The Delhi High Court has come down heavily on the Income Tax Department for sitting over a tax refund for nearly eight years. In a sharply worded order, the court directed the authorities to immediately release over ₹5.37 crore to Microsoft Corporation India Pvt. Ltd., along with statutory interest, calling the delay “shocking” and “utterly negligent”.
Background of the Case
The dispute arose from a refund linked to Fringe Benefit Tax. Microsoft India approached the court after repeated requests to the tax department failed to yield results.
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During the hearing, the company pointed to a communication dated June 16, 2017, issued by the assessing officer. That letter clearly acknowledged that two refund amounts were payable to the company. While one amount was eventually released, the second refund - ₹5,37,77,310 - remained unpaid.
Counsel for Microsoft argued that there was no legal hurdle involved.
“The officer was only waiting for a refund adjustment challan. This was purely ministerial work,” the lawyer submitted, adding that the delay stretched to more than eight years without justification.
Court’s Observations
The division bench Justice Dinesh Mehta and Justice Vinod Kumar did not mince words while assessing the conduct of the authorities.
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“The officers of the Income Tax Department have been callous towards the petitioner’s grievance,” the court observed, noting that withholding a legitimate refund for such a long period should have “pricked the conscience” of those in charge.
The judges also expressed displeasure that even after the writ petition was filed, the refund had still not been processed.
“It is painful to learn that in spite of the writ petition, even till today, the petitioner has not been paid the amount,” the bench remarked in open court.
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When the department sought another twelve weeks to process the payment, the court rejected the request outright, calling it unreasonable. The bench said such conduct showed that the department was taking both citizens and the High Court “for granted.”
Arguments by the Tax Department
Representing the Income Tax Department, the senior standing counsel informed the court that the assessing officer had assured him the payment would be made with interest within twelve weeks.
However, given the history of delay, the court was unconvinced and refused to grant further time beyond a firm deadline.
Decision
Allowing the writ petition, the Delhi High Court directed the tax authorities to pay the entire pending refund of ₹5.37 crore along with applicable interest, including additional interest under Sections 244 and 244A(1A) of the Income Tax Act.
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The court fixed February 15, 2026, as the final deadline for payment, specifying that the amount must be credited directly to Microsoft India’s bank account.
In a strong deterrent measure, the bench added that if the refund is not paid by the deadline, the Deputy Commissioner of Income Tax will have to personally pay costs of ₹1 lakh to the company, from his own pocket.
With this direction, the court brought the matter to a close, underlining that administrative delays cannot be allowed to override taxpayer rights.
Case Title:- Microsoft Corporation India Pvt. Ltd. vs Deputy Commissioner of Income Tax & Others
Case Number:- W.P.(C) 5608/2025
