Landmark Property Development Co Ltd Vs DCIT (Delhi High Court)
System Glitch No Excuse- Refund Cannot Be Blocked by CPC Limitations -Advance Tax Credit Must Be Given- Delhi HC Directs Manual Refund in Demerger Case –
The Delhi High Court addressed a writ petition concerning the grant of credit for advance tax paid by a predecessor entity in the context of a corporate demerger. The petitioner argued that part of the advance tax deposited in the PAN of the predecessor ought to be credited to the demerged company, but due to system limitations at CPC, such adjustment was not being reflected, resulting in an incorrect demand & blocking of refund.
On an earlier date, the Revenue had sought time to resolve the issue. At the next hearing, the Department placed on record an email dated 15.09.2025 from the DCIT, acknowledging technical limitations in the IT system which prevented partial credit transfer between PANs. It was stated that the matter was being handled manually, & a proposal had already been sent to the CCIT (Central), New Delhi for approval to issue a paper refund after giving manual credit of the disputed advance tax. The Revenue also proposed to mark the impugned demand as “stayed” to prevent future refunds from being wrongly adjusted at CPC.
Taking note of this stand, the Division Bench disposed of the petition, directing the Revenue to take necessary follow-up action within three weeks as an outer limit. The Court clarified that if action was not taken within the stipulated time, the petitioner would have the liberty to seek revival of the writ petition. Pending applications were dismissed as infructuous.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. On the last date of hearing we have passed the following orders.
“1. Learned Counsel for the respondent/revenue seeks time to ensure resolution of the issue raised by the petitioner in this petition.”
2. Today the learned counsel appearing for the respondent has placed before us a mail dated 15.09.2025 received from DCIT, Central Circle-01, Delhi which reads as under:
“2. In this regard, it is stated that the Systems Directorate has expressed its technical limitation and inability to allow partial credit of advance tax challan made in the PAN of predecessor entity in the hands of the demerged entity. It has been advised to handle the issue manually.
3. Accordingly, a proposal has been submitted to the Chief Commissioner of Income-tax (Central), New Delhi through proper channel on 01.09.2025 requesting to accord approval to allow issuance of paper refund to the assessee by manually giving the credit of partial advance tax paid on a different PAN
4. It is also noted that manual handling of the issue will not result in removal of demand in CPC portal. Hence, to avoid recurrence of the adjustment of future refunds against the impugned demand on CPC portal, it has been proposed to mark the demand ‘stayed’.
5. As such, the matter is under process and kind consideration of the office of CCIT (Central), New Delhi and is expected to be resolved soon.
6. Hence, the Hon’ble Court may kindly be requested to allow about 2 weeks’ time to suitably settle the issue taken up by the petitioner by way of impugned writ petition.”
3. The reading of the said e-mail would reveal that a proposal has been submitted to the Chief Commissioner of Income Tax, Central, New Delhi requesting to accord the approval to allow the issuance of paper refund to the assessee by manually giving the credit of partial advance tax paid on a different Pan.
4. It is also stated two weeks be granted to suitably settle the issue taken up by the petitioner in the writ petition. Accordingly, we by taking a stand of the respondent on record dispose of the petition by directing the respondent to take up the follow up action within three weeks as an outer limit.
5. It is made clear that if the action is not taken within three weeks, liberty shall be with the petitioner to file an application seeking revival of the writ petition.
6. The petition is disposed of.
7. The pending applications, if any, stands dismissed as infructuous.
