Delhi High Court - Orders
M/S Huawei Telecommunications (India) ... vs The Deputy Director Of Income Tax ... on 18 March, 2026
$~53
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 6352/2022
M/S HUAWEI TELECOMMUNICATIONS (INDIA) COMPANY
PVT. LTD. .....Petitioner
Through: Mr. Arvind Datar and Mr. Tarun
Gulati, Sr. Advs. with Mr. Kishore
Kunal, Mr. Ankita Prakash and Mr.
Anuj Kumar, Advs.
versus
THE DEPUTY DIRECTOR OF INCOME TAX (INV.)-4(3), NEW
DELHI & ORS. .....Respondents
Through: Mr. Indruj Singh Rai, SSC, Mr.
Sanjeev Menon and Mr. Rahul Singh,
JSCs and Mr. Gaurav Kumar, Adv.
CORAM:
HON'BLE MR. JUSTICE DINESH MEHTA
HON'BLE MR. JUSTICE VINOD KUMAR
ORDER
% 18.03.2026 CM APPL. 46949/2023 (Direction) CM APPL. 56770/2024 (Direction) CM APPL. 22417/2025 (delay of 160 days in filing reply)
1. By way of instant application filed, the petitioner-company seeks requisite direction/ permission to repatriate the amount of dividend which the petitioner-company is required to pay to its shareholders situate outside India.
2. The facts necessary for the present purpose are that the petitioner is a company registered in India. Many of its shareholders are outside India and the ultimate parent/holding company is situated in China.
3. The instant writ petition (W.P.(C) no. 6352/2022) was filed laying Page 1 of 8 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 25/03/2026 at 20:38:02 challenge to the action of the respondents, who had attached/freezed all bank accounts and trade receivables and stopped all outward remittances by way of impugned order dated 17.02.2022 and 19.02.2022 passed under section 132(9B) of Income Tax Act, 1961.
4. By various orders of this Court viz 06.07.2022 and 01.08.2022, Coordinate Benches of this Court had allowed outward remittances including royalty but excluding dividend.
5. We would like to mention that vide order dated 30.08.2022, this Court had allowed all other expenses, except royalty and dividend, to be paid/repatriated abroad, while observing thus:-
"7. Having heard the learned senior counsel for the Petitioner and the senior standing counsel for the Revenue, in view of the fact that the Petitioner has agreed to secure the Respondents, we do not wish to go into the merits of the allegations and contentions raised. Consequently, to balance the equities, without going into the merits of the contentions raised by the respective parties, the present writ petition is being disposed of and accordingly the previous orders dated 21st April, 2022 stands modified to the following extent: -
(i) In addition to the Fixed Deposit Receipt of Rs. 100 crores which was directed to be made by order dated 21st April, 2022, the Petitioner shall prepare another Fixed Deposit Receipt of Rs.100 crores in Axis Bank Account No. 919020017328222, which shall be renewed automatically from time to time. A photocopy of the said FDR shall be filed with the Assessing Officer within a week. The Banker is also Page 2 of 8 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 25/03/2026 at 20:38:02 directed to ensure that the Petitioner and/or any of its officials/nominees/authorized representatives do not deal with the FDR in any manner. There shall be a lien in favour of the Department with respect to both the FDRs till conclusion of the assessment proceedings and thereafter the amount will be dealt in accordance with law. The Bankers will issue a letter to the AO acknowledging the lien in favour of the Department
(ii) The Respondents are directed not to release any refund [which is stated to be to the tune of Rs.30 crores (approx.)] to the Petitioner till the assessment proceedings are completed and thereafter the refund shall be dealt with in accordance with law.
(iii) The Respondents are directed to complete the assessment as expeditiously as possible. The parties will be at liberty to apply to this Court to seek a variation of this order.
(iv) The Petitioner shall not repatriate any royalty or dividend abroad. The Petitioner will be at liberty to approach this Court, in case the need so arises.
(v) The Petitioner shall continue to file its monthly statement with the assessing officer of 'Payments Received as well as Made'."
6. Thereafter vide order dated 09.02.2024, the payment of royalty was allowed subject to deduction of tax. An amount of Rs.97 Crores was allowed to be repatriated vide paragraph no. 6 of the order dated 09.02.2024, which reads as under:
"6. Presently and for the purposes of considering the grant Page 3 of 8 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 25/03/2026 at 20:38:02 of relief to the applicant, we are of the considered opinion that the facts and circumstances warrant the applicant being permitted to repatriate Rs. 97crores which represents the royalty subject to deduction of tax. The applicant is thus permitted to repatriate moneys payable towards royalty less TDS in the interim and till the matter is taken up for consideration again. We further direct the applicant to provide full and complete details in respect of the royalty repatriation which is proposed to be undertaken to the respondents."
7. As a consequence of the above referred orders, the petitioner- company was allowed to make payment/repatriate all expenses and royalty subject to depositing Rs.200 Crores Fixed Deposit Receipts (hereinafter referred to as "FDR") in Axis Bank and DBS bank with a stipulation that there shall be a lien in favour of the Department in respect of these FDRs.
8. Mr. Arvind Datar and Mr. Tarun Gulati, learned Sr. Advs. for the petitioner submitted that a substantial amount of earnings is accumulated with the petitioner-company and it is not only under a moral obligation but also under a statutory obligation to declare the dividend and disburse the same to its shareholders. They further submitted that because of non- payment of dividend, the company's share value is not getting its worth in the market, as the investors are hardly getting anything.
9. During the course of arguments, a chart was handed over with the initials of authorized signatory of the company who was also present in the Court. The same is taken on record.
10. According to the details furnished in the chart, it was submitted that Page 4 of 8 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 25/03/2026 at 20:38:02 the proposed dividend to be paid to the shareholders and repatriated out of India is approximately Rs.800 Crores. (if allowed to be announced and paid).
11. Learned Senior Counsel submitted that as of today, a refund of Rs.29,76,90,160/- for Assessment Year (AY) 2021-22 has been withheld by the authorities, apart from the FDR of Rs.200 Crores drawn on Axis Bank and DBS Bank which are under lien with the Income Tax Department and prayed that the petitioner-company be allowed to repatriate the dividend.
12. Mr. Indruj Singh Rai, learned Senior Standing Counsel vehemently opposed the application and submitted that as of today, there is an outstanding demand of about Rs.4,000 Crores against the petitioner- company and if it is allowed to repatriate the amount, it will be very difficult for the respondents to recover the demand. He produced a chart which shows that the total outstanding demand is as high as Rs.38,88,77,42,405/-. The said chart is taken on record (A copy whereof has been handed over to petitioner's counsel).
13. He submitted that the petitioner-company has its origin in China and it has hardly any assets in India and therefore, it will be very difficult to recover the outstanding demand if petitioner's challenge to the assessment orders fail.
14. Mr. Datar, at this juncture interjected and submitted that the demand that is being shown by the respondents' counsel is unsustainable and each of the demands has either been stayed by the Appellate Authority or by this Court.
15. He argued that since at the time of granting interim order and staying the demand, this Court had not imposed any condition of depositing or even Page 5 of 8 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 25/03/2026 at 20:38:02 furnishing surety, the right of the petitioner-company to repatriate the legitimate money to its shareholders cannot be thwarted as prayed by the respondents' counsel.
16. Heard learned counsel for the parties and perused the previous order and record to the extent necessary.
17. It has been informed that since 2021, the petitioner-company has not been able to repatriate dividend to its foreign investors and shareholders. It is also true that a demand of about Rs.4,000Crores is pending against the petitioner-company, but this Court cannot lose sight of the fact that entire demand has been stayed by this Court or by the Appellate Authority, that too without any condition of furnishing surety.
18. In this overall factual backdrop, we are of the view that the rights of the investors and shareholders cannot be curtailed or deferred, simply because the Income Tax Department had preemptively freezed the accounts of the petitioner-company under apprehension.
19. True it is, that such apprehension has ultimately translated or culminated into assessment orders with huge demand but those assessment orders are all pending legal scrutiny before the Appellate Authority or the High Court, which have passed various interim orders staying such demand.
20. According to us, while passing interim order on the stay application if the High Court has not put any embargo or condition to secure the demand, the petitioner cannot be put to any condition let alone any onerous or stringent condition simply because the petitioner is praying that it be allowed to repatriate the reasonable amount of dividend to its shareholders. In any case, the demand shall always remain subservient to the orders passed by this Court in those writ petitions.
Page 6 of 8This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 25/03/2026 at 20:38:02
21. The petitioner's initial cause of action was freezing the bank accounts and stoppage of withdrawal of money anticipating a demand. The demand has now been crystalised and the same stands stayed. The petitioner's payments except payment/repatriation of dividend are already permitted. According to us, since the demand has been crystallized and stayed, unabated embargo on the repatriation of the amount will be contrary to the petitioner's right so also the rights of its shareholders.
22. We see no reason to continue such bar for indefinite period. However, since an Assessment Order has been passed, we deem it appropriate to balance the equity and therefore, order that the petitioner-company shall be allowed to repatriate dividend to its [foreign investors and shareholders] by declaring and paying the amount of dividend in accordance with law, subject of course to, the guidelines in relation to foreign remittance and deduction of tax at source.
23. However, once the dividend is declared, the same shall be allowed to be repatriated only on furnishing Auto-renewable Interest bearing FDR of equal amount in any nationalized bank, which shall be deposited with Registrar General who shall keep the same, in the safe custody. The fate of these FDRs shall be subject to the final decision of writ petitions as mentioned in the chart submitted by Mr. Indruj Singh Rai.
24. The lien on the FDR of Rs.200Crores is hereby lifted and the petitioner-company is allowed to withdraw the FDR if they so desire and utilize the same as deemed expedient.
25. The amount of refund (Rs.29,76,90,160/-) for AY 2021-22 is allowed to be adjusted by the Income Tax Department against the demand of AY 2018-19 (about Rs.997Crores). Since this adjustment is being allowed on the Page 7 of 8 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 25/03/2026 at 20:38:02 concession of Mr. Gulati, learned Senior Counsel for the petitioner, the Department shall not be alleged to be in contempt of the interim order passed by this Court, in case they adjust the refund against the outstanding demand of AY 2020-21.
26. To set the figures right, we hereby clarify that the petitioner-company shall have to deposit an FDR of Rs.770Crores if they propose to repatriate a sum of Rs.800Crores as bonus. The amount of FDR shall be increased or decreased in the same way.
27. All pending applications in this writ petition stand disposed of.
DINESH MEHTA, J VINOD KUMAR, J MARCH 18, 2026/ss Page 8 of 8 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 25/03/2026 at 20:38:02