Cash-strapped Vodafone Idea to get Rs 833 crore in tax refund, Supreme Court slams taxmen for delay

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Updated: Jul 23, 2020 8:59 AM

Pursuant to the SC’s directions, the assessing officer (AO) on May 28 computed the refund payable to Vodafone at Rs 1009.43 crore for the assessment year 2014-15, but reduced it to Rs 833.04 crore on account of pending demands against the assessee.

Supreme Court, income tax department, Bombay High Court, Vodafone Idea, vodafone idea tax refund, latest news on vodafone ideaA bench led by Justice UU Lalit slammed the revenue authorities for failing to release the tax refunds to Vodafone Idea as directed by it on April 29.

The Supreme Court on Wednesday rejected the income tax department appeal against the Bombay High Court’s June 26 order that directed it to refund Rs 833 crore to telecom major Vodafone Idea in two weeks. A bench led by Justice UU Lalit slammed the revenue authorities for failing to release the tax refunds to Vodafone Idea as directed by it on April 29.

The apex court earlier while dismissing the Vodafone Idea’s claim for tax refund of around Rs 4,761 crore had directed that the amount of Rs 733 crore be refunded to the company for assessment year 2014-15 within four weeks subject to any proceedings that the revenue authorities may deem appropriate to initiate in accordance with law. It also directed the income tax department to conclude the proceedings initiated pursuant to notice under sub-section (2) of Section 143 of the Act in respect of AY 2016-17 and 2017-18 as early as possible.

Pursuant to the SC’s directions, the assessing officer (AO) on May 28 computed the refund payable to Vodafone at Rs 1009.43 crore for the assessment year 2014-15, but reduced it to Rs 833.04 crore on account of pending demands against the assessee. The company then moved the Bombay High Court seeking release of the refund amount on the grounds that there was no provision under the Income Tax Act allowing withholding of the admitted amount once refund orders have been issued. The HC on June 26 also ruled in favour of the assessee, saying the department’s May order had attained finality and it had no power to withhold refunds against undetermined future demands.

Challenging the HC order that directed it to refund Rs 833 crore to the telecom major in two weeks, the department in its appeal stated that the SC gave precedence to any such proceeding which it may “initiate and then the direction to refund will have to yield to such proceedings being initiated in accordance with law.”

“Therefore, the direction of refund applied if department chooses not to initiate proceedings to adjust the said demand of Rs 733 crore generated on completion of scrutiny assessment for AY 2014-15 against any other demands pending against the assessee,” solicitor general Tushar Mehta argued.

However, the apex court also rejected the department’s plea seeking to withhold the refund on the grounds that they may have a future demand against the teleco arising out of the pending assessment orders.

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