Delhi High Court Disallows Income Tax Dept From Adjusting Stayed Demand Towards Previous Refund Due To Nokia

Granting relief to telecom equipment company Nokia, the Delhi High Court disallowed the Income Tax Department from adjusting the outstanding demand raised against the company, towards a previous refund due to it. A division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma pointed towards stay of recovery proceedings and said, “there is no allegation that the petitioner is alienating its assets so as to frustrate the recovery of any demand or that it would be unable to pay the disputed demand in the event the same was confirmed in the appellate proceedings.” It was also informed that in terms of the stay order, the company had made a pre-deposit of over 20% demand. The Department sought to recover ₹38,70,73,134/- demand in respect of assessment year 2015-16 and in this bid, had adjusted the refund payable to the company for AY 2008-09. Noikia's appeal with respect to the demand is pending before the Commissioner of Income Tax (Appeals) and in the meanwhile, it has obtained a stay of recovery, subject to payment of 20% of the outstanding demand. The company argued that the adjustments against the demand, if any, had to be necessarily confined to the amount that it was required to pay for securing the stay of the balance demand. The Department on the other hand contended that the stay order was expressly subject to conditions, whereby the Department had reserved its right to adjust the refunds, arising if any, against the demand. At the outset, the High Court held that the Revenue's decision to adjust the refund due to Nokia is arbitrary, given the CBDT instructions for grant of stay upon deposit of 20% outstanding demand. It observed, “the effect of the Revenue adjusting refunds against the stayed demand would essentially place the Assessee that is entitled to a refund in a disadvantageous position vis-a-vis those assesses to whom no refund is due.” Accordingly, it directed the Department to refund the amount due to the petitioner with applicable interest, preferably within eight weeks. Appearance: Advocates Ankul Goyal and Ashish Sarda for Nokia; SSC Ruchir Bhatia, JSC Anant Mann and Advocate Abhishek Anand for Department Case title: Nokia Solutions And Networks India Pvt. Ltd v. Joint Commissioner Of Income Tax, & Ors.Citation: 2024 LiveLaw (Del) 1346 Case no.: W.P.(C) 11115/2019 Click Here To Read/Download The Order

Delhi High Court Disallows Income Tax Dept From Adjusting Stayed Demand Towards Previous Refund Due To Nokia

Kapil Dhyani

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