Karnataka High Court
Citrix Systems Asia Pacific ... vs Deputy Commissioner Of Income Tax on 22 February, 2024
Author: S.R.Krishna Kumar
Bench: S.R.Krishna Kumar
-1-
NC: 2024:KHC:7488
WP No. 24032 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 22ND DAY OF FEBRUARY, 2024
BEFORE
THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR
WRIT PETITION NO. 24032 OF 2023 (T-IT)
BETWEEN:
CITRIX SYSTEMS ASIA PACIFIC PROPRIETARY LIMITED,
LEVEL 23, 100 MOUNT STREET, NORTH SYDNEY
NEW SOUTH WALES 2060,
AUSTRALIA
REPRESENTED HEREIN BY ITS
MANAGER-ACCOUNTING,
MR. ARUN KARKERA,
COMPANY INCORPORATED UNDER THE
LAWS OF AUSTRALIA
...PETITIONER
(BY SRI. T. SURYANARAYANA, SENIOR COUNSEL FOR
SMT. MANASA ANANTHAN, ADVOCATE
AND:
1. DEPUTY COMMISSIONER OF INCOME TAX
Digitally signed INTERNATIONAL TAX CIRCLE 1(1),
by V KRISHNA BMTC BUILDING, 6TH BLOCK,
Location: High 80 FT ROAD, KORAMANGALA,
Court of
Karnataka BANGALORE - 560 095.
2. THE PRINCIPAL COMMISSIONER OF INCOME-TAX-1
BMTC BUILDING, 6TH BLOCK,
80 FT. ROAD, KORAMANGALA,
BANGALORE - 560 095.
...RESPONDENTS
(BY SRI. E.I. SANMATHI, ADVOCATE)
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NC: 2024:KHC:7488
WP No. 24032 of 2023
THIS WP IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO A) QUASHING THE ORDER
DATED 18/05/2023 BEARING NO. ITBA/COM/F/17/2023-
24/1052949386(1) (ANNEXURE-S) PASSED BY THE R1 UNDER
SECTION 154 OF THE ACT, REJECTING THE PETITIONERS
RECTIFICATION APPLICATIONSS FILED FOR THE ASSESSMENT
YEARS 2017-18, 2018-19 AND 2019-20. AND ETC.
THIS PETITION, COMING ON FOR ORDERS, THIS DAY, THE
COURT MADE THE FOLLOWING:
ORDER
In this petition the petitioner seeks quashing of the impugned
order at Annexure-S dated 18.05.2023 and for other reliefs.
2. Heard the learned Senior Counsel appearing for the
petitioner and learned counsel appearing for respondents and
peruse the material on record.
3. In addition to reiterating the various contentions urged
in the petition and referring to the material on record, learned
Senior Counsel invited my attention to Annexure-A, the order
passed by the Authority for Advance Rulings (Income Tax), New
Delhi, whereby the claim of the petitioner was rejected by the
Authority. In pursuance of the same, the petitioner filed its returns
for the assessment year 2017-18, 2018-19 and 2019-20 and paid
taxes under protest in view of the Rulings of aforesaid Authority.
The said order of AAR having been challenged by the petitioner
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before the Hon'ble Apex Court in the case of ENGINEERING
ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED V. THE
COMMISSIONER OF INCOME TAX & ANR Civil Appeal No.8733-
8734/2018 DATED 02.03.2021 the AAR order was expressly
overruled.
4. It is submitted that subsequent to order of Hon'ble
Apex Court, the petitioner filed rectification applications for the
aforesaid assessment year and sought for refund of taxes paid
under protest by invoking Section 154 of the Income Tax Act, 1961
(for short, 'I.T. Act'). In this context, reliance was also placed upon
the Circular dated 17.11.1971 issued by the Central Board of Direct
Tax, whereunder the respondents have stated that subsequent
interpretation of law by the Apex Court to constitutes a mistake
apparent from the records and rectification action under Section
154 of I.T. Act was permissible in law.
5. Learned Senior Counsel appearing for the petitioner
submits that, despite the aforesaid facts and circumstances,
respondent no.1 has erroneously passed the impugned order
rejecting the petitioner's rectification applications on erroneous
premise that Section 154 of I.T. Act was not applicable to the facts
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of the instant case and as such, the petitioner is before this Court
by way of the present petition.
6. Per contra, learned counsel appearing for respondents
in addition to opposing the petitioner's rectification applications
submits that, in the light of judgment of Hon'ble Apex Court in the
case of COMMISSIONER OF INCOME TAX V. KESHRI METAL (P)
LTD., reported in (1999) 9 SCC 165 submits that since there is no
error apparent on the face of record in the income tax returns
originally filed by the petitioner, the question of invoking Section
154 of I.T. Act and seeking rectification and consequent refund
would not arise in the facts of the instant petition, which is liable to
be dismissed. It is also submitted that respondents have filed
R.P.No.1422-1497/2021 seeking review of aforesaid judgment of
Hon'ble Apex Court and on this ground also, the present petition is
liable to be dismissed.
7. A perusal of the impugned order will indicate that main
ground on which the Trial Court has rejected the rectification
applications by coming to the conclusion that Section 154 of the
I.T. Act was not applicable to the applications filed by the petitioner.
In this context, it is relevant to state that as per circular dated
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17.11.1971, an assessee is entitled to seek rectification pursuant to
interpretation of law by the Hon'ble Apex Court. Further, as rightly
contended by the learned Senior Counsel for the petitioner in the
case of ENGINEERING ANALYSIS CENTRE OF EXCELLENCE
PRIVATE LIMITED (supra), the Hon'ble Apex Court at paragraph
No.100 has held as under:
"Also, any ruling on the more expansive language
contained in the explanations to Section 9(1)(vi) of the Income Tax
Act would have to be ignored if it is wider and less beneficial to the
assessee than the definition contained in the DTAA, as per section
90(2) of the Income Tax Act read with explanation 4 thereof, and
Article 3(2) of the DTAA. Further, the expression "copyright" has
to be understood in the context of the statute which deals with it, it
being accepted that municipal laws which apply in the Contracting
States must be applied unless there is any repugnancy to the
terms of the DTAA. For all these reasons, the determination of the
AAR in Citrix Systems (AAR) (supra) does not state the law
correctly and is thus set aside".
8. As is clear from the aforesaid judgment, the Hon'ble
Apex Court has expressly overruled the order of Advance Rulings
Authority in respect of the Citrix Systems i.e., petitioner and
consequently, taxes paid by the petitioner under protest deserves
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to be refunded by rectifying the income tax returns filed by the
petitioner pursuant to the order of Advance Rulings Authority.
9. A perusal of the material on record will also indicate
that it was only after the order was passed by the Advance Rulings
Authority, the petitioner filed its returns and paid taxes, that too
under protest. It is also an undisputed fact that, it is only after said
order of Advance Rulings Authority being reversed by the Hon'ble
Apex in the case of ENGINEERING ANALYSIS CENTRE OF
EXCELLENCE PRIVATE LIMITED (supra) that the petitioner filed
instant rectification applications seeking rectification of returns and
consequently refund of taxes paid by the petitioner. Under these
circumstances and in the light of the circular referred to supra and
the judgment of the Apex Court, I am of the considered opinion that
respondent no.1 clearly fell in error in passing the impugned order
rejecting the applications filed by the petitioner and consequently,
the impugned order deserves to be set-aside and the rectification
applications deserves to be allowed by directing refund of taxes
paid by the petitioner.
10. Insofar as the judgment of Hon'ble Apex Court in the
case of KESHRI METAL (P) LTD (supra) is concerned, the same
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did not arise out of any order passed subsequently by the Hon'ble
Apex Court and as such the said judgment is not applicable to the
facts of the instant case.
11. In the light of the above, I proceed to pass the
following:
ORDER
(i) The petition is hereby allowed.
(ii) The impugned order dated 18.05.2023 is
hereby set-aside. The rectification
applications Annexures-N, P & Q are
hereby allowed.
(iii) The concerned respondents are directed
to refund the tax of Rs.15,49,87,083/-,
Rs.11,83,29,527/- and Rs.13,61,19,086/-
together with applicable interest back to
the petitioner within a period of two
months from the date of receipt of copy of
the order.
Sd/-
JUDGE
