M/S OLIVE LIFESCIENCES PRIVATE LIMITED vs. THE DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX

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WP/21861/2024HC KarnatakaKAHC01045360202401 October 2024Author: S.R.KRISHNA KUMAR4 pages
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What did the High Court hold?

The High Court of Karnataka, in its writ jurisdiction, directed the respondent to verify the records and pay interest in favour of the petitioner on the refund amount in terms of Section 244A of the Income Tax Act. The Court emphasized that this payment should be made bearing in mind Circular No. 11/2016 dated April 26, 2016, and the judgment of the Apex Court in Union of India Vs. Tata Chemical Ltd. The payment is to be completed within a period of three months from the date of the order. The Court did not explicitly leave any issue undecided. The ratio of the decision is that tax authorities must compute and pay interest on refunds as per statutory provisions and relevant circulars/judgments, considering the entire period from the date of payment of tax to the date of refund, unless specific exceptions apply. The operative direction is to pay the enhanced interest within three months.

What were the facts?

The petitioner, M/s Olive Lifesciences Private Limited, is challenging the computation of interest on a TDS refund. The petitioner paid TDS on May 24, 2013, and September 28, 2013. The refund was granted on December 3, 2022. The petitioner contends that interest was calculated only for two months, excluding the period from the TDS payment dates to the refund date. The petitioner seeks enhancement of this interest computation. The respondents, represented by the Deputy/Assistant Commissioner of Income Tax, TDS, Circle 2(1), and other income tax authorities, are involved in this matter. The assessment year is not explicitly stated. The petitioner filed a writ petition under Articles 226 and 227 of the Constitution of India before the High Court of Karnataka.

What were the issues?

1. Whether the petitioner is entitled to enhanced interest under Section 244A of the Income Tax Act, 1961, on the TDS refund, considering the period from the date of TDS payment to the date of refund grant? Assessee's Contention: The petitioner argues that they paid TDS on May 24, 2013, and September 28, 2013, and received the refund on December 3, 2022. They contend that the respondent calculated interest for only two months and failed to account for the entire period. They rely on Circular No. 11/2016 dated April 26, 2016, and the Supreme Court judgment in Union of India Vs. Tata Chemical Ltd. (2014) 6 SCC 335, to support their claim for interest for the entire period. Revenue's Contention: The respondent submits that if reasonable time is granted, they will calculate the interest payable to the petitioner under Section 244A and make the payment after due verification.

Which sections of the Income-tax Act were involved?

Section 244A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1ST DAY OF OCTOBER, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 21861 OF 2024 (T-IT) BETWEEN:

M/S OLIVE LIFESCIENCES PRIVATE LIMITED., COMPANY INCORPOATED UNDER COMPANIES ACT. 1956, REPRESENTED BY ITS AUTHORIZED SIGNATORY SRI. SANIL K V SON OF SRI K V NARAYAN, NO 5805/05, NH-4, NEAR NAVAYUGA TOLL GATE, NELAMANGALA, BENGALURU – 562 123. PAN AABCO1065F …PETITIONER

(BY SRI. ANNAMALAI S.,ADVOCATE)

AND:

1.

THE DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX TDS, CIRCLE 2(1), NO 59, HMT BHAVAN, 4TH FLOOR BALLARI ROAD, GANGANAGAR, BENGALURU 560 032.

2.

THE COMMISSIONER OF INCOME TAX (TDS) NO 59,HMT BHAVAN, 4TH FLOOR, BALLARI ROAD, GANGANAGAR, BENGALURU 560 032.

3.

THE CHIEF COMMISSIONER OF INCOME TAX (TDS) KARNATAKA AND GOA, CENTRAL REVENUE BUILDING, NO 1, QUEENS ROAD, BENGALURU 560 001.

Digitally signed by LEELAVATHI S R Location: HIGH COURT OF KARNATAKA

4.

CENTRALIZED PROCESSING CELL-TDS AAYAKAR BHAWAN,SECTOR 3, VAISHALI, GHAZIABAD, UTTAR PRADESH 201 010. …RESPONDENTS (BY SRI.ARAVIND V CHAVAN.,ADVOCATE FOR R1 TO R3; R4 SERVED BUT UNREPRESENTED)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO ENHANCE THE SHORT COMPUTATION OF INTEREST UNDER SECTION 244A OF THE ACT IN RESPECT OF TDS REFUND AS COMPUTED IN THE E- MAIL SENT ON 16.08.2023 BY THE R1 TO THE PETITIONER HEREIN MARKED AS ANNX-A.

THIS WRIT PETITION, COMING ON FOR ORDERS THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE S.R.KRISHNA KUMAR

ORAL ORDER

In this petition, petitioner seeks the following reliefs: “i) Issue a writ of direction in the nature of a writ of mandamus to enhance the short computation of interest under section 244A of the Act in respect of TDS refund as computed in the e-mail sent on 16.08.2023 by the Respondent No.1 to the petitioner herein marked as Annexure-A.

ii) And pass such other orders as this Hon’ble Court deems fit and proper in the interest of justice and equity.”

2.

Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record.

3.

In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner submits that TDS amount payable by the petitioner was paid on various dates on 24.05.2013 and 28.09.2013 and subsequent to which, the request of the petitioner for refund was accepted and refund was granted in favour of the petitioner on 03.12.2022. It is submitted that despite the respondent having collected TDS from the petitioner on 24.05.2013 and 28.09.2013 and having granted refund only on 03.12.2022, respondent has granted interest only for the period of two months and has not granted interest for the remaining period and in the light of the Circular No.11/2016 dated 26.04.2016 and judgment of the Apex Court in the case of Union of India Vs. Tata Chemical Ltd.,1 petitioner would be entitled to interest on the aforesaid refund amount and since the same has not been granted to the petitioner, the petitioner is before this Court by way of present petition. 4. Per contra, learned counsel for the respondent submits that if reasonable time is granted, respondent would calculate the interest payable in favour of petitioner under Section 244A and make payment after due verification.

1 (2014) 6 SCC 335

5.

In view of the aforesaid facts and circumstances and submissions made by both sides, I deem it just and appropriate to dispose of the petition directing the respondent to verify the records and pay interest in favour of the petitioner on the refund amount in terms of Section 244A of the Income Tax Act bearing in mind Circular No.11/2016 dated 26.04.2016 and judgment of the Apex Court in the case of Union of India (supra) within a period of three months from today. 6. Subject to the aforesaid directions, petition stands disposed of.

Sd/- (S.R.KRISHNA KUMAR) JUDGE

MDS List No.: 1 Sl No.: 3

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