2023 (7) TMI 30 - HC - Income Tax

Migration of credit for advance tax and tax deducted at source (TDS) post merger - Claim of credit of taxes paid by Polaris in the merged entity of Virtusa - HELD THAT - Today when the matter is called upon Standing Counsel submits on the basis of written instruction that challan from Polaris to Virtusa has been successfully migrated. Earlier such migration could not be uploaded as manual order could not be uploaded. The migration order finally got uploaded manually on 07.06.2023 and credit for advance tax and TDS was allowed resulting in a refund. Petitioner submits that direction may be issued to the respondents to release the refund to the petitioner in a time-bound manner. Since the basic grievance of the petitioner has been redressed, we are of the view that the consequential refund is required to be remitted to the petitioner at an early date with applicable interest in accordance with law. Let the refund along with applicable interest be remitted to the petitioner within a period of eight weeks from the date of receipt of a copy of this order. This disposes of the writ petition.

Summary

Issues involved:
The issues involved in the judgment are related to the inaction of the respondents in disposing of a rectification application and granting refunds, the credit of pre-paid taxes of merged entities, and the timely release of refunds with interest.

Rectification Application and Refunds:
The petitioner filed a petition under Article 226 of the Constitution of India seeking relief for the inaction of the respondents in not disposing of the rectification application dated 28.01.2022 and not granting refunds, which was declared illegal, unjust, and against the provisions of the Income Tax Act, 1961. The petitioner also requested the respondents to grant credit of all pre-paid taxes of merged entities and to expeditiously dispose of the rectification application and grant the refund amount of Rs. 55,48,66,713/- (principal amount of Rs. 47,22,26,990/- with interest amount of Rs. 8,26,39,723/-) within a specified time frame. The court directed the respondents to remit the refund along with applicable interest to the petitioner within eight weeks from the date of the order.

Migration of Credit for Advance Tax and TDS:
The matter pertained to the migration of credit for advance tax and tax deducted at source (TDS) from Polaris Consulting & Services Limited to Virtusa Consulting Services Private Limited following their merger. Virtusa requested the revenue to allow credit of taxes paid by Polaris in the merged entity. The migration order from Polaris to Virtusa was successfully uploaded manually on 07.06.2023, allowing credit for advance tax and TDS and resulting in a refund of Rs. 51.66 crores. The court noted that since the migration issue was resolved, the consequential refund needed to be remitted to the petitioner promptly with applicable interest as per the law.

Conclusion:
The court, having found that the basic grievance of the petitioner had been redressed with the migration of credit and refund processing, directed the respondents to release the refund along with applicable interest to the petitioner within eight weeks from the date of the order. The writ petition was disposed of, and any pending miscellaneous applications were closed without any order as to costs.