Madras High Court
Coda Global Llc vs (1) The Deputy Commissioner Of Income ... on 9 January, 2024
Author: Senthilkumar Ramamoorthy
Bench: Senthilkumar Ramamoorthy
2024:MHC:5758
W.P No.26634 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 09.01.2024
CORAM
The Hon'ble Mr. Justice SENTHILKUMAR RAMAMOORTHY
Writ Petition No.26634 of 2023
Coda Global LLC
C/o.Sundaram & Narayanan,
Chartered Accountants,
No.18, Luz Church Road,
Mylapore, Chennai-600 004
Represented by:K.Meenatchi Sundaram,
S/o.K.V.Krishnan,
aged 59 years ... Petitioner
vs.
(1) The Deputy Commissioner of Income Tax,
International Taxation – 1(1),
Room No.8713, BSNL Building 4th Floor,
BSNL Tower No.16, Greams Road,
Chennai – 600 006.
(2) The Additional Commissioner of Income Tax
(International Taxation) Range – 1,
BSNL Building 4th Floor,
BSNL Tower No.16, Greams Road,
Chennai – 600 006.
(3) The Commissioner of Income Tax,
International Taxation,
BSNL Tower No.16, Greams Road,
Chennai-600 006. ... Respondents
https://www.mhc.tn.gov.in/judis
1 Of 12
W.P No.26634 of 2023
PRAYER : Petition filed under Article 226 of the Constitution of India
praying to issue a writ of Mandamus directing the 1st Respondent to
grant refund of the amount determined u/s.143(3) of the Income Tax
Act, 1961 dated and Compensatory Interest.
For Petitioner : Mr.G.Baskar
For Respondents : Mr.B.Ramana Kumar,
Senior Standing Counsel (Tax)
Mr.Prabhu Mukunth Arun Kumar
Junior Standing Counsel (Tax)
ORDER
Originally, the writ petitioner sought a mandamus for the
grant of refund with interest thereon in respect of the Assessment
Year 2021-22. After the writ petition was filed, the refund was made
on 05.10.2023. Consequently, the petitioner sought an amendment of
the prayer by confining it to payment of interest.
2. The petitioner is a Limited Liability Company (LLC)
incorporated in the United States of America (USA). During the
financial year 2020-21, 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
https://www.mhc.tn.gov.in/judis
2 Of 12
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 thereafter
on 08.12.2022. Since the refund was not made, the petitioner raised
grievances with the Central Processing Centre (CPC). For instance, on
22.04.2022, 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 cannot be processed
unless a bank account is 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 present writ petition was
filed in the said facts and circumstances, and the refund was made
thereafter on 05.10.2023.
3. Learned 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
https://www.mhc.tn.gov.in/judis
3 Of 12
have been made. By drawing reference to the press release dated
24.07.2017 issued by the Central Board of Direct Taxes (the CBDT),
learned 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 refund. In the case at hand, learned counsel points out that the
income tax return contained the details of the foreign bank account of
the petitioner along with the IBAN. If the respondents required the
SWIFT code, learned counsel submits that the same could have been
requested for at that juncture. Even otherwise, he submits that the
respondents could have enabled the petitioner to input the SWIFT
code in the portal. Since the delay in making the refund is entirely
attributable to the respondents, learned counsel submits that the
petitioner is entitled to interest not only in terms of Section 244A of
the Income Tax Act but also by way of compensation.
4. In support of these submissions, learned counsel for the
petitioner referred to and relied upon the following judgments:
https://www.mhc.tn.gov.in/judis
4 Of 12
1. Sandvik Asia Ltd. v. CIT (2006) 150 Taxman 591 (SC),
particularly paragraph 36 thereof.
2. Sanjeev Kumar v. UOI [2022] 140 taxmann.com. 598
(Bombay), particularly paragraph 38 thereof.
3. Sesame Workshop Initiatives (India) (P.) Ltd. v. Union of India
[2023] 151 taxmann.com 52 (Delhi), particularly paragraph 11 thereof;
4. Matrix Publicities and Media India (P) Ltd. v. DCIT [2023]
155 taxmann.com 588 (Bombay), particularly paragraphs 2 and 3 thereof;
5. PCIT v. Ambuja Darla Kashlog Mangoo Transport Co-
operative Society [2020] 114 taxmann.com 527 (Himachal Pradesh),
particularly paragraph 9 thereof; and
6. Union of India v. Willowood Chemicals (P.) Ltd. [2020] 119
taxmann.com 255 (Gujarat), particularly paragraph 6 thereof.
5. In response to these submissions, Mr.Ramana Kumar,
learned senior standing counsel, submitted that no interest is payable
under Section 244A, if 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,
https://www.mhc.tn.gov.in/judis
5 Of 12
envisages the provision of the IFS Code and validation by the Income
Tax Department, learned counsel submits 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. By
making allowance for a reasonable period of three months from such
date, he submits that no interest is payable on the amount already
refunded.
6. As regards the judgments relied upon by learned counsel
for the petitioner, he submits that in all those cases, the assessee was
not at fault. When the reasons for delay are attributable to the
assessee, he submits that the statute provides for the exclusion of the
the period of delay by the assessee. Even with regard to the foreign
bank account indicated in the return of income, learned counsel
submits that the SWIFT code was not provided. Without the SWIFT
code, learned counsel submits that no refund can be made to a
foreign bank account.
https://www.mhc.tn.gov.in/judis
6 Of 12
7. Based on the submissions made, the issue that falls for
consideration is whether the petitioner is entitled to interest on
refund. Section 244A of the Income Tax Act governs payment of
interest on refund. The said provision, in relevant part, is as under:
Section 244A
“[Interest on refunds
244A.(1)[Where refund of any amount becomes due to the assessee
under this Act], he shall, subject to the provisions of this section, be
entitled to receive, in addition to the said amount, simple interest
thereon calculated in the following manner, namely :—
[(a) where the refund is out of any tax[collected at source
under section 206C or paid by way of advance tax or treated as paid
under section 199, during the financial year immediately preceding the
assessment year, such interest shall be calculated at the rate of one-half
per cent for every month or part of a month comprised in the period,-
(i) from the 1st day of April of the assessment year to the
date on which the refund is granted, if the return of income has been
furnished on or before the due date specified under sub-section (1) of
section 139; or
(ii) from the date of furnishing of return of income to the
date on which the refund is granted, in a case not covered under sub
clause (i):
[Provided that where refund arises as a result of an order
passed by the Assessment Officer in consequence of an application
made by the assessee under sub-section (20) of section 155, such
interest shall be calculated at the rate of one-half per cent for every
month or part of a month comprised in the period from the date of such
application to the date on which the refund is granted;]
(aa) where the refund is out of any tax paid under section
140A, such interest shall be calculated at the rate of one-half per cent
for every month or part of a month comprised in the period, from the
https://www.mhc.tn.gov.in/judis
7 Of 12
date of furnishing of return of income or payment of tax, whichever is
later, to the date on which the refund is granted:
Provided that no interest under clause (a) or clause (aa)
shall be payable, if the amount of refund is less than ten per cent of the
tax as determined under sub-section (1) section 43 or on regular
assessment;]
(b)in any other case, such interest shall be calculated at the
rate of [one-half per cent] for every month or part of a month comprised
in the period or periods from the date or, as the case may be, dates of
payment of the tax or penalty to the date on which the refund is granted.
Explanation:- For the purposes of this clause, “date of payment of tax
or penalty” means the date on and from which the amount of tax or
penalty specified in the notice of demand issued under section 156 is
paid in excess of such demand.”
(2) If the proceedings resulting in the refund are delayed for
reasons attributable to the assessee [or the deductor, as the case may
be], whether wholly or in part, the period of the delay so attributable to
him shall be excluded from the period for which interest is payable,
[under sub-sections (1) or (1A) [or (1B)]] and where any question arises
as to the period to be excluded, it shall be decided by the [Principal
Chief Commissioner or Chief Commissioner] or [Principal
Commissioner or Commissioner] whose decision thereon shall be final.
(4) The provisions of this section shall apply in respect of
assessments for the assessment year commencing on the 1st day of
April, 1989, and subsequent assessment years :
Provided that in respect of assessment of fringe benefits, the
provisions of this sub-section shall have effect as if for the figures
'1989', the figures '2006' has been substituted.”
8. 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. This leads to the question whether the
assessee was responsible for the delay. The assessee submitted its
https://www.mhc.tn.gov.in/judis
8 Of 12
return of income in respect of the Assessment Year 2021-22 and
provided information relating to an account with the 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. The petitioner specifically called upon the
respondents to enable the petitioner to update the bank account
details of its foreign bank account by inputting the SWIFT code and
IBAN. In response, the respondents called upon the petitioner to re-
try. Significantly, the respondent did not inform the petitioner that
only a bank account with an Indian bank is eligible for receipt of
refund. In any event, the press release dated 24.07.2017 of the CBDT
enables a non-resident to provide a foreign bank account for
purposes of refund. Therefore, after the petitioner requested the
respondents to enable the petitioner to provide the SWIFT code and
IBAN, the delay in processing the refund cannot be attributed to the
petitioner. Even allowing for a reasonable time of about seven days
https://www.mhc.tn.gov.in/judis
9 Of 12
for the respondents to respond appropriately to the request to enable
the portal, the refund should have been processed.
9. Instead, the respondents appeared to have orally
informed the petitioner that bank account in an Indian bank is
necessary for purposes of refund. In those circumstances, such bank
account was opened in January 2023. Such account was validated in
July 2023 and the refund was made in October, 2023.
10. If the delay is not attributable to the assessee, Section
244A provides for 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.
https://www.mhc.tn.gov.in/judis
10 Of 12
11. This writ petition is therefore disposed of 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 from
the date of receipt of a copy of this order. There shall be no order as
to costs.
09.01.2024
Index : Yes/No
Internet : Yes/No
Neutral Citation : Yes/No
kal
To
https://www.mhc.tn.gov.in/judis
11 Of 12
(1) The Deputy Commissioner of Income Tax,
International Taxation – 1(1),
Room No.8713, BSNL Building 4th Floo,r
BSNL Tower No.16, Greams Road,
Chennai – 600 006.
(2) The Additional Commissioner of Income Tax
(International Taxation) Range – 1,
BSNL Building 4th Floor,
BSNL Tower No.16, Greams Road,
Chennai – 600 006.
(3) The Commissioner of Income Tax,
International Taxation,
BSNL Tower NO.16, Greams Road,
Chennai-600 006.
SENTHILKUMAR RAMAMOORTHY J.
kal
https://www.mhc.tn.gov.in/judis
12 Of 12
Writ Petition No.26634 of 2023
09.01.2024
https://www.mhc.tn.gov.in/judis
13 Of 12
