The HC held that the company is entitled to interest on its income tax refund under Section 244A, ruling that such interest cannot be denied unless the delay is clearly attributable to the assessee.
Saloni Kumari | Feb 21, 2026 |
Interest on Income Tax Refund a Legal Right; Denial Permissible Only if Assessee Caused Delay: HC
The Delhi High Court in a recent case has dismissed the Income Tax Department’s appeal against HCL Infotech Pvt. Ltd. and upheld the company’s right to receive interest on its income tax refund under Section 244A of the Income Tax Act, 1961.
The present writ petition has been filed by the Income Tax Authorities against a company, HCL Infotech Pvt. Ltd., in the Delhi High Court, challenging an order dated September 15, 2023, passed by the Income Tax Appellate Tribunal (ITAT), Bench “B”, New Delhi, in favour of the petitioner.
The company had initially filed its income tax return (ITR) for the Assessment Year 2014-15, declaring a total loss of Rs. 129.36 crore and claiming a refund of Rs. 15.38 crore. After a court-approved merger scheme involving its holding company, HCL Infosystems Ltd, the company had to recast its accounts. Subsequently, the company furnished a revised return on March 21, 2016, declaring a total loss of Rs. 130.25 crore and claiming an additional TDS credit/refund of Rs. 10.24 crore, making the total refund of the TDS Rs. 25.63 crore. This way, his total refund claim was increased.
However, due to a glitch in the portal, the TDS credit could not be properly reflected in the revised return. Thereafter, the petitioner immediately reports the issue to the Centralised Processing Centre (CPC) and the concerned Assessing Officer (AO). Later, the company filed a rectification application under Section 154, seeking rectification of the assessment order and claiming a refund of the tax that had been deducted from the payments made to it. Through an order dated April 26, 2018, the AO granted the TDS refund to the appellant but denied interest under Section 244A, stating that the delay was the company’s fault.
The CIT(A) ruled in favour of the petitioner, and the tribunal also upheld the ruling of the CIT(A), holding that there was no delay attributable to the company. When the high court analysed the facts of the case and two earlier rulings of the CIT(A) and ITAT, it held that interest on refund is a legal right and can be denied only if the delay is clearly attributable to the assessee. The court highlighted the provisions of Section 244A(2), which says only higher authorities, like the Principal Commissioner or Chief Commissioner, can decide whether any delay period should be excluded. The Assessing Officer does not have the authority to decide on such matters.
Considering the same, the high court dismissed the appeal of the tax authorities and confirmed that the company is entitled to interest on the refund.
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