Refund of Taxes paid to be granted to Companies that are incorporated under a foreign country: Delhi High Court

A company that has been incorporated under a foreign country shall receive the refund of taxes paid to India as it would be illegal to hold the money when it is not registered under the provisions of the Companies Act in India, as is also explained in the case of Amadeus IT Group SA (Earlier Amadeus Global Travel Distribution SA) v. Assistant Commissioner of Income Tax & Others, in W.P.(C) 14295/2021, decided by the Hon’ble Mr. Justice Manmohan & Hon’ble Mr. Justice Navin Chawla on December 15, 2021.

The brief facts of the case are the petitioner is a foreign company (being a non-resident incorporated under the laws of Spain) and part of Amadeus Group of Companies, the petitioner was merged with Amadeus IT Holding SA with effect from 01st August 2016. Hence, a petition was filed seeking directions to the respondents to grant refund of taxes paid/ deposited by the petitioner for the assessment years 1996-97 to 2016-17 along with applicable interest.

The counsel for the petitioner contends that the petitioner filed its return of income for the assessment year 1996-97 on 26th February 1999 declaring NIL income. He further states that the assessing officer vide order dated 23rd March 1999 under section 143(3) of the Act assessed the total income of the petitioner at Rs.13,00,83,258/-. Further, the petitioner preferred an appeal before the First Appellate Authority, viz., the Commissioner of Income Tax Appeals against the order dated 23rd March, 1999. The Appellate Authority vide order dated 23rd March, 2000 upheld the findings of the assessing officer regarding permanent establishment and attribution of income to a PE.

Aggrieved by the substantive findings of the CIT(A) upholding the assessment order, the petitioner filed statutory appeal under Section 253 of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’) before the Income Tax Appellate Tribunal, New Delhi. The Appellate Tribunal vide common order dated 30th November 2007 partly allowed the appeals of the petitioner as a result of which, the NIL income returned by the petitioner stood accepted.

The counsel for the respondent contends that by way of the present writ petition, the petitioner seeks refund of, as many as, twenty assessment years in one go. He further states that no cause of action has arisen in the recent past and therefore, the present writ petition is not maintainable.

The Court after listening both the parties had ruled that the petitioner prior to the filing of the present writ petition had made a request to respondent no.1 vide application dated 5th August, 2021 requesting thereby to respondent no.1 to grant refund of income tax due for the assessment years 1996-97 to 2016-17. However, the said application has not been decided till date despite various reminders. Further, Section 240 of the Act embodies the salutary principle of right of the assessee to receive refund of tax which becomes due to the assessee as a result of any order passed in appeal. Lastly, the Court had also directed the 1st respondent to refund of taxes paid/deposited by the petitioner for the assessment years 1996-97 to 2016-17 and refund the same along with applicable interest in accordance with law within three months. However, the process of refund is subject to the order to be passed by the Apex Court in the appeals already pending before it. The writ petition was disposed of in favour of the petitioner.

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Reviewed by Revanth

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