(1) of IT Act). To further support this argument he drew our attention to analysis of s. 244(1A) of IT Act by S. C. Maheshwari printed at pp. 192 to 194 of Articles portion of 37 CTR, para 8 thereof reads as under: "What is composition of refund amount is immaterial for purpose of interest. If other conditions are satisfied fact that amount which has resulted in refund was originally recovered in tax, penalty or interest under s. 139, 215, 217 or 220(2) has not significance. There must arise refund of any sum due to assessee as result of appeal or other proceedings. Jabalpur Bench of Tribunal had to decide point in ITA No. 379 (Jab)/1980 in case of S. Balwant Singh Gujral vs. ITO, A-Ward, Raigarh in which department had denied interest under s. 244(1A) on that part on refund which was originally recovered as interest under s. 139 and 217. Hon'ble Bench held that entire amount of refund due in excess of tax liability of assessee is eligible for interest under s. 244(1A)." We asked assessee's representative to produce order of Jabalpur Bench in I.T.A. No. 379 (Jab)/1980 referred to above but he was not in position to do so. On perusal of language used in this section we find that there is difference between language of sub-s. (1) and sub-s. (1A). Whereas farmers refers to refund in pursuance of order referred on in s. 240, latter refers to interest on excess amount which assessee is liable to pay as tax or penalty which impliedly means that interest is not to be taken into consideration for purpose of this sub-section. Since decision of Jabalpur Bench was not produced before us on language of this section, we are of opinion that contention of departmental representative deserves to succeed. Accordingly we accept appeal, set aside order of CIT (A) and restore that of ITO. In result, appeal is allowed. *** INCOME TAX OFFICER v. RAHUT SYNDICATE