×Latest Case Laws on Income Tax by various High Courts of India
These are the latest case laws decided by various High Courts of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
14-12-2018, VODAFONE MOBILE SERVICES, Section 244A, 92CC, HIGH COURT OF DELHI
Appeal No. - W.P.(C) 2730/2018 & CM Nos.46054-55/2018
Asstt. Year - 2014-15, 2017-18
PER : S. RAVINDRA BHAT, J.
1. The present Writ Petition No.2730/2018 is filed by the petitioner (hereafter “Vodafone”) under Article 226 and 227 of the Constitution of India on account of inaction on the part of the Assistant Commissioner of Income Tax (hereafter referred as “respondent”) in not processing income tax returns for four Assessment Years (hereafter referred as “AY”) 2014-15 to 2017-18 (hereafter referred as the “relevant period under consideration”) which will result in issuance of refunds aggregating to `4759.74 crores along with applicable interest under Section 244A of the Income Tax Act (hereafter referred as “Act”). A tabular depiction of the claims for refund for the aforementioned AYs is as under:-
2. The writ petition claims a direction upon the respondent to expeditiously process the refund claim made by Vodafone, and issue refund in respect of Vodafone’s income tax returns for the relevant period under consideration, together with eligible interest under Section 244A of the Act.
3. Briefly, Vodafone is engaged in providing telecommunication services. There were a total of seven group entities providing telecom services in different circles, as named below :
(1) Vodafone Mobile Services Ltd. (“VMSL”)
(2) Vodafone Cellular Limited ("VCL")
(3) Vodafone Digilink Limited (“HVDL")
(4) Vodafone East Limited ("VEL")
(5) Vodafone South Limited ("VSL")
(6) Vodafone Spacetel Limited ("VSPL")
(7) Vodafone West Limited ("VWL")
4. Two amalgamation involving merger of certain Vodafone group companies were undertaken to re-structure business operations and increase operational efficiencies. Four Vodafone group entities (HVDL, VEL, VSLand VCL) amalgamated with Vodafone under the first scheme of amalgamation w.e.f. 01.04.2011. Further, the second scheme of amalgamation, two other groups (VSPL and VWL) amalgamated with Vodafone w.e.f. 01.04.2012. The Revenue was duly intimated about the two schemes of amalgamation. As a consequence, all proceedings in the case of the amalgamating entities are to be carried on in the name of Vodafone.
5. The revised e-returns of income pertaining to AY 2014-15 and AY 2015- 16, were filed on 31.03.2016 and 25.11.2016 respectively, claiming refunds of `l,532.09 crores and `l,355.51 crores, respectively. Subsequently, in view of the Advance Pricing Agreement dated 18.11.2016 entered by Vodafone with the Central Board of Direct Taxes (hereafter referred as 'CBDT') under section 92CC of the Act, it filed modified tax return as per the mandate of section 92CD of the Act for AY 2014-15 on 22.02.2017. However, such returns have not been processed till date. The return of income pertaining to AY 2016-2017, claiming refund of ` l128.47 crores was filed on 30.11.2016. However, this too has not been processed till date.
6. In the meanwhile, the Revenue (in certain pending writ petitions) filed a Civil Miscellaneous Application in WP(C)Nos.12301, 12303 and 12307 of 2015 in the month of March 2017 before this court (later withdrawn), whereby it, inter alia, agreed to process the tax returns filed by Vodafone for AYs 2012- 13 to 2016-17 irrespective of the pending assessments. The Revenue, by such application sought this court’s permission to process such return and adjust the refunds to the extent of the stayed outstanding tax demand. However, such application was later withdrawn. Therefore, there exists no reason why the legitimate refunds continue to be held back from Vodafone.
7. Further, by a letter dated 24.07.2017, Vodafone requested the revenue for expeditious processing of the pending income tax returns. It duly submitted that it was under financial stress and no recoverable demands are foreseeable, thus stating that there was no ground for delaying the processing of the returns and issuance of the consequent refunds. Thereafter, by letter dated 19.09.2017, Vodafone reiterated that it was under immense financial stress and, therefore, the returns should be processed forthwith. Vodafone also submitted that system related issues cannot be held against Vodafone so as to deny its due and such considerable delay is against the mandate of the provisions of the Act and the law laid down by this court. Vodafone submits that the ITD System does have a functionality, enabling the revenue to manually grant credit of tax in case of a merger. Reliance in this regard is placed on the decision in the case of Times Internet v. Additional Commissioner of Income Tax WP (C) 3384 of 2017. The relevant para of the case is extracted hereunder for ready reference:
―1. Pursuant to the order of this Court dated 6th July, 2017, a reply has been handed over today on behalf of the Respondents wherein it has been, inter alia, stated that 71% of the tax refund amount claimed by the Petitioner for the AYs 2013-14 and 2014-15 has been processed by the Department. It is sought to be explained by Mr. Rahul Chaudhary; the learned Senior Standing Counsel for the Revenue that new software has to be developed to process the refund claims and, pending the development of such software, manual credit for tax deducted at source, after verification, is being given. The Respondent seeks six more
months' time to process all the refund claims and issue appropriate orders.
2. Mr. C. S. Agarwal, learned Senior Counsel for the Petitioner, points out that for no fault of the Petitioner, it is being made to unnecessarily wait for what is legitimately due to it and that the time, as sought by the Respondent, is unreasonable. Mr. Chaudhary explains that the Systems Directorate of the Department is doing its best to develop the software functionality and, as it is, a large portion of its work force is engaged only in the task of processing the Petitioner's refund Applications. It is also stated that as