2021 (12) TMI 828 - HC - Income Tax

Refund of taxes paid/ deposited by the petitioner for the assessment years 1996-97 to 2016-17 along with applicable interest - Conclusions arrived at by the Tribunal as a result of which the Nil income returned by the Petitioner stood affirmed which in turn makes the petitioner entitled to refund of the entire taxes deposited/ paid along with applicable interest - HELD THAT - As by way of the present writ petition the petitioner seeks refund of as many as twenty assessment years in one go - no cause of action has arisen in the recent past and therefore the present writ petition is not maintainable. This Court finds that the petitioner prior to the filing of the present writ petition had made a request to respondent no.1 vide application dated 5th August 2021 requesting thereby to respondent no.1 to grant refund of income tax due for the assessment years 1996-97 to 2016-17. However the said application has not been decided till date despite various reminders. Consequently this Court is of the view that the petitioner has the cause of action to maintain the present writ petition. This Court is also of the view that Section 240 of the Act embodies the salutary principle of right of the assessee to receive refund of tax which becomes due to the assessee as a result of any order passed in appeal. The present writ petition is disposed of with the directions that respondent No.1 shall process the case of the petitioner for refund of taxes paid/deposited by the petitioner for the assessment years 1996-97 to 2016-17 and refund the same along with applicable interest in accordance with law within three months.

Summary

Issues:
Seeking refund of taxes paid for assessment years 1996-97 to 2016-17.

Analysis:
The petitioner, a foreign company merged with another entity, filed a writ petition seeking a refund of taxes paid for multiple assessment years. The petitioner declared NIL income for the assessment year 1996-97, but the assessing officer assessed the income at a substantial amount. The petitioner appealed the decision, and the Appellate Authority upheld the assessment order regarding permanent establishment and income attribution. Subsequently, the Income Tax Appellate Tribunal partly allowed the appeals, leading to the acceptance of the NIL income returned by the petitioner. The High Court dismissed appeals by both the petitioner and the revenue, affirming the Tribunal's findings and entitling the petitioner to a refund of all taxes paid, along with applicable interest.

The petitioner and the Revenue are in appeal before the Supreme Court against the High Court's orders, but no stay has been granted on the operation of the High Court's orders. The petitioner argued that the refund cannot be withheld pending final adjudication before the Supreme Court. The Court noted that the petitioner had previously requested a refund from the tax authority, which remained undecided despite reminders. Consequently, the Court found that the petitioner had cause to maintain the writ petition.

The Court emphasized the principle under Section 240 of the Income Tax Act, recognizing the right of the assessee to receive a refund of tax due as a result of any order passed in appeal. Accordingly, the Court directed the tax authority to process the petitioner's case for refund of taxes paid for the mentioned assessment years and refund the amount with applicable interest within three months. However, the refund process is subject to the Supreme Court's pending appeals, and the Court clarified that it had not expressed any opinion on the refund amount. The writ petition was disposed of with these directions.