2024 (8) TMI 1126 - HC - Income Tax

Refund claim - Benefit of Tax Deducted at Source TDS restricted - as argued AO had failed to take into consideration the total TDS which had been deducted and deposited and the refund thus being computed in light of what had been claimed in the original Return of Income - HELD THAT - As in cases where a refund becomes due and payable consequent to an order passed in an appeal or other proceedings, the AO is obliged to refund the amount to the assessee without it having to make any claim in that behalf. The reference to Section 239 is thus clearly misconceived. The claim of the petitioner for being accorded credit of the entire TDS as reflected in Form 26AS was thus liable to be accorded recognition along with interest to be computed in accordance with Section 244A of the Act. Regard must also be had to the fact that the TDS which had been duly deposited becomes liable to be treated as tax duly paid in terms of Section 199 and interest thereon would consequently flow from the first day of April of the relevant AY to the date on which the refund is ultimately granted by virtue of Section 244A (1) (a) of the Act. The contention of the respondents, therefore, that interest would flow only from the date of the order of the Tribunal is thoroughly misconceived. In the present case the AO was called upon to give effect to a direction framed by the Tribunal. Viewed in that light, the stand as taken by the AO is clearly rendered unsustainable insofar as it restricts the claim of the petitioner to the disclosures made in the Return of Income. It would be wholly illegal and inequitable for the respondents to give short credit to the tax duly deducted and deposited based on the claim that may be made in a Return of Income. It is pertinent to note that insofar as the question of rights to live feed being treated as royalty is concerned and other allied issues pertaining to the merits of the dispute stand settled right up to this Court by virtue of the judgment rendered by us 2024 (1) TMI 1008 - DELHI HIGH COURT in ITA 812/2023. We accordingly allow the instant writ petition and quash the impugned order dated 08 April 2024. A writ shall consequently issue commanding the respondents to acknowledge the credit of TDS as reflected in Form 26AS of the petitioner and to recompute the total refund.

Issues Involved:
1. Restriction of TDS credit.
2. Taxability of revenue as royalty.
3. Verification and grant of TDS credit.
4. Entitlement to interest on refund.

Detailed Analysis:

1. Restriction of TDS Credit:
The petitioner challenged the order dated 08 April 2024, where the Assessing Officer (AO) restricted the benefit of Tax Deducted at Source (TDS) to INR 24,46,62,305/- as claimed in the Return of Income, resulting in a refund order of INR 4,92,208/- with interest under Section 244A of the Income Tax Act, 1961.

2. Taxability of Revenue as Royalty:
For Assessment Year (AY) 2014-15, the petitioner filed a Return of Income declaring INR 90,35,46,340/- and claimed a refund of INR 3,65,970/-. The Return was selected for scrutiny to determine if revenue earned, including live feed consideration, constituted royalty and was taxable. The AO, in a draft assessment order dated 31 December 2017, held that the consideration for live feed was taxable as royalty. The Dispute Resolution Panel (DRP) affirmed this on 05 September 2018, leading to a final assessment order on 08 October 2018.

The petitioner contested this before the Tribunal, arguing that the consideration for live feed rights was not taxable as royalty and that the respondents failed to grant the full TDS credit as reflected in Form 26AS. The Tribunal, on 21 February 2023, ruled in favor of the petitioner, directing the AO to verify and grant the TDS credit claimed.

3. Verification and Grant of TDS Credit:
The Tribunal directed the AO to verify the TDS credit reflected in Form 26AS, quantified at INR 2,03,36,66,125/-. The petitioner filed an application with the AO, which was disposed of by the impugned order. The respondents, in their counter affidavit, did not dispute the amounts in Form 26AS but argued that since the petitioner did not claim INR 2,03,40,32,090/- in their income tax return, the TDS credit should be denied. They further contended that the petitioner should follow the procedure in Section 239 of the Act for refund claims, which was not done within the prescribed period.

The court found the respondents' position unsustainable, emphasizing Section 240 of the Act, which mandates the AO to refund amounts due from an appeal or other proceedings without requiring a claim from the assessee. The court concluded that the petitioner was entitled to TDS credit as reflected in Form 26AS, along with interest as per Section 244A.

4. Entitlement to Interest on Refund:
The court noted that TDS deposited should be treated as tax paid under Section 199, and interest should accrue from the first day of April of the relevant AY to the refund date per Section 244A (1) (a). The respondents' argument that interest should only accrue from the Tribunal's order date was rejected. The AO's restriction of the petitioner's claim to the Return of Income disclosures was deemed illegal and inequitable.

The court referred to the Supreme Court's decision in Wipro Finance Ltd. v. CIT, which clarified that the Tribunal has plenary powers under Section 254 to admit and grant relief on fresh claims, even if inconsistent with the Return of Income.

Conclusion:
The court allowed the writ petition, quashing the order dated 08 April 2024. It directed the respondents to acknowledge TDS credit as reflected in Form 26AS, amounting to INR 2,27,83,28,430/-, and recompute the refund at INR 2,03,40,32,090/-, considering interest payable under Section 244A (1) (a) of the Act.

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