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Tuesday, Oct 22, 2019

Bombay HC asks IT department to refund Vodafone Idea’s ₹374.26 crore withheld for a TDS mismatch of ₹1

mumbai Updated: Oct 11, 2019 00:30 IST
Kanchan Chaudhari
Kanchan Chaudhari

In a major relief for Vodafone Idea Limited, the Bombay high court last week directed the income-tax department to refund in two weeks ₹374.26 crore, which was withheld for about a year over a TDS (tax deducted at source) mismatch of ₹1, to the company.

The telecom major had filed two separate petitions seeking expeditious release of two refund amounts pertaining to the assessment year 2014-15.

While an assessment order of November 29, 2018, gave rise to a refund of Rs149.98 crore, by another assessment order of February 25, 2019, yet another amount of Rs224.28 crore, deducted by the company’s payers towards excess TDS, was ordered to be refunded.

The company complained to the high court that neither of these amounts, however, were released by the income-tax department. When the company pursued the matter with department officials, they were being told that the amount was being adjusted towards taxes payable by the telecom major under other assessment orders.

Its counsel pointed out to the high court that two assessment orders gave rise to the refund claim and there was no reason, no authority in law to withhold the amount. The counsel also pointed out that there was no question of adjusting the amount towards pending tax demands for other assessment years, as all the demand orders were either reversed or stayed by appellate authorities. “None of the demands could be adjusted to the refund in question.”

The company also pointed out that at times, the department officials cited TDS mismatch of Re1, arising out of rounding of figures, as the reason for withholding the refund. The department, however, took a different stance before the high court.

Its counsel claimed that the refund could not be processed because of a glitch in the central processing centre’s computer system. The glitch, according to him, occurred because the system did not accept the fact that other demands were either reversed or stayed.

The stance irked the bench of justices Akil Kureshi and SJ Kathawalla. The bench said when material facts were not disputable, there was no reason why the company should not get the refund, especially when the department accepted that other tax demands cited by them were not enforceable.

“That being the position, the refund of the petitioner, arising out of order of assessment for the year 2014-15 cannot be withheld, that too on the grounds of technical difficulty,” said the bench.

The bench said the technical glitch cannot override a correct legal position. “In the present case, the correct legal position is that the petitioner must receive the refund,” said the bench, adding, “Whatever the technical difficulties in releasing the refund, the department must sort it out and if the technical glitch prevents auto generation of refund, the officer concerned must do it manually.”

Taking due note of the fact that there could be a large number of such other cases, making it difficult to process refund because of the problem, the bench also directed the department to address the larger issue “so that similar disputes do not have to travel to the high court for resolution.”

First Published: Oct 11, 2019 00:30 IST

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