HCL INFOTECH LIMITED,DELHI vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -10(1), DELHI, DELHI

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ITA 8731/DEL/2025Status: DisposedITAT Delhi12 August 2026AY 2015-1612 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee is entitled to interest under Section 244A for the entire period from the end of the financial year until the refund was issued. The Tribunal noted that the delay was not solely attributable to the assessee and followed a High Court decision in a similar case.

What were the facts?

The assessee claimed credit for TDS on income from a merged business. While the TDS credit was eventually allowed after rectification, the assessee was denied interest under Section 244A for the period between the end of the financial year and the date of refund, with the AO attributing the delay to the assessee.

What were the issues?

Whether the assessee is eligible for interest under Section 244A for the entire period of delay in refund, and whether the AO can deny such interest by attributing the delay to the assessee.

Which sections of the Income-tax Act were involved?

Section 244A,Section 154,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI “A” BENCHES, NEW DELHI

Before: SHRI RAJ KUMAR CHAUHAN & SHRI MANISH AGARWAL

आयकर अपीलीय अिधकरण, िद�ी पीठ�, नई िद�ी INCOME TAX APPELLATE TRIBUNAL DELHI “A” BENCHES, NEW DELHI BEFORE SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA 8731/DEL/2025 िनधा�रण वष�/Assessment Year: 2015-16) HCL INFOTECH LIMITED DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL 806, SIDDHARTH 96, NEHRU CIRCLE -10(1),C.R. BUILDING PLACE, NEW DELHI-110019 Vs. NEW DELHI-110002, DELHI अपीलाथ� Appellant ��थ� Respondent

Permanent Account Number of Assessee: AADCH0305F

Sh Rohit Jain, ADV & अपीलाथ� �ारा/Appellant represented by: Ms Ayushi Pragya, ADV ��थ� �ारा/Respondent represented by: Sh Jitender Singh, CIT DR

सुनवाई की तारीख / Date of conclusion of hearing: 20-May-2026 घोषणा की तारीख / Date of pronouncement: 12-Aug-2026 आदेश / ORDER PER MANISH AGARWAL, A.M.:

The present appeal is filed by assessee against the order dated 13.10.2025 passed by Ld. Commissioner of Income Tax (A)/ADDL/JCIT (A)-6, Kolkata [“Ld. CIT(A)”] in Appeal No. NFAC/2014-15/10391950 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of order dated 28.06.2024 passed u/s 154 of the Act, pertaining to Assessment Year 2015-16.

2.

Brief facts of the case are that assessee is a company and originally filed its return of income on 28.11.2015 declaring total loss of INR 1,08,46,47,428/-. In the return of income filed, assessee has claimed credit

ITA 8731/DEL/2025 HCL INFOTECH LIMITED of TDS of INR 23,95,66,788/- which includes TDS of INR 8,68,52,930/- on its own account and the remaining TDS was related to HCL Infosystem Ltd, a company whose hardware division was merged with the assessee. The facts leading to claim the credit of HCL Infosystem Ltd. was that in terms of the scheme of arrangement approved by Hon’ble Delhi High Court vide its order dated 30.10.2013 w.e.f. the appointed date of 01.01.2013, the hardware solution business of HCL Infosystem Ltd. stood transferred to the assessee company. As a result of said order, the company prepared its account for FY 2014-15 relevant to year under appeal including results of hardware solutions business of HCL Infosystem Ltd. In the final account under Note-36, this was fact duly disclosed. The assessee later revised its return of income on 29.03.2017 declaring the same loss and claimed further TDS thus, the total TDS claimed was as under:- (i) INR 8,68,52,930/- is on account of appellant’s own name business and (ii) INR 27,30,61,324/- on account of amalgamated business of HCL Infosystem Ltd. 3. The copy of the said ITR is placed at page 3 & 4 of the Paper Book filed before us wherein refund claimed of the gross amount of TDS of both the companies totaling to INR 35,99,14,254/- was appearing. The assessment was completed vide order dated 26.12.2018 u/s 143(3) of the Act wherein during the course of assessment proceedings, the AO asked the reasons for claiming the amount of refund which was duly replied to the AO and further indemnity bound issued by erstwhile company i.e. HCL Infosystem Ltd. was also filed alongwith re-conciliation statement and the corresponding revenue declared which are placed at pages 278 to 291 of the Paper Book. The AO though assessed the income so offered on account of business acquired by the assessee of HCL Infosystem Ltd. however, the credit of the TDS was allowed only of INR 8,68,52,930/- i.e. TDS appearing in the 26AS statement of the assessee. Thereafter, assessee filed a rectification application on 11.01.2019 requesting to allow the balance TDS claimed on account of income offered of amalgamated

ITA 8731/DEL/2025 HCL INFOTECH LIMITED company i.e. HCL Infosystem Ltd. The AO passed the rectification order on 10.09.2021 u/s 154 of the Act wherein the AO has categorically allowed and observed that the credit of the assessee of the entire TDS of INR 27,29,39,091/- related to HCL Infosystem Ltd. And further observed that after verification, the credit of TDS of INR 27,29,39,391/- appearing in 26AS statement of HCL Infosystem Ltd. for AY 2015-16 be allowed to the appellant company. As a consequence, ITNS-150 was issued however, again credit of TDS of INR 8,68,52,930/- was allowed. Thereafter, the AO passed second rectification order on 17.09.2021 and allowed the assessee TDS credit of INR 35,98,57,914/- however, interest u/s 244A of the Act was paid at INR 17,99,290/- i.e. only for a month. Therefore, the assessee filed another rectification application before the AO requested to allow the interest for the entire period. However, the AO in terms of the impugned order passed has rejected the claim of the assessee of additional amount of interest u/s 244A of the Act from the end of the financial year relevant to assessment year under appeal upto the date when credit of the TDS was allowed to the assessee and refund was issued, by observing that the delay was attributable to the assessee and therefore, the same cannot be allowed.

4.

Aggrieved by the said order, the assessee is in appeal before ld. CIT(A who dismissed the appeal of the assessee.

5.

Aggrieved by the order of ld. CIT(A), the assessee is in appeal before the Tribunal by taking following Grounds of appeal:-

1.

“That on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) ["CIT(A)"] erred in confirming the action of the assessing officer in denying claim of interest of Rs. 14,03,44,586 under section 244A of the Income-tax Act, 1961 ('the Act') in the rectification order dated 28.06.2024 passed under section 154 of the Act. 1.1. That the CIT(A) erred in not appreciating that the rectification order dated 28.06.2024, passed without granting opportunity of hearing, much less personal hearing is violative of mandate of section 154 of the Act and principles of natural justice.

ITA 8731/DEL/2025 HCL INFOTECH LIMITED 1.2. That the CIT(A) erred in not directing the assessing officer to grant interest under section 244A(1) of the Act on the amount of refund pertaining to prepaid taxes (TDS credit) of Rs.35,98,57,914. 1.3. That the CIT(A) erred in not appreciating that the appellant was eligible for interest on refund under section 244A of the Act from the first day of the relevant assessment year till the date of grant of refund i.e., from 01.04.2015 to 04.10.2021. 1.4. That the CIT(A) erred in attributing the delay in processing refund under section 244A(2) of the Act to the assessee, without appreciating that the assessing officer had categorically acknowledged in earlier rectification order(s), that non- reflection of TDS credit in Form 26AS was on account of administrative/ system issue. 1.5. That the CIT(A) erred in adjudicating the appeal in gross violation of principles of judicial propriety in so far as the order passed by the Hon'ble Tribunal in the appellant's own case for preceding assessment year 2014-15, wherein interest under section 244A of the Act was held allowable to the appellant was ignored from consideration. The appellant craves leave to add, to amend or vary the above grounds of appeal on or before the date of hearing.”

6.

Before us, Ld.AR submits that the assessee has taken over the running business of hardware solution of HCL Infosystem Ltd. in terms of the order of Hon’ble Delhi High Court effective from the appointed date i.e. 01.01.2013. The income earned from such business has been assessed in the hands of the assessee company however, despite of this fact that, no credit of TDS on such income was allowed to the transferee company i.e. HCL Infosystem Ltd. It was allowed to the assessee only after filing of rectification applications vide rectification order dated 10.09.2021. However, the interest u/s 244A of the Act has not been allowed to the assessee company from the end of the previous year relevant to the year under appeal till the date of the refund and it was allowed for only one month by observing that deduction of TDS in the name of transferor company is the fault on the part of the assessee and therefore, by invoking the provision of section 244A(2) of the Act, AO has dismissed the claim of the assessee. Ld.AR submits that assessee was in process of renewal of the contracts with the respective parties and due to lack of information, TDS was deducted under the old PAN of HCL Infosystem Ltd. As per Ld.AR, once the income of erstwhile company HCL Infosystem Ltd. was assessed in the hands of the assessee 4

ITA 8731/DEL/2025 HCL INFOTECH LIMITED company on substantive basis and further it was the admitted fact that no credit of TDS on such income was claimed by HCL Infosystem Ltd. therefore, interest u/s 244A(1) has to be allowed to the assessee company from the end of the previous year till the date of refund issued to the assessee as a result of such TDS. Ld.AR submits that under identical circumstances, the Hon’ble Jurisdictional High Court in immediately preceding year in the case of assessee itself vide order reported in 184 taxmann.com 38 has appreciated the fact that scheme of takeover has been approved by the Hon’ble Delhi High Court and the assessee has to recast its books of accounts and thereafter, filed the revised return. During this period, TDS was deducted by the parties in the name of old company i.e. in the name of HCL Infosystem Ltd. and therefore the assessee is entitled for such refund being exceptional circumstances and interest is to be allowed u/s 244A and provision of section 244A(2) of the Act could not be applied. He prayed accordingly.

7.

On the other hand, ld. CIT DR supported the orders of the lower authorities and submits that TDS was reflected in 26AS statement of HCL Infosystem Ltd. and it was the fault on the part of assessee of delay in renew the contracts with the respective parties so that to enable them to make TDS in the PAN of the assessee company. This lapse is solely attributable to the assessee and therefore, in terms of section 244A(2) of the Act, lower authorities have rightly denied the interest u/s 244A to the assessee on the TDS of HCL Infosystem Ltd. from the end of the previous year relevant to year under appeal till the issue of refund to the assessee. Ld. CIT DR further submits that non- allowing of interest u/s 244A of the Act is not an appealable order and therefore the appeal of the assessee is not non-maintainable. He thus, requested for the rejection of the appeal of the assessee.

ITA 8731/DEL/2025 HCL INFOTECH LIMITED 8. Heard the contentions of both the parties at length and perused the material available on record. In the instant case, the original return was filed by the assessee on 28.11.2015. The present appeal is filed by the assessee against the order passed u/s 154 of the Act denying the interest u/s 244A on the refund received for the excess amount of TDS of M/s HCL Infosystem Ltd, a company whose hardware business was merged with the assessee. The assessee in the original return of income has claimed credit of TDS of INR 23,95,66,788/- which includes TDS of INR 8,68,52,930/- appearing in the 26AS statement of assessee and balance was of the merged entity i.e. HCL Infosystem Ltd. Since, total TDS of HCL Infosystem Ltd. was of INR 27,30,61,324/-, therefore, the assessee later revised the return on 29.03.2017 and claimed the balance TDS credit of INR 12,03,47,466/- so as to claim the gross of TDS of INR 35,99,14,254/- pertained to both the companies i.e. of the assessee and of erstwhile company i.e. HCL Infosystem Ltd. The income pertaining to hardware business of erstwhile company was accepted by the AO in the order passed u/s 143(3) dated 26.12.2018. It is further observed that the AO has allowed TDS credit only to the extent of TDS as appearing in the 26AS statement of the assessee without making any observations as to why the balance TDS was not allowed to the assessee pertaining to HCL Infosystem Ltd. It is further observed that during the course of assessment proceedings, the AO had obtained the Indemnity bond from HCL Infosystem Ltd. to the effect that credit of TDS to the extent of INR 27,29,39,091/- was not claimed by HCL Infosystem Ltd. It is further observed that the assessee has filed the reconciliation statement of the income offered is vis-a-vis TDS claimed of both the companies i.e. HCL Infotech Ltd. and HCL Infosystems Ltd. i.e. the merged entity. These documents are placed at pages 278 to 291 of the Paper Book.

9.

It is further observed that the AO while disposing the rectification application filed u/s 154 in terms of order dated 10.09.2021 has allowed the total

ITA 8731/DEL/2025 HCL INFOTECH LIMITED credit claimed for the TDS of both the companies however interest u/s 244A of the Act was given only for the period of one month i.e. the period from which credit is approved by DGIT(System) to the date of issue of refund. Here it is relevant to state that as observed above, the assessee has claimed credit of TDS of INR 27,30,61,324/- of HCL Infosystem Ltd. Out of which the assessee has claimed credit of INR 15,27,13,858/- in the return of income filed u/s 139(1) and balance was claimed at INR 12,03,47,466/- was claimed in the revised return filed on 29.03.2017. Thus, the assessee has claimed full credit of TDS related to the income pertaining to the HCL Infosystem Ltd. in two [02] trenches (i) of INR 15,27,13,858/- on 28.11.2015 through original return and (ii) balance of INR 12,03,47,466/- on 29.03.2017 through revised return. Therefore, the entire TDS credit of HCL Infosystem Ltd. was claimed by the assessee in accordance with law. It is also a matter of fact that no credit of this TDS was claimed ever by HCL Infosystem Ltd. Separately and entire credit was allowed to the assessee after making verification of this fact and further the income related to such TDS was also assessed in the hands of the assessee company on substantive basis in the order passed u/s 143(3) of the Act.

10.

The credit of TDS is to be allowed as per provisions of section 199 of the Act. For the sake of convenience, Section 199 of the Act is reproduced as under:- Credit for tax deducted 199. (1) “Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security, or of the depositor or of the owner of property or of the unit-holder, or of the shareholder, as the case may be. (2) Any sum referred to in sub-section (1A) of section 192 and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made. (3) The Board may, for the purposes of giving credit in respect of tax deducted or tax paid in terms of the provisions of this Chapter, make such rules as may be necessary, including the rules for the purposes of giving credit to a person other than those referred to in sub-section (1) and sub- 7

ITA 8731/DEL/2025 HCL INFOTECH LIMITED section (2) and also the assessment year for which such credit may be given.]”

11.

Further Rule 37BA of the Income Tax Rules, 1962 (“the Rules”) provides the procedure to allow credit of tax deducted at source in the hands of the person other than the deductee which reads as under:- Credit for tax deducted at source for the purposes of section 199. 37BA. (1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority. (2) (i) Where under any provisions of the Act, the whole or any part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for the whole or any part of the tax deducted at source, as the case may be, shall be given to the other person and not to the deductee : Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1). (ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person. (iii) The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (1) and shall keep the declaration in his safe custody. (3) (i) Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable. (ii) Where tax has been deducted at source and paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax. [(3A) Notwithstanding anything contained in sub-rule (1), sub-rule (2) or sub- rule (3), for the purposes of section 194N, credit for tax deducted at source shall be given to the person from whose account tax is deducted and paid to the Central Government account for the assessment year relevant to the previous year in which such tax deduction is made.] (4) Credit for tax deducted at source and paid to the account of the Central Government shall be granted on the basis of—

ITA 8731/DEL/2025 HCL INFOTECH LIMITED [i] the information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority; and [ii] the information in the return of income in respect of the claim for the credit subject to verification in accordance with the risk management strategy formulated by the Board from time to time.”

12.

The conjoint reading of section 199 of the Act and Rule 37BA of the Rules, make it clear that where the person other than the deductee had made a claim that TDS was deducted in the name of original deductee has not been claimed and income pertaining to such deductee has been declared by other person, credit of TDS on such income has to be allowed in the hands of such other persons. In the instant case, such other person is the assessee company i.e. HCL Infotech Ltd. who had claimed the TDS deducted in the hands of HCL Infosystem Ltd. and the income pertaining to such TDS has been assessed in the hands of appellant company. Thus as per the section 199 r.w. Rule 37BA, the assessee is entitled for the credit of TDS and therefore, it is entitled for the interest u/s 244A of the Act as if this TDS was originally deducted out of the income of the assessee, irrespective of the fact that the same was appearing in other PAN. Therefore, interest u/s 244A has to be allowed to the assessee in accordance with law from the end of the previous year relevant to the assessment year under appeal till the date refund was issued after allowing the credit of such TDS. Once the AO has allowed the credit of such TDS in the hands of the assessee company, the interest u/s 244A for the entire period cannot be denied by holding that delay in allowing the credit is due to default on the part of the assessee company. More particularly when since the beginning, the assessee not concealed the income on which the TDS of INR 27,30,61,324/- was deducted in the PAN of erstwhile merged entity HCL Infosystem Ltd. who never claimed credit of such TDS therefore, it was the duty of AO to allow the credit of such TDS in accordance with law alongwith interest u/s 244A of the Act to the assessee company. Alleging that the delay was attributed to the

ITA 8731/DEL/2025 HCL INFOTECH LIMITED assessee is patently incorrect. The Hon’ble Delhi High Court in the case of assessee itself stated supra, considering these facts, has made following observations:- 35. “According to us, if a natural meaning is given to sub-section (2) of Section 244A, it is clear that an assessee is entitled for interest under Section 244A of the Act of 1961 as a matter of course and it is only in exceptional circumstances that the same can be denied in the event of the assessee himself being in default or remaining at fault. 36. Looking at the language used in sub-section (2) of Section 244A of the Act of 1961, we are of the firm opinion that in case, the Assessing Officer is of the view that the delay in processing the request for refund has been caused for reasons attributable to the assessee, it is „Principal Chief Commissioner or Chief Commissioner‟ or “Principal Commissioner or Commissioner‟ who shall decide the question as to which period is to be excluded. 37. In other words, in case some period or a part of the period is to be excluded from the period for the purpose of calculation of interest, this issue has to be decided by the authorities prescribed under sub-section (2) of Section 244A. The Assessing Officer himself cannot take onto himself power and deprive an assessee from the interest payable under Section 244A of the Act of 1961. 38. A perusal of the order dated 26.04.2018 shows that the Assessing Officer had given shoddy reasons for denying the interest by merely writing a line that "the interest under Section 244A is not allowed in this case as there is a lapse on the part of the assessee in claiming the same in its revised return of income". 39. Though he has written 7-8 lines to the effect, but the same do not constitute a valid reason. It will not be out of place to reproduce the so-called reasons given by him in the impugned order. "It is pertinent to mention here that at the time of revised return filed by the Assessee, the TDS was not claimed by the assessee. But as per the AIR information available on the system, the TDS is reflected in case of HCL Infotech and HCL Infosystems in their respective 26AS. The assessee has submitted Indemnity Bond in respect of claim of TDS and has declared Income in respect of these TDS in the return of HCL Infotech, in compliance to direction of Hon'ble High Court wherein the scheme of arrangement was approved. The indemnity bond and the said claim of TDS has been however filed with this application on 31.01.2018. Hence, the interest u/s 244A is not allowable in this case, as there is a lapse on the part of the assessee in claiming the same In its revised Return of Income." 40. According to us, having recorded assessee‟s contention that the TDS was though reflected in the Form no.26AS of the respondent-assessee but was not reflected, when the revised return was filed, the AO ought

ITA 8731/DEL/2025 HCL INFOTECH LIMITED not to have denied interest by saying that there was a lapse on the part of the assessee in claiming the same in its revised return of income. 41. According to us, the finding as recorded by Assessing Officer was completely erroneous.”

13.

Here it is also relevant to state that order passed by Hon’ble Delhi High Court is related to immediately preceding AY which was also effected due to merger of both the entities and all the facts and circumstances are identical. Hypothetically, had the merger was not taken place and the credit of TDS was claimed by the original deductee i.e. M/s HCL Infosystem Ltd., interest u/s 244A should be given as per law from 01.04.2015 i.e. from the end of the previous year till the issue of refund. Merely because such company stood merged with the assessee, legitimate claim of interest u/s 244A of the Act cannot be denied for the procedure lapse on the part of the department. Under these circumstances, by respectfully following the order of Hon’ble Delhi High Court and looking to the fact that assessee had claimed TDS by filing original return as well as revised return therefore, the interest u/s 244A(1) of the Act should be allowed from the end of the relevant AY till the date of issue of refund of the TDS amount claimed as refund. Accordingly the AO is directed to compute the interest from 01.04.2015 till the issue of refund to the assessee. All the Grounds of appeal raised by the assessee are thus allowed.

In the result, appeal filed by the assessee is allowed. 14.

Order pronounced in the open court on 12.08.2026. Sd/- Sd/-

RAJ KUMAR CHAUHAN MANISH AGARWAL JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 12.08.2026 *Amit Kumar, Sr. P.S*

ITA 8731/DEL/2025 HCL INFOTECH LIMITED

Copy to: HCL INFOTECH LIMITED, 1 806, SIDDHARTH 96, NEHRU PLACE, NEW DELHI-110019, DELHI DEPUTY COMMISSIONER OF INCOME TAX, 2 CENTRAL CIRCLE-10(1), C.R. BUILDING, NEW DELHI-110002 3 THE PCIT / CIT, 4 THE D.R., ITAT, DELHI BENCH 5 GUARD FILE

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