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2010 (12) TMI 961 - HC - Income TaxRefund - whether tax admittedly paid by the petitioner-assessee by way of TDS in respect of the alleged interest payable to IDBI, which interest had, in fact, never accrued to IDBI and hence, was not its income liable to tax, could be refunded to petitioner-assessee? - Held that - As interest had never accrued in IDBI s favour and further that the IDBI has no objection to the return of interest to petitioner-assessee, in view of judgment in Universal Cables Ltd. (2009 (6) TMI 913 - MADHYA PRADESH HIGH COURT), respondent are directed to refund the tax which was paid by way of TDS for the Assessment Years 2002-03 and 2003-04 respectively to the petitioner-assessee. With the aforesaid directions, the present writ petition stands allowed
Issues:
1. Refund of tax paid by petitioner-assessee by way of TDS for alleged interest to IDBI. Analysis: The petitioner-assessee filed a writ petition seeking a writ of Certiorari to quash the order refusing to refund the tax paid via TDS for assessment years 2002-03 and 2003-04. The main issue was whether the tax paid by the petitioner-assessee for alleged interest payable to IDBI, which was never accrued to IDBI and not its taxable income, could be refunded. The petitioner sought a direction for the refund of the tax amount. The court considered Income Tax Circular No.285 dated 21st October, 1980, which allowed for the refund of excess tax deducted at source, independently of the Income-tax Act, to the person responsible for the payment, subject to necessary administrative safeguards. During the hearing, the counsel for respondent nos. 1 to 3 did not dispute the refundability of the TDS amount but argued that the refund should be claimed by the deductee, IDBI. However, IDBI confirmed that the interest never accrued to them and had no objection to the refund of the TDS amount to the petitioner-assessee. The court noted that the Circular No.285 was still valid and subsisting, and based on this and previous judgments, ordered the refund of the tax amounts paid by the petitioner-assessee for the assessment years 2002-03 and 2003-04. The court set aside the impugned orders and directed respondent nos. 1 and 2 to refund the tax amounts to the petitioner-assessee. The writ petition was allowed with no order as to costs.
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