The Madras High Court directed to allow the refund within Two Months. The Income tax department delayed refunding tax even after the assessee requested to enable the SWIFT code and IBAN.
Coda Global LLC, the petitioner is a Limited Liability Company (LLC) incorporated in the United States of America (USA). The petitioner sold equity shares in India to a buyer in the USA. The buyer deducted income tax at 20% of the sale consideration. The petitioner filed its income tax return declaring a total income of Rs.20,10,16,940/- and claimed a refund of Rs.2,19,51,010/-.
Upon examining the return, an intimation was issued under Section 143(1) of the Income Tax Act, 1961 (the Income Tax Act) on 21.03.2022 informing the petitioner that it is entitled to a refund of Rs.2,27,20,180/-. An assessment order was issued. Since the refund was not made, the petitioner raised grievances with the Central Processing Centre (CPC).
The petitioner raised a grievance that it is unable to input the SWIFT code and IBAN as per Sl. No.13.b. of the ITR. Eventually, after being informed orally that the refund claim could not be processed unless a bank account was set up in India, the petitioner set up a bank account in India. The said bank account was validated by the respondents on or about 07.07.2023.
The counsel for the petitioner submitted that the entitlement of the petitioner to refund was accepted in the intimation issued on 21.03.2022. Therefore, he submits that the refund should have been made. By drawing reference to the press release dated 24.07.2017 issued by the Central Board of Direct Taxes (the CBDT), counsel points out that a non-resident is entitled to provide details of a foreign bank account in his return of income for issuance of a refund.
Mr.Ramana Kumar, senior standing counsel, submitted that no interest is payable under Section 244A if the refund is delayed for reasons attributable to the assessee. By submitting that the process for claiming a refund, as per the bank account user manual of the Income Tax Department, envisages the provision of the IFS Code and validation by the Income Tax Department, counsel submitted that the bank account in an Indian bank was opened by the petitioner sometime in January 2023 and that such bank account was validated only on 07.07.2023.
As is evident from sub-section 2 of Section 244A, interest is not payable if the refund proceedings are delayed for reasons attributable to the assessee. The assessee submitted its return of income in respect of the Assessment Year 2021-22 and provided information relating to an account with Comerica Bank in the USA. The income tax return discloses that the IBAN was provided but not the SWIFT code. After the assessment order was issued, since the refund was not made, the petitioner raised grievances through the CPC. The grievance raised on 22.04.2022 is of particular relevance.
A single bench of Justice Senthilkumar Ramamoorthy held that “If the delay is not attributable to the assessee, Section 244A provides for a refund at the rate of ½% per month or 6% per annum. The petitioner has provided a calculation memo in which credit has been given for interest already paid for the period running from 01.04.2021 to 31.03.2022. As regards the period subsequent thereto, the documents on record indicate that the petitioner endeavoured to input the SWIFT code and IBAN in April 2022. Therefore, the petitioner is entitled to interest for the period from 01.05.2022 until the date of receipt of refund.”
The court disposed of the writ petition by directing the respondents through the Central Processing Centre to pay interest on the sum of Rs.2,27,20,180/- at the rate specified in Section 244-A of the Income Tax Act from 01.05.2022 to 05.10.2023. The refund shall be made within a maximum period of two months.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
