GE Capital Mauritius Overseas Investments Vs Deputy Commissioner of Income-tax & another
Delhi High court
Date-26th March 2021

Sub-whether order u/s 241A withholding refund pending completion of scrutiny assessment can be quashed by writ court under article 226 of the Constitution of India.

The Delhi high court in an interesting case as above was dealing with GE Capital’s challenge to order u/s 241A which was passed by the department to withholding refund of more than Rs 200 crore to which GE became entitled upon filing its return for AY 2018-19 in which it had disclosed income of more than Rs 1000 crore on sale of shares of SBI Cards and payments which was listed on stock exchanges and in respect of which GE claimed benefit of Article 13(4) of the INDO Mauritius treaty. While holding that though there is no time limit prescribed under the law for passing order u/s 241A and therefore the time limit for issuance of intimation and refunds thereupon has to be read into it , the Delhi high court dismissed the writ petition on the ground that Section 241A of the Act, though in the nature of attachment before judgment, but owing to the determination of tax liability being not in the domain of this Court, save under Section 260A, but in the domain of the statutory scheme under the Income Tax Act, this Court in writ jurisdiction, while entertaining a challenge to an order under Section 241A of the Act, will ordinarily not enter into the correctness of reasons given for holding that the assessee may be ultimately found liable for tax. For the writ Court to quash the order under Section 241A of the Act on the ground that no tax is due and thus question of refund likely to adversely affect the revenue does not arise, this Court has to conclusively hold that the petitioner has no tax liability in India which the court declined to do.

This is an interesting judgement and this issue is being faced by lot of assessees. However, the court can in appropriate cases be approached to quash the order under Section 241A of the Act on the ground that no tax is due and thus question of refund likely to adversely affect the revenue does not arise.