75th Founding Day Lecture Meeting on “India@2030” Know More

March 2011

Refund of TDS to deductor: Circular No. 285, dated 21-10-1980: A.Ys. 2002-2003 and 2003-2004: Interest payable to IDBI not accruing to it and not liable to tax: Tax paid by petitioner by way of TDS in respect of said interest is to be refunded to petition

By K. B. Bhujle | Advocate
Reading Time 2 mins

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56 Refund of TDS to deductor: Circular No. 285, dated
21-10-1980: A.Ys. 2002-2003 and 2003-2004: Interest payable to IDBI not accruing
to it and not liable to tax: Tax paid by petitioner by way of TDS in respect of
said interest is to be refunded to petitioner.


[Pasupati Acrylon Ltd. v. CBDT, 237 CTR 138 (Del.)]

For the A.Ys. 2002-2003 and 2003-2004, the petitioner company
had deducted tax at source of Rs.40,65,917 and Rs.51,59,393, respectively, on
the interest payable to IDBI and had deposited the said amount in the Government Treasury by
way of TDS. It was then found that the interest did not accrue to IDBI and
accordingly was not liable to tax. Therefore, the petitioner applied for the
refund of the amount of TDS so deposited, but the application was rejected.

The petitioner filed a writ petition against the said
rejection order. The Delhi High Court allowed the writ petition and held as
under :

“Interest payable by the petitioner to IDBI not having
accrued to it and not liable to tax, the tax paid by the petitioner by way of
TDS in respect of the said interest is to be refunded to the petitioner in view
of Circular No. 285, dated 21-10-1980.”

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