Wp/9361/2024 Of M/S Himalaya Wellness Company v. The Deputy Commissioner Of Income Tax

Digitallysigned byVandana SLocation:HIGHCOURT OFKARNATAKA IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30 DAY OF AUGUST, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR -WRIT PETITION NO. 9361 OF 2024 (TIT) BETWEEN: M/S HIMALAYA WELLNESS COMPANY (BEARING PAN AADFT 3025B) MAKALI, TUMKURU ROAD BENGALURU 562162 (REPRSENTED BY ITS CHIEF FINANCILAL OFFICER CHIEF OPERTING OFFICER AND PARTNER REPRSESENTAIVE SMT JAYAHSREE ULLAL D/O SRI DAYANAND ULLAL AGED ABOUT 50 YEARS (REGISTERED UNDER THE INDIAN PARTNERSHIP ACT 1932) …PETITIONER (BY SRI. K.K.CHAITANYA, SENIOR COUNSEL FOR SRI. TATA KRISHNA., ADVOCATE) AND: 1. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 6(2)(1) 3 FLOOR, BMTC BUILDING 80 FT ROAD, KORAMANGALA VI BLOCK BENGALURU 560095 80 FT ROAD, KORAMANGALA VI BLOCK BENGALURU 560095 2. THE PRINCIPAL COMMISSIONER OF INCOME TAX I 5 FLOOR, BMTC BUILDING 80FT ROAD, KORAMANGALA IV BLOCK BENGALURU 560 095. 5 FLOOR, BMTC BUILDING 80FT ROAD, KORAMANGALA IV BLOCK BENGALURU 560 095. 3. THE ASSISTANT DIRECTOR OF INCOME TAX CPC POST BAG NO 1 ELECTRONIC CITY POST OFFICE BENGALURU 560 500. …RESPONDENTS …RESPONDENTS (BY SRI. Y.V.RAVIRAJ, ADVOCATE) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUITION OF INDIA PRAYING TO ISSUE AS FAR AS THE PETITIONER IS CONCERNED AN APPROPRIATE WRIT OR ORDER IN THE NATURE OF MANDAMUS OR OTHERWISE, DIRECTING THE R-1 AND 3 TO GIVE EFFECT TO THE MANDAMUS OF THIS HONOURABLE COURT WP IN 8164/2021 DTD 16.12.2021 ENCLOSED AS ANNEXURE-A AND ETC. THIS 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 for the following reliefs: "(A) Issue as far as the Petitioner is concerned an appropriate writ or order in the nature of Mandamus or otherwise, directing the Respondent 1 & 3 to give effect to the mandamus of this Honourable Court Writ Petition in 8164/2021 dated 16.12.2021 enclosed as Annexure A (B) Issue as far as the Petitioner is concerned an appropriate writ or order in the nature of Mandamus or otherwise, directing the Respondent 1 & 3 to issue refund of Rs. 121,89,19,244 for AY 2010-11 to AY 2015- 16; (C) Issue as far as the Petitioner is concerned an appropriate writ or order in the nature of Mandamus or otherwise, directing the Respondent 1 & 3 to grant interest of Rs 14,39,86,777 on refund of Rs 121,89,19,244 [which includes tax of Rs.92,75,45,532 and interest of Rs 29,13,73,712.] under section 244A(1)(b) for AY 2010-11 to AY 2015-16. (D) Issue as far as the Petitioner is concerned an appropriate writ or order in the nature of Mandamus or otherwise, directing the Respondent 1 & 3 to grant interest of Rs.13,28,50,085 on refund of Rs 121,89,19,244 [which includes tax of Rs. 92,75,45,532 and interest of Rs. 29,13,73,712] under section 244A(1A) for AY 2010-11 to AY 2015-16. (E) Issue as far as the Petitioner is concerned an appropriate writ or order in the nature of Mandamus or otherwise, directing the Respondents to grant compensation for not granting refund in defiance of the order of this Honourable Court. (F) Issue as far as the Petitioner is concerned an appropriate writ or order in the nature of Mandamus or otherwise, directing the Respondent 1 & 3 not to proceed with adjustment of refunds of AY 2010-11 to AY 2015-16 under section 245 as contemplated under intimations dated 01.08.2023 & 27.02.2024 except to the extent of Rs 4,34,682 in case of demand of AY 2016-17; AY 2018-19 & AY 2021-22 as referred in para 65.12." 2. Heard learned Senior counsel for the petitioner and learned counsel for the respondents – revenue and perused the material on record. 3. A perusal of the material on record will indicate that during the period 2019-2020 and 2020-2021, the Income Tax (F) Issue as far as the Petitioner is concerned an appropriate writ or order in the nature of Mandamus or otherwise, directing the Respondent 1 & 3 not to proceed with adjustment of refunds of AY 2010-11 to AY 2015-16 under section 245 as contemplated under intimations dated 01.08.2023 & 27.02.2024 except to the extent of Rs 4,34,682 in case of demand of AY 2016-17; AY 2018-19 & AY 2021-22 as referred in para 65.12." 2. Heard learned Senior counsel for the petitioner and learned counsel for the respondents – revenue and perused the material on record. 3. A perusal of the material on record will indicate that during the period 2019-2020 and 2020-2021, the Income Tax Appellate Tribunal (for short ‘the ITAT’) passed several orders allowing the appeals filed for various years by the petitioner i.e., Assessment years 2009-10, 2010-11, 2011-12, 2012-13, 2013-14, 2014-15 and 2015-16 upholding the claim of the petitioner, as a result of which, petitioner became entitled to refund together with applicable interest in terms of Section 244A(1)(b) and 244A(1A) of the Income Tax Act, 1961 (for short ‘the I.T.Act’). Since the repeated requests / representations submitted by the petitioner to the respondents calling upon them to implement and give effect to the said orders passed by the ITAT and grant refund together with interest was not complied with by the respondents who also did not consider the rectification application filed by the petitioner, the petitioner approached this Court in W.P.No.8164/2021, which was disposed of by this Court vide order dated 16.02.2021, which reads as under:- “ 7. In view of the aforesaid facts and circumstances facts and circumstances and submission made at the Bar, I deem it just and proper to dispose of this Petition directing respondent to pass orders giving effect to the orders of the Tribunal for the assessment years 200-10, 2010-11, 2012-13, 2013-14, 2014-15 and 2015-16 vide Annexure-B1 to B6 respectively and by further directing the respondent to grant refund of the sums payable to the petitioner in terms of the aforesaid orders at Annexures-B1 to B6 together with interest payble in favour of the petitioner under Sections 244A1(1A) as sought for at Prayers ’D’ and ‘E’ to the petitioner in accordance with law and within a period of six weeks from today. 8. So also, the respondent is hereby directed to consider the rectification application at Annexure-D dated: 06.08.2015 submitted by the petitioner and pass appropriate orders on the same in accordance with law within a period of six weeks from today.” 4. In pursuance of the same, there were several correspondents, proceedings etc., between the petitioner and respondents, who did not grant refund or interest thereon in favour of the petitioner. Since the respondents neither paid the refund amount nor interest thereon in terms of Section 244A(1)(b) and 244A(1A) of the I.T.Act, petitioner is before this Court by way of the present petition. 5. As can be seen from prayer Nos.(A) and (B) in the writ petition, the same relate to direction to the respondents to grant refund in favour of the petitioner in terms of the order dated 16.12.2021 passed by this Court in W.P.No.8164/2021; so also, prayer No.(F) for a direction to the respondents not to proceed with adjustment of refund under Section 245 of the I.T.Act. In this context, it is relevant to state that the present petition having been preferred on 15.03.2024, the respondents have granted refund in favour of the petitioner on 10.06.2024 during the pendency of the present petition and consequently, prayers (A), (B) and (F) sought for in the petition do not survive for consideration any longer. Accordingly, the issue involved in the present petition as on date is with regard to the right of the petitioner to claim interest under Section 244A(1)(b) and 244A(1A) of the I.T.Act. context, it is relevant to state that the present petition having been preferred on 15.03.2024, the respondents have granted refund in favour of the petitioner on 10.06.2024 during the pendency of the present petition and consequently, prayers (A), (B) and (F) sought for in the petition do not survive for consideration any longer. Accordingly, the issue involved in the present petition as on date is with regard to the right of the petitioner to claim interest under Section 244A(1)(b) and 244A(1A) of the I.T.Act. 6. As stated supra, during the pendency of this petition, the Petitioner received refund on 10.06.2024 as per Order giving effect (OGE) for AY 2010-11, AY 2012-13, AY 2013-14, AY 2014-15 & AY 2015-16 which is summarised as under:- - 7 - NC: 2024:KHC:34924WP No. 9361 of 2024 7. The Petitioner was granted aforesaid refund of Rs 121,29,05,664/- as per OGE only. However, the petitioner was not granted interest on the said amount and in my considered opinion, the petitioner is entitled to interest under Section 244A(1)(b) of the I.T.Act. In this regard, it is necessary to state that it is well settled that interest not paid along with the principal refunded would constitute ‘any amount’ under section 244A(1) and hence interest on such interest not paid along with the principal amount refunded would be liable to be paid to the assessee. In the case of CIT v. H.E.G Ltd. [2010] 324 ITR 331 (SC) (para 7), the Apex Court held as under:- “7. The next question which we are required to answer is - What is the meaning of the words "refund of any amount becomes due to the assessee" in section 244A? In the present case, as stated above, there are two components of the tax paid by the assessee for which the assessee was granted Refund, namely TDS of Rs. 45,73,528 and Tax paid after Original assessment of Rs. 1,71,00,320. The Department contends that the words "any amount" will not include the Interest which accrued to the respondent for not refunding Rs. 45,73,528 for 57 months. We see no merit in this argument. The interest component will partake of the character of the "amount due" under section 244A. It becomes an integral part of Rs. 45,73,528 which is not paid for 57 months after the said amount became due and payable. As can be seen from the facts narrated above, this is the case of short payment by the Department and it is in this way that the assessee claims interest under section 244A of the Income-tax Act. Therefore, on both the aforestated grounds, we are of the view that the assessee was entitled to interest for 57 months on Rs. 45,73,528. The principal amount of Rs. 45,73,528 has been paid on 31-12-1997 but net of interest which, as stated above, partook the character of "amount due" under section 244A.” 8. It is also relevant to state that interest not paid along with the principal refunded would constitute ‘any amount’ under section 244A(1) and hence, interest on such interest not paid along with the principal amount refunded would also be liable to be paid to the assessee as held in the following decisions: CIT vs. Narendra Doshi - [2002] 254 ITR 606 (SC); (SC); CIT vs .Syndicate Bank - [2020] 428 ITR 372 (Kar); (Kar); India Trade Promotion Organisation vs. CIT - [2014] 361 ITR 646 (Delhi); [2014] 361 ITR 646 (Delhi); 9. Further, interest has to be granted under section 244A(1)(b) from the date of payment of tax up to the date on which refund is granted i.e., up to the credit of amount to the account of the assessee as hereunder:- Instruction No. 2 of 2007; Circular No. 209 [F. No. 212/485/76(A-II)] dated 11.01.1977; 11.01.1977; Ingenico International India Pvt Ltd vs JCIT [WP(C) 5570/2022] (Delhi); 5570/2022] (Delhi); Wabtec Locomotive Pvt Ltd vs ACIT [W.P. (C) 4405/ 2022] (Delhi); 2022] (Delhi); CIT vs Pfizer Ltd [1991] 191 ITR 626 (Bombay). 10. It is therefore clear that the interest has to be paid on the entire amount determined & reflected in OGE which is tax and interest u/s 244A(1)(b) upto the date of OGE. The computation in this regard is as under:- 9. Further, interest has to be granted under section 244A(1)(b) from the date of payment of tax up to the date on which refund is granted i.e., up to the credit of amount to the account of the assessee as hereunder:- Instruction No. 2 of 2007; Circular No. 209 [F. No. 212/485/76(A-II)] dated 11.01.1977; 11.01.1977; Ingenico International India Pvt Ltd vs JCIT [WP(C) 5570/2022] (Delhi); 5570/2022] (Delhi); Wabtec Locomotive Pvt Ltd vs ACIT [W.P. (C) 4405/ 2022] (Delhi); 2022] (Delhi); CIT vs Pfizer Ltd [1991] 191 ITR 626 (Bombay). 10. It is therefore clear that the interest has to be paid on the entire amount determined & reflected in OGE which is tax and interest u/s 244A(1)(b) upto the date of OGE. The computation in this regard is as under:- Interest u/s 244A(1)(b) as per assessee(Annexure 1) - 10 - 11. Thus, the petitioner is entitled to receive interest of Rs.15,81,84,285/- under Section 244A(1)(b) of the I.T.Act from the respondents – revenue and necessary directions are to be issued in this regard. 12. Insofar as the interest payable by the respondents to the petitioner under Section 244A(1A) of the I.T.Act is concerned, the petitioner would be entitled to additional interest after the expiry of time limit provided under section 153(5) till the date of payment of refund i.e., 10.06.2024. The petitioner - assessee is entitled to the interest at the rate of 3% per annum in addition to interest under section 244A(1)(b) for the period beginning from the date following the date of expiry of the time allowed under section 153(5) to the date on which the refund is granted i.e., 10.06.2024. In the instant case, in the case of all five assessment years i.e. AY 2010-11, AY 2012-13, AY 2013-14, AY 2014-15 & AY 2015-16, it is not a case of setting aside the entire assessment order; further, no issues were remanded to the file of the assessing officer for AY 2010-11 & AY 2012-13. Therefore, interest u/s 244A(1A) is attributable after the - 11 - expiry of three months from the date of receipt of Tribunal order by Pr. CCIT or CCIT or Pr. CIT or CIT till the date of refund voucher i.e., 10.06.2024; further, the minor issues were remanded to the file of Assessing Officer which resulted in small additions relating to depreciation & additional depreciation for AY 2013-14, AY 2014-15 & AY 2015-16. The refund for AY 2013-14, AY 2014-15 & AY 2015-16as reflected in OGE is entirely refund attributable to concluded issues only. 13. In Wipro Ltd vs JCIT- (2021) 438 ITR 581, this Court held as under:- “…….harmonious construction of these provisions would mean as under: (b)……when the assessment order is set aside on some issues only and confirmed on other, it is not a case of 'setting aside or cancelling the assessment'. …. (d)….Therefore, if the orders to be given effect to are to be made by following the principles already laid down by the higher forum, it would not be a case of fresh assessment in terms of section 153(3) or a reassessment in terms of section 153(2), it would simply mean that the orders of the higher forum are to be applied & followed by the assessing officer;… … (iii) Interest u/s 244A(1A) would not accrue in cases of fresh assessment or reassessment; use of words 'wholly or partly' 13. In Wipro Ltd vs JCIT- (2021) 438 ITR 581, this Court held as under:- “…….harmonious construction of these provisions would mean as under: (b)……when the assessment order is set aside on some issues only and confirmed on other, it is not a case of 'setting aside or cancelling the assessment'. …. (d)….Therefore, if the orders to be given effect to are to be made by following the principles already laid down by the higher forum, it would not be a case of fresh assessment in terms of section 153(3) or a reassessment in terms of section 153(2), it would simply mean that the orders of the higher forum are to be applied & followed by the assessing officer;… … (iii) Interest u/s 244A(1A) would not accrue in cases of fresh assessment or reassessment; use of words 'wholly or partly' therein would again indicate that the bar of interest accrual is confined only to that part of the assessment that are occasioned by remittance/remand and would not extend to other concluded issues that give rise to refund u/s 153(5);employment of identical language in section 153(5) and section 244(1A) too supports this analogy; it is clear that section 244A(1A) would apply to cases covered u/s 153(5); thus where, in respect of certain issues, order giving effect to be passed u/s. 153(5), otherwise than by making a fresh assessment or reassessment is passed beyond the prescribed time-limit, interest u/s. 244A(1A) has to be granted in respect of refund arising on such issues that are concluded and that the pendency of consideration on remitted issues does not interdict the statutory accrual of interest; an argument to the contrary cannot be countenanced without straining the text & context of the provision. Similar legislative intent is forthcoming from the Notes on Clauses to the Finance Bill, 2016 and paragraph 60.4 of the Circular No. 3 of 2017 dated 20-1-2017. (iii) Interest u/s 244A(1A) would not accrue in cases of fresh assessment or reassessment; use of words 'wholly or partly' therein would again indicate that the bar of interest accrual is confined only to that part of the assessment that are occasioned by remittance/remand and would not extend to other concluded issues that give rise to refund u/s 153(5); employment of identical language in section 153(5) and section 244(1A) too supports this analogy; it is clear that section 244A(1A) would apply to cases covered u/s 153(5); thus where, in respect of certain issues, order giving effect to be passed u/s. 153(5), otherwise than by making a fresh assessment or reassessment is passed beyond the prescribed time-limit, interest u/s. 244A(1A) has to be granted in respect of refund arising on such issues that are concluded and that the pendency of consideration on remitted issues does not interdict the statutory accrual of interest; an argument to the contrary cannot be countenanced without straining the text & context of the provision. 14. The same principle has been laid down in the cases of Nokia India (P) Ltd vs DCIT- [2018] 407 ITR 20 (Delhi) and United Spirits Limited v. ACIT - [2024] 464 ITR 167 (Karnataka) (para 22). It follows therefrom that interest is attributable u/s 244A(1A) after the expiry of three months from the date of receipt of Tribunal order by Pr. CCIT or CCIT or Pr. CIT or CIT till the date of refund voucher i.e., 10.06.2024. 15. As stated supra, the Petitioner should have been granted refund of tax paid and interest under section 244A(1)(b) on or before the due date of expiry of time limit provided under section 153(5). The Petitioner did not receive the said refund on or before the expiry of time limit provided under section 153(5) and consequently, the Petitioner is entitled for interest under section 244A(1A) in terms of the computation as hereunder:- Statement of Interest u/s 244A(1A) computed upto 31st May 2024 –as per assessee (Annexure 2) 15. As stated supra, the Petitioner should have been granted refund of tax paid and interest under section 244A(1)(b) on or before the due date of expiry of time limit provided under section 153(5). The Petitioner did not receive the said refund on or before the expiry of time limit provided under section 153(5) and consequently, the Petitioner is entitled for interest under section 244A(1A) in terms of the computation as hereunder:- Statement of Interest u/s 244A(1A) computed upto 31st May 2024 –as per assessee (Annexure 2) Refund Interestu/s244(1)(b)Attributable to relief accumulafter Total ateduptoreducing theexpirInterestu/l. SAYAnnrrefund as Total ITAT order dep as per communicated to Order Expiry of time 244A(1A)Interestu/s Refunreleasd PeriInt.od OGE attributable to remand tax & ssingOGEu/s153(ateforpayofdued5) Refund due as on the expiry of due date date of s244A(1A[Col.)Nefper OGE dateHC appeal limitu/s153(ed (Modatedisallowanu/s153(5) o.(Rs)Respondefiled by 5)Runs fromonnthsrefund ces is (Rs)(Rs)N*J*0.25%] ntattributable )under OGEworkings [check (Rs)forAnn2](Rs)[A][B][C][D][E][F][G][H][I][J][K][L][M][N][O]12010-11C7456,706,43230.04.201930.04.201931.07.201901.08.2019 10.06.20245925.05.2022 318,715,94987,646,886406,362,83559,938,51822012-13C9198,183,05302.11.202027.01.202130.04.202101.05.2021 10.06.20243707.04.2022 150,135,48439,000,000189,135,48417,495,0323296,183,65114.07.202014.07.202031.10.202001.11.2020 10.06.20244331.03.2022 231,746,83145,626,771277,373,60229,817,6622013- 14C1042014- 15 C11237,357,97107.12.202008.02.202131.05.202101.06.2021 10.06.20243631.03.2022 200,203,28731,149,843231,353,13020,821,7822,166,195C1224,474,55708.12.202027.01.202130.04.202101.05.2021 10.06.20243731.03.2022 21,249,6912,168,63423,418,32552015-16Total1,212,905,66492,20,51,24220,55,92,134 1,12,76,43,376130,239,189 Note1 :No issues were remanded to the file of the assessing officer for AY 2010-11&AY2012-13. Therefore, Interest u/s 244A(1A) is attributable after the expiry of 3mfrom the date of receipt of Tribunal order by Pr. CCIT or CCIT or Pr. CIT or CIT till the date of refund voucher i.e., 10.06.2024. Note2 :Minor issues were remanded to the file of Assessing Officer which resulted in small additions relating to depreciation& additional depreciation for AY 2013-14, AY2014-15&AY2015-16. Refund as per OGE entirely would be refund attributable to concluded issues only. Therefore, interest is attributable u/s 244A(1A)aftertheexpiryof3mfrom the date of receipt of Tribunal order by Pr. CCIT or CCIT or Pr. CIT or CIT till the date of refund voucher i.e., 10.06.2024 in accordance with the decision of this Honourable HC in Wipro Ltd vs JCIT(2021)438 ITR581(Karnataka HC). Note 3:-Computation of Interest accumulated upto the expiry of time limit U/s. 153(5) AY ROI IntereInterest InteInterest Refund of interest runsInterInterest ReguRegular IntInterest Total st should run resU/s earlier years from date ofest U/s lar assessmeru/s Interest us runs upto the t 244A(1b) available so adjusted peri244A(1b) asseent tax es244A(1b) 244(1) (b) from expiry of Per(Rs.) adjuted as od- (Rs) ssmepaid t (Rs) of expiry of time limit u/s iod regular Monnt tax on/InterePetime limit 153(5) in assessment ths paid(st runs riou/s 153(5) motax (Rs) Rs.) from d (Rs.) nth– s Months2010-11 NIL NIL 31.07.2019 NIL - 31,87,15,949,01.02.2015 55 8,76,46,886 - - - - 8.76.46.886 2012-13 NIL NIL 30.04.2021 NIL - - - - - 15,00,00,000 01.02.2017 52 3,90,00,000 3,90,00,000 2013-14 16,15,331 01.04.201331.10.2020 93 7,51,129 - - - - 23,01,31,500 21.08.2017 39 4,48,75,643 4,56,26,771 2014-15 NIL NIL 31.05.2021 NIL - 2,13,00,000 29.03.2019 27 28,75,500 18,84,95,618 01.01.2019 30 2,82,74,343 3,11,49,843 2015-16 12,49,691 01.04.201530.04.2021 75 4,68,634 - - - - 2,00,00,0000 03.01.2020 17 17,00,000 21,68,634 20,55,92,134 16. The aforesaid facts and circumstances clearly establish that the petitioner is entitled to interest under Section 244A(1A) also. 17. In the result, I pass the following:- ORDER 16. The aforesaid facts and circumstances clearly establish that the petitioner is entitled to interest under Section 244A(1A) also. 17. In the result, I pass the following:- ORDER (i) Petition is hereby allowed. (ii) In view of the refund granted by the respondents – revenue to the petitioner on 10.06.2024 and in view of (iii) & (iv) below prayers (A), (B) and (F) to the petition do not survive for consideration. (iii) The respondent – revenue is directed to grant refund of Rs.15,81,84,285/- for the Assessment years 2010-11 to 2015-16 to the petitioner as stipulated under Section 244A(1)(b) of the I.T.Act within a period of one month from the date of receipt of a copy of this order. (iv) The respondent is further directed to grant interest on refund in a sum of Rs.13,02,39,189/- as stipulated under Section 244A(1A) of the I.T.Act for the Assessment years 2010-11 to 2015- 16 to the petitioner within a period of one month from the date of receipt of a copy of this order. Sd/- (S.R.KRISHNA KUMAR) JUDGE Srl.