india

Updated: Oct 18, 2019 13:00 IST

The Bombay high court has ordered the income tax department to refund Rs 788.39 crore to Vodafone Idea Limited within three weeks. The money had been held back by the department.

This is the second occasion when the high court has granted relief to the company.

Earlier this month, the two-judge bench comprising justice Akil Kureshi and justice SJ Kathawalla had ordered the tax department to process refund of Rs 374.26 crore due to the company. The amount, arising out of two assessment orders, had been withheld by the department on grounds such as a Re 1 mismatch in the tax deducted at source.

The order to refund Rs. 788.39 crore arose was issued last week. The dispute has its origin in the assessment order of March this year for 2017-18, the financial year in which the company had suffered huge losses in excess of Rs 6,600 crore.

The income tax officer had ordered withholding the refund on the ground that the company had declared income of Rs 286.86 crore during the assessment year 2016-17, and a huge loss the next year. The officer felt there was a need to thoroughly investigate the return for the year 2017-18.

The officer had also referred to several other issues such as revenue share license fees, non-deduction of tax at source on discount to prepaid distributors, non-deduction of tax at source on international roaming charges etc, pending with the Income Tax Appellate Tribunal. He concluded that there was likelihood of enhancement in demand of tax.

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 company had on May 17, 2016, filed an application under Section 197 of the Income Tax Act before the Deputy Commissioner of Income Tax (TDS) seeking waiver from deduction of tax at source by its payees, claiming its financial condition did not justify such deduction.