In a major relief to Wipro Limited, the Karnataka High Court allowed the additional 3% interest on the delayed Income Tax Refund.
The Petitioner Assessee, Wipro Limited has been engaged in the business of manufacture of computer software and providing IT enabled services, is knocking at the doors of Writ Court for assailing the order whereby the respondent, DCIT having negatived its application filed under section 244A(1A) of the Income Tax Act, 1961 has denied additional 3% interest on the allegedly delayed refund of amount relatable to Assessment Year 2008-09.
Mr. S.Ganesh, the counsel for the assessee contended that after all the transfer pricing adjustment would account for a refund of a paltry sum of Rs.3.88 crore compared to refund of Rs.978/- crore; to hold up the entire refund of such a huge amount on the pretext of deciding a small issue of TPA, offends the sense of fairness & proportionality; the transfer pricing adjustment actually was not determinative of the refund in as much as the tax amount was paid based on book profit, as provided under section 115JB; the entitlement of the assessee for interest under section 244A(1A) is intended to bring parity in the converse situation where the Revenue levies interest on delayed payment of taxes as provided under section 234B.
On the other hand the revenue contended that Section 240 contemplates refund, only after the accomplishment of the exercise mandated under the appellate order; where the assessment is set aside and a fresh assessment is directed, the question of granting interest at once would not arise till after the ascertainment of amount to be refunded, and that happens after the fresh assessment or reassessment is done in terms of the ITAT order; the time limit of three months prescribed in Section 153(5) for passing ‘giving effect to’ orders is applicable only in cases where no fresh assessment or reassessment is contemplated under the appellate orders; since the matter was remitted to the TPO for fresh assessment or reassessment, case of the petitioner does not fit into section 244A(1A).
The single judge bench of Justice Krishna S. Dixit permitted the Assessee to submit the fresh claim for additional interest at the rate of 3% per annum for the period envisaged in section 153(5) r/w section 244A(1A), within eight weeks. A Writ of Mandamus issues to the respondents to compute the interest amount till date and pay it to the Assessee within eight weeks.
“If delay is brooked in complying with the above direction, the Revenue shall pay to the petitioner – Assessee an extra interest, at the rate of 1.5 % per month and this amount, after payment, may be recovered personally from the erring officials of the Department,” the court said.
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