Refund ₹788 crore to telecom firm in 3 weeks: HC to I-T dept

In a relief for Vodafone Idea Limited, the Bombay high court (HC) recently directed the Income Tax (I-T) department to refund ₹788.39 crore to the company within

In a relief for Vodafone Idea Limited, the Bombay high court (HC) recently directed the Income Tax (I-T) department to refund ₹788.39 crore to the company within three weeks. This is the second time in a month that the HC has ordered the department to transfer refunds, withheld on grounds like TDS (tax deduction at source) mismatch, to the company.

HT Image

Earlier this month, a division bench of justice Akil Kureshi and justice SJ Kathawalla had ordered the department to refund ₹374.26 crore withheld owing to TDS mismatch of ₹1. Last week, the same bench directed the department to refund ₹788.39 crore. The amount arose out of the assessment order dated March 24, 2019, related to the financial year 2017-18, amounting to ₹6,600.47 crore.The assessing officer had withheld the refund as the company had declared an income of ₹286.86 crore during the assessment year 2016-17, but declared a huge loss in the next financial year. The officer found it necessary to conduct an investigation of the returns for 2017-18. The officer also referred to other issues that were pending with the Income Tax Appellate Tribunal, and concluded that the total tax amount was likely to increase.

The bench, however, refused to accept the grounds cited by the assessing officers for withholding the refund. “Merely because in the immediately preceding assessment year 2016-17, the assessee had declared a positive income as against substantial loss declared in the present assessment year, by itself, cannot be a ground to doubt the contents of the return or the claim of the assessee with respect to the loss suffered,” said the bench.

Besides, the bench noted that the firm had on May 17, 2016, filed an application seeking waiver of deduction of tax at source by its payees. Acting on the plea, the deputy commissioner (TDS) had granted the waiver. However, the order came a day before the end of the financial year, on March 30, 2017. The bench said had the order come in time, the telecom major’s payees would not have deducted tax at source and there would be no need to seek refund.

.