Rs. 5.37 Crore Refund Stuck for 8 Years: HC Reprimands Tax Dept. for Its Callous and Negligent Attitude:

Rs. 5.37 Crore Refund Stuck for 8 Years: HC Reprimands Tax Dept. for Its Callous and Negligent Attitude Delhi High Court directed the Income Tax Department to refund Rs. 5.37 crore with interest to Microsoft India after an 8-year delay, criticised departmental negligence, set a February 15, 2026, deadline, and warned of Rs. 1 lakh personal cost on the defaulting officer. Microsoft Corporation India Private Limited has filed a writ petition in the Delhi High Court against the Income Tax Department for not issuing a refund amounting to Rs. 5.37 crore arising from fringe benefit tax for over eight years. Also, prayed the court to direct the tax department to release the relevant amount of interest.

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Before the High Court, the company tried to draw attention towards a communication dated June 16, 2017, issued by the Additional Commissioner of Income Tax, Special Range 6, New Delhi, which clearly stated that the amounts of Rs. 69,456,509 and Rs. 53,777,310 are required to be payable to the company. Of which, the amount of Rs. 6.94 crore was successfully paid; however, the amount of Rs. 5.37 crore is yet to be paid. The company argued that the Assessing Officer (AO) was merely awaiting a routine adjustment challan, but despite this, the department failed to release the amount for more than eight years. The company stated that such an inordinate delay was unjustified and claimed interest under Sections 244 and 244A(1A) of the Income Tax Act. The company also requested the court to impose exemplary costs on the department for its negligence.

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During the hearing, the tax department assured the court that the refund, along with the relevant interest for 8 years, will be paid to the company within twelve weeks. However, the court strongly criticised the negligence of the tax department. The court asserted that "we are of the firm view that the officers of the Income Tax Department have been callous towards the petitioner’s grievance, as they did not pay any heed to the petitioner’s grievance. Not paying the refundable amount to an assessee for eight years is shocking and is an issue that should have pricked the conscience of the officers at the helms of affairs." The court stated that holding a taxpayer's refund for over eight years shows the callous and negligent attitude of the tax department. The Court noted that such conduct should have troubled the conscience of senior officers and that the petitioner was forced to approach the Court due to the department’s inaction.

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In conclusion to the aforesaid findings, the court allowed the writ petition and directed the tax department to release the entire refund amount of Rs. 5.37 crore, along with all applicable interest, including interest under Section 244A(1A), by February 15, 2026, directly into Microsoft’s bank account. Further stated, if the tax department fails to comply with the prescribed time limit, then the Deputy Commissioner of Income Tax will have to personally pay costs of Rs. 1 lakh to the petitioner from his own pocket.