Supreme Court Upholds Bombay High Court Ordering IT Department For Tax Refund To Vodafone
Supreme Court Upholds Bombay High Court Ordering IT Department For Tax Refund To Vodafone
The judgment has come as a relief to the telecom company
The Supreme Court has upheld a Bombay High Court order directing the Income Tax Department to refund Vodafone Idea excess prepaid tax of Rs.1,128 crores.
Vodafone had sought a refund of prepaid taxes with interest for Rs.1,600 crore for the Assessment Year 2016-17, comprising advance tax and tax deducted at source (TDS).
A bench of Justice JB Pardiwala dismissed the department's appeal against the high court order that held the assessment order against the telecom major as "unsustainable and time-barred."
While dismissing the appeal of the IT department, the top court held, "There is a gross delay of 295 days in filing the SLP, which has not been satisfactorily explained by the petitioners.”
Earlier, the revenue department termed the high court order "perverse and beyond its jurisdiction of interpreting the law.”
It told the apex court that the high court set a time-limit for response from the assessing officer (AO), though there was no such time limit in the Income Tax Act.
The department stated, “The court barged into drafting legislation regarding time limit where none exists.” It added that the insertion of Section 144C was to provide an alternative dispute resolution mechanism within the department to correct any conservative view taken by the AO or the transfer pricing officer (TPO).
In August 2023, the AO passed the order against Vodafone, two years after a dispute resolution panel (DRP) issued directions to the company. It was issued under the faceless assessment system, meant to eliminate interface between the taxpayers and the department.
However, the operator said that even though in March 2021, the DRP issued the direction, the final order was not passed by the AO within the prescribed period of one month. Therefore, the Income Tax Return (ITR) of Vodafone for the Assessment Year 2016-17 became time-barred in April 2021.
Thus, the company had sought a direction to the Central Processing Centre, Bengaluru to grant a refund of taxes paid by it with interest.
In its ITR, Vodafone had disclosed a loss of Rs.5,042 crore. The telecom's claim for refund went through different levels, as it involved international transactions. It eventually went to the DRP, under the IT Act.
The department claimed that the AO received the DRP directions in August 2023. He passed the final assessment order in seven days - the statutory time limit, a contention opposed by Vodafone.
In 2018, UK's Vodafone Group PLC's India unit, Vodafone India, merged with Aditya Birla Group's Idea Cellular.
Additional Solicitor General S Dwarakanath appeared for the IT department and senior counsel Sachit Jolly represented Vodafone.
