Relief to Max Life Insurance: Delhi HC directs Income Tax Dept to Refund Rs 221 Crores of Excess Outstanding Demand [Read Order]

In a major relief to Max Life Insurance Company Limited, the Delhi High Court directed the Income Tax Department to refund excess outstanding demand of Rupees 221 crores.

The petitioner prayed before the Court for the issuance of a writ of mandamus directing the Respondents to refund the amount adjusted against the disputed demand for AY 2017-18 in an illegal and arbitrary manner by adjusting the same against the refund for the preceding years i.e. AY 2013-14 and 2014-15.

It was also prayed for the issuance a writ of mandamus restraining the Respondents from further recovery of outstanding tax demand for AY 2017-18 until the disposal of appeal filed by the Petitioner before the Commissioner (Appeals).

Gaurav Gupta, senior standing counsel, who appeared on behalf of the respondents/revenue, does not dispute the fact that the petitioner/assessee has preferred an appeal, which is pending adjudication with the CIT(A).

The direction of the CIT(A) is that the respondents/revenue cannot recover anything more than 20% of the demand. This order also reflects the position that the amount recovered, i.e., Rs.86 crores, (as is obvious if simple mathematical calculation is done), is more than 20% of the demand, which is approximately Rs.221 crores.

As per Central Board of Direct Taxes (CBDT) OM dated 31.07.2017 in F. No. 404/72/93-ITCC (FTS:284146), the respondents/revenue cannot recover more than 20% of the outstanding demand, which is Rs.221,03,71,862/-, for the AY in issue, i.e., 2017-18.

A Division Bench of Justices Rajiv Shakdher and Girish Kathpalia observed that “The respondents/revenue will refund the amount which is in excess of 20% of the outstanding demand, i.e., Rs.221,03,71,862/-, concerning AY 2017-18. The said sum will also include Rs.12,68,20,270/-, that was sought to be adjusted against the disputed demand for AY 2017-18 by respondent no.1.”

The Court further noted that the CIT(A) will endeavour to dispose of the appeal at the earliest. The amount will be remitted as expeditiously as possible, though, not later than six (6) weeks from the date of receipt of this order, along with applicable interest.

To Read the full text of the Order CLICK HERE

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