2025 (1) TMI 457 - HC - Income Tax

Refund as reflected in the TDS certificate - Petitioner, on instructions submitted that the Petitioner will not claim any interest on the refund, however, since the TDS certificate has been placed on record, the Respondents should at least verify the position regarding deductions and grant a refund to the Petitioner - HELD THAT - In the peculiar facts of this case, we think that the Respondent must dispose of the Petitioner s representation dated 19 June 2019 within three months from today. For this, the Respondents must verify the status of deductions, if any, carried out by Percept Pictures Company Pvt Ltd. If the Petitioner has any further material regarding the deductions, the Petitioner is granted liberty to place the same before the concerned Respondent within two weeks from today. The concerned Respondent must hear the Petitioner, consider the material placed by the Petitioner on record, verify the status of deductions, if any, made by Percept Pictures Company Pvt Ltd and the other material available with the department and dispose of the Petitioner s representation, dated 19 June 2019. Suppose the concerned Respondent is satisfied that deductions were indeed made as reflected in the TDS certificate. In that case, this amount should be refunded to the Petitioner within a month from such determination.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the petitioner is entitled to a refund of Rs. 2,89,775/- as reflected in the TDS certificate.
Whether the respondents are obliged to verify the deductions claimed by the petitioner and process the refund accordingly.
The implications of the petitioner's waiver of interest on the refund amount.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Entitlement to Refund

Relevant legal framework and precedents: The case involves the interpretation of Section 244A of the Income Tax Act, 1961, which deals with interest on refunds under certain circumstances.
Court's interpretation and reasoning: The court focused on the procedural aspect of verifying the TDS certificate and the deductions made by Percept Picture Company Pvt Ltd. The court emphasized the need for the respondents to verify the deductions to determine the petitioner's entitlement to the refund.
Key evidence and findings: The petitioner presented a TDS certificate indicating a deduction of Rs. 2,89,775/-. The respondents' affidavit failed to clarify the status of this certificate or the deductions.
Application of law to facts: The court directed the respondents to verify the deductions and determine the refund entitlement based on the TDS certificate and any additional material provided by the petitioner.
Treatment of competing arguments: The court did not delve into the merits of the rival contentions, as these involved factual determinations that were not appropriate for resolution at this stage.
Conclusions: The court concluded that the respondents must verify the deductions and process the refund if the deductions are confirmed.

Issue 2: Obligation to Verify Deductions

Relevant legal framework and precedents: The obligation of the tax authorities to verify claims for refunds is inherent in the tax administration process.
Court's interpretation and reasoning: The court emphasized the need for the respondents to act on the petitioner's representation and verify the deductions as part of their administrative duty.
Key evidence and findings: The petitioner's representation dated 19 June 2019, seeking the refund, was a crucial document that the respondents had not yet acted upon.
Application of law to facts: The court directed the respondents to dispose of the petitioner's representation within three months, verifying the deductions and considering any additional material provided by the petitioner.
Treatment of competing arguments: The court left the contentions of both parties open for future determination, focusing instead on the procedural requirement of verification.
Conclusions: The respondents are required to verify the deductions and process the refund as per the court's directions.

Issue 3: Waiver of Interest

Relevant legal framework and precedents: The waiver of interest by the petitioner impacts the timeline and conditions under which the refund is to be processed.
Court's interpretation and reasoning: The court acknowledged the petitioner's waiver of interest and stipulated conditions under which interest would become payable if there were delays in processing the refund.
Key evidence and findings: The petitioner's statement regarding the waiver of interest was recorded in court and influenced the court's directives on the refund timeline.
Application of law to facts: The court set a timeline for the refund process and specified that interest would be payable only if the refund was delayed beyond two months from the determination.
Treatment of competing arguments: The court did not address any arguments regarding interest, as the petitioner had waived this claim.
Conclusions: The respondents must process the refund within the stipulated timeline to avoid paying interest.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "In the peculiar facts of this case, we think that the Respondent must dispose of the Petitioner's representation dated 19 June 2019 within three months from today."
Core principles established: The court established that tax authorities have a duty to verify and act upon representations for refunds in a timely manner, and that the waiver of interest by a petitioner can influence the conditions for refund processing.
Final determinations on each issue: The court directed the respondents to verify the TDS deductions and process the refund within a specified period, with interest payable only if there were undue delays.

The judgment underscores the procedural obligations of tax authorities in handling refund claims and highlights the impact of a petitioner's waiver of interest on the refund process. The court's decision to leave factual contentions open for future determination reflects a focus on ensuring administrative compliance rather than adjudicating substantive tax disputes at this stage.

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