Case Law Details
Virtusa Consulting Services Private Limited Vs DCIT (Telangana High Court)
Telangana High Court Directs IT Department to Process Virtusa’s Rectification Application
In a recent judgment, the Telangana High Court has issued directions to the Income Tax Department to promptly handle a rectification application filed by Virtusa Consulting Services Private Limited. The court’s decision comes after the company sought a declaration regarding the delay in processing the application and the grant of refunds.
Background of the Case
Virtusa Consulting Services Private Limited approached the Telangana High Court through a writ petition (W.P. No. 6637 of 2023) under Article 226 of the Indian Constitution. The company raised concerns about the inaction of the Income Tax Department in failing to process their rectification application, which was dated 26th December 2019. They also claimed that this delay in granting refunds was unlawful and in violation of the provisions of the Income Tax Act, 1961.
The petitioner further requested the court to instruct the Income Tax Department to provide credit for the prepaid taxes of merged entities, seeking a fair resolution to their grievances.
Court’s Observations and Decision
During the hearing of the case, the court noticed that Virtusa Consulting Services Private Limited had filed another writ petition, W.P. No. 6638 of 2023, addressing similar issues. In W.P. No. 6638 of 2023, the company had merged with Polaris Consulting & Services Limited, based on the order of the National Company Law Tribunal, effective from 1st April 2017. In response to the issues raised in the petition, the Income Tax Department acknowledged the successful migration of challans from Polaris to Virtusa. Consequently, the court disposed of W.P. No. 6638 of 2023 on 9th June 2023.
In the present case, Virtusa Consulting Services Private Limited cited a merger based on the order of the National Company Law Tribunal. The court noted that the Income Tax Department had already completed its part in this merger. However, it was brought to the court’s attention that the migration of one of the companies involved in the merger was pending due to technical reasons. The migration was to be carried out from Circle-III in Chennai, and the Income Tax Department’s officers were actively pursuing the matter.
Taking this into consideration, the Telangana High Court decided that there was no reason to prolong the proceedings of the writ petition. The court ruled that the matter in the jurisdiction of the Hyderabad office of the respondents had been adequately addressed, and the remaining steps were to be completed by the Income Tax Department’s officers in Circle-III, Chennai. The court directed respondent No. 1 to ensure that the rectification application, initiated by Virtusa Consulting Services Private Limited, was processed and finalized as soon as possible.
The court set a deadline of eight weeks, the same timeline that had been granted in the earlier writ petition, to complete the rectification process. The court emphasized that the petitioner would be entitled to claim any refunds in accordance with the law, subject to the successful migration. Any refund applications were to be processed without unnecessary delay.
The Telangana High Court ruled in favor of Virtusa Consulting Services Private Limited, providing a solution to their pending rectification application and refund issues. No costs were imposed as part of this judgment, and any related miscellaneous petitions would be closed as a result of the court’s decision.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ, order or direction, more particularly in the nature of Writ of Mandamus declaring and directing the Respondents to:
I. Declaring the in-actions of the Respondents in not disposing off the rectification application dated 26.12.2019 and not granting the refunds, as illegal, unjust, and against the provision of the Income Tax Act, 1961; and
II. Directing the Respondents to grant crecit of all pre-paid taxes of merged entities in the hands of the Petitioner; and
III. Directing the Respondents to expeditiously dispose of the rectification application dated 26.12.2019 and grant/issue refund of Rs. 17,13,22,726/- (Rs. 13,22,95,541/- principal amount with Rs. 3,30.27,185/- interest amount) along with up to date interest within a reasonable/specified time frame by electronic/manual/paper mode and ensure that refund is not withheld due to any technical difficulties/reasons.
IV. For such further and other reliefs, including costs of this Petition, as this Hon’ble Court may deem fit and proper in the nature and circumstances of the case.
V. Award the costs of this Writ Petition in f2vour of the Petitioner and against Respondents.
Counsel for the Petitioner: M/s. ANANYA KAF’OOR
Counsel for the Respondents: M/s. SUNDARI R.PISUPATI, Sr. SC FOR IT DEPT. The Court made the following: ORDER
THE HON’BLE SRI JUSTICE P.SAM KOSHY
AND
THE HON’BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY
W.P. No. 6637 of 2023
Heard Ms. Ananya Kapoor, learned counsel for the petitioner and Ms. Sundari R. Pisupati, learned Senior Standing Counsel for Income Tax Department for the respondents.
2. The instant writ petition has been filed seeking to declare the in-actions of the respondents in not disposing off the rectification application dated 26.12.2019 and so far as not granting refund amounts, as illegal and unjust. It was also the prayer of the petitioner to direct the respondents to grant credit of all pre-paid taxes of merged entities in the hands of the petitioner.
3. During the course of hearing, learned counsel for the petitioner produced before this Court a copy of W.P.No.6638 of 2023 filed of similar nature by the petitioner. In the said writ petition, there was merger of Polaris Consulting & Services Limited (hereinafter referred to as, ‘Polaris’) to the petitioner’s establishment i.e, Virtusa Consulting Services Private Limited (hereinafter referred to as, Tirtusal. The merger of Polaris with Virtusa was on the basis of the order passed by the National Company Law Tribunal dated 03.04.2018 with effect from 01.04.2017. Consequent to the said merger, the learned Senior Standing Counsel for the Department in W.P.N0.6638 of 2023 submits on instructions that the challan from Polaris to Virtusa had been successfully migrated and on the said statement made by the learned counsel for the Department, the said writ petition stood disposed of vide order dated 09.06.2023. In the instant case also, the merger has been on the basis of the order of the National Company Law Tribunal Thereafter, the writ petition has now been filed for a similar relief.
4. However, in the instant case, learned Senior Standing Counsel for the Department submits on the basis of the instructions that the migration of one of the companies has to be done from the Chennai Office, as the said company falls within Circle-III and it is being pursued at Chennai by the respondents herein. Further that it is expected to take place at the earliest, but for the technical reasons that are coming in the way of the Department, it would take some time to proceed with the same.
5. Given the said submission by the learned Senior Standing Counsel for the Department that so far as the role that has to be played by the Office of the respondents in Hyderabad is concerned, that has already been done and that the further steps have to be taken by the concerned officers of the Income Tax Department at Circle-III, Chennai, we do not find any good reason to keep the writ petition pending any further.
6. Accordingly, in the light of the disposal of W.P.No.6638 of 2023, the present writ petition also stands disposed of with a specific direction to respondent No.1 to ensure that the rectification application initiated by the petitioner is dealt with and finalized at the earliest, within an outer limit of eight (8) weeks, as was granted in the earlier writ petition. Subject to the migration being done successfully, the petitioner would be entitled for claiming whatever refund that they are entitled for in accordance with law. The refund application if any also shall be processed and finalized as expeditiously as possible. No order as to costs.
Consequently, miscellaneous petitions pending, if any, shall stand closed.
