In a recent ruling, the Karnataka High Court directed the Income Tax Department to refund the entire amount due, including interest, to IBM India Private Limited. This ruling was made to enforce compliance with previous directives issued by the Supreme Court and other judicial bodies.
IBM India Private Limited, the petitioner is a private limited company, filed a writ petition to seek a refund of Rs. 154,08,41,927 for assessment years 2008-09 to 2015-16, as determined by orders from the Supreme Court, Karnataka High Court, and the Income Tax Appellate Tribunal.
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According to these orders, the refund due to the petitioner included both the principal tax component and interest as mandated under Section 244A of the Income Tax Act, which governs interest on refunds arising due to excess payment of advance tax, self-assessment tax, or tax deducted at source ( TDS ).
Section 244A of the Income Tax Act ensures that taxpayers receive interest on delayed refunds to compensate for the time value of money owed to them by the Income Tax Department when taxes have been paid in excess.
The Income Tax Department refunded only the principal amount but did not include the determined interest which the petitioner claimed was due as per the court’s earlier orders. Aggrieved, the petitioner filed a writ petition before the Karnataka High Court.
The petitioner’s counsel argued that the respondents failed to refund the full amount, including applicable interest, as stipulated in prior court orders. The counsel claimed that applications were filed per regulatory requirements, yet refunds have not been processed fully specifically concerning the interest shortfall.
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The respondent’s counsel acknowledged the outstanding amount and sought additional time for verification and processing of the refunds.
Justice S.R. Krishna Kumar acknowledged the undisputed facts that the petitioner was due a refund, supported by evidence from previous orders and Form 26B applications. The court observed that despite the petitioner’s compliance with procedural requirements, the respondents had delayed processing the refunds.
Therefore, the court ordered the respondents to refund Rs. 154,08,41,927 along with applicable interest as per Section 244A of the Income Tax Act by April 30, 2024. The respondents were directed to verify and refund the interest shortfall amount of Rs. 59,70,096, along with the applicable interest by the same date.
The petitioner disposed of with direction.
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