9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (2) TMI 889 - HC - Income TaxRefund of excess TDS deducted u/s 195 - whether the respondents are authorised by law to withhold the excess TDS paid by the petitioner? - whether the deductor is entitled for refund of the said payment of excess TDS? HELD THAT - Reliance can be placed to the latin maxim jure naturae aequum est, neminem cum alterius detrimento, et injuria fieri locupletioremit which translates to and settles the position that by natural law, it is just that no one should be enriched by another s loss or injury. Put otherwise, no one can be unjustly enriched at the expense of others. By no prudent stretch of imagination, the respondents are entitled to withhold the excess TDS deposited by the petitioner in lieu of the anticipated liability for concerned AY as the same would amount to collection of tax without any authority of law. Writ petition is allowed. The impugned orders are, hereby, set aside. The respondents are directed to issue a refund of excess TDS along with the applicable rate of interest as per extant law as expeditiously as possible not exceeding beyond six months.
Issues Involved:
1. Whether the respondents are authorized by law to withhold the excess TDS paid by the petitioner. 2. Whether the deductor is entitled to a refund of the excess TDS payment. Summary: Issue 1: Authorization to Withhold Excess TDS The petitioner filed a writ petition under Articles 226 and 227 of the Constitution of India, challenging the orders dated 19.01.2017 and 29.03.2018, which rejected the claim for a refund of excess TDS amounting to Rs. 67,41,620/- for the Assessment Year (AY) 2012-13. The petitioner, a company engaged in manufacturing and trading molded plastic items, had imported molds from Dart Industries Inc. USA (Dart USA) and paid rent based on actual production days. Due to anticipated higher rental charges, the petitioner deducted and deposited TDS on a higher amount, which later turned out to be excessive when the actual rent was lower. The petitioner applied for a refund of the excess TDS as per the CBDT circular dated 23.10.2007, but the application was rejected without a hearing. The petitioner argued that no income accrued to Dart USA for the anticipated increase in rent, and thus, the excess TDS should be refunded. The respondents contended that only the payee (Dart USA) is entitled to a refund, not the deductor (petitioner). The court referred to Article 265 of the Constitution of India, emphasizing that taxes can only be levied or collected by the authority of law. It was established that no income accrued to Dart USA for the excess TDS paid by the petitioner, and thus, the respondents had no right to retain the excess amount. The court found the reasoning in the impugned orders baseless as the CBDT circular allows for a refund in cases where the income does not accrue to the non-resident or the excess amount is borne by the deductor. Issue 2: Entitlement to Refund The court cited the principle that no one should be unjustly enriched at another's expense and referred to the decision in Indglonal Investment and Finance Ltd. v. ITO, which held that taxes collected contrary to law must be refunded. The court also referenced the Supreme Court's decision in Union of India v. Tata Chemicals Ltd., which stated that excess TDS should be refunded with interest, as retaining such amounts without right is unjust. The court also noted the decision of the Bombay High Court in Sunflag Iron and Steel Co. Ltd. v. CBDT, which supported the refund of excess TDS to the deductor in cases of anticipated liability that did not materialize. Conclusion: The court concluded that the respondents are not entitled to withhold the excess TDS deposited by the petitioner, as it would amount to collecting tax without authority of law. The writ petition was allowed, and the impugned orders were set aside. The respondents were directed to issue a refund of Rs. 67,41,620/- along with applicable interest within six months.
|
