The Delhi High Court held that refunds cannot be withheld just to verify the claim for the deduction under section 10 AA of the Income Tax Act,1961.
The petitioner, True blue India LLP challenged the Order dated 15th June 2022 passed under Section 241A of the Income Tax Act, 1961.
The Respondents vide email dated 27th January 2022 confirmed therefund along with interest amounting to Rs.21.80 crore under Section 244A of the Act. It was contended that the refund due to the Petitioner was liable to be released at the time of processing of the return under Section 143(1) of the Act.
The petitioner contended that the deduction under Section 10AA of the Act has already been allowed in earlier years by the Respondents Assessment Years 2017-18 and 2018-19. Further contended that the total deduction claimed under Section 10AA of the Act, Rs.10,44,91,121/- pertains to the old unit Unit 1, while Rs.50,95,912/- pertains to the new unit Unit 2.
It was settled law that the refund due to the Petitioner was liable to be released at the time of issuance of the intimation/order under Section 143(1) of the Act unless an Order for withholding of refund has been passed under Section 241A of the Act explicitly recording that the grant of refund would affect adversely to the Revenue.
It was observed that the refunds cannot be withheld just because the Notice under Section 143(2) of the Act has been issued and the Respondents want to verify the claim for deduction under Section 10AA of the Act.
Mr Justice Manmohan and M S justice Manmeet Pritam Singh Arora observed that the impugned Order lacks sufficient reasoning to hold that the Revenue would be adversely affected by the grant of refund and quashed the impugned Order passed under Section 241A of the Act.
The appellant was represented by Ms Ananya Kapoor and the respondent was represented by Mr Sunil Agrawal with Mr Tushar Gupta and Mr Uthkarsh Tiwari.
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