Big Win For Vodafone Idea As Supreme Court Upholds Rs 1600 Crore Refund To The Telco

The Supreme Court on Monday upheld an order of the Bombay High Court whereby the income tax department was directed to refund Rs 1,128 crore to Vodafone Idea, along with interest.

The top court dismissed the tax department’s appeal against the high court order on the ground of delay. “There is a gross delay of 295 days in filing the special leave petition that has not been satisfactorily explained,” the court said.

The total amount that the tax department has to refund the telco stands at about Rs 1,600 crore, including interest.

The case pertains to Vodafone Idea's claim for a refund to the tune of Rs 1,128 crore for AY 2016-17.

Vodafone Idea’s case was selected for scrutiny by the tax department to determine the arm’s length price with respect to certain transactions so as to ascertain whether the claimed refund is proper or not.

The tax department made certain upward revisions to the company’s taxable income and thereby rejected the claimed refund.

This prompted Vodafone Idea to move the Bombay High Court.

In November last year, the high court ruled that the assessment order passed against the telco was ‘unsustainable’ and ‘time barred.’

The high court said that the assessing officer issued the final order two years after the dispute resolution panel had issued its order. This, the court said, was in gross violation of the scheme of the Income Tax Act, as the timeline prescribed for the assessment officer to pass the order is within 30 days of the dispute resolution panel’s directions.

The high court had also flagged that such laxity had caused a huge loss to the exchequer.