MOTHERSON TECHNOLOGY SERVICES LIMITED vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 16 1 NEW DELHI & ORS.

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W.P.(C)/16531/2024HC DelhiDLHC01086880202412 December 2024Bench: HON'BLE THE ACTING CHIEF JUSTICE,HON'BLE MR. JUSTICE TUSHAR RAO GEDELA3 pages
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What did the High Court hold?

The Delhi High Court found merit in the petitioner's contention. The Court referred to Para 4(E)(iii) of the CBDT's Office Memorandum dated February 29, 2016, which states that the Assessing Officer may impose conditions for granting a stay, including the right to adjust refunds arising, if any, against the demand, to the extent required for granting the stay and subject to the provisions of Section 245 of the Act. The Court reasoned that the adjustment of the refund for AY 2023-24 against the balance 80% of the demand for AY 2016-17 was contrary to this provision. Therefore, the Court directed the respondent to process the petitioner's refund along with applicable interest within eight weeks, to the extent of the amount adjusted against the balance 80% of the demand for AY 2016-17. The issue of the recoverability of the demand itself was not decided.

What were the facts?

The petitioner, Motherson Technology Services Limited, filed a writ petition before the Delhi High Court challenging an intimation issued under Section 245 of the Income Tax Act, 1961. This intimation dated January 19, 2024, adjusted a refund of ₹12,61,85,164/- due for AY 2023-24 against a non-recoverable demand for AY 2016-17. The petitioner argued that the adjustment should not exceed 20% of the demand, as this was the condition imposed for a stay order granted earlier. For AY 2016-17, the petitioner's assessed income was ₹37,13,20,003/-. A stay of demand was granted subject to a 20% deposit, which was recovered from refunds of earlier assessment years. The remaining 80% of the demand for AY 2016-17 was adjusted against the refund for AY 2023-24.

What were the issues?

1. Whether the adjustment of the refund due for AY 2023-24 against the outstanding demand for AY 2016-17, beyond the 20% of the demand stipulated for the stay order, is permissible under Section 245 of the Income Tax Act, 1961 and relevant CBDT circulars. Assessee's Contention: The petitioner argued that the adjustment of the refund for AY 2023-24 against the demand for AY 2016-17 was illegal as it exceeded the 20% of the demand, which was the condition for the stay order. They relied on the principle that the adjustment should be limited to the extent required for granting the stay. Revenue's Contention: The judgment does not record any specific contentions made by the revenue. However, the action of the revenue in adjusting the refund beyond the 20% threshold implies a contention that such an adjustment was permissible.

Which sections of the Income-tax Act were involved?

Section 245

AI-generated summary — verify with the full judgment below

$~39 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 16531/2024 MOTHERSON TECHNOLOGY SERVICES LIMITED .....Petitioner Through: Ms Ananya Kapoor, Mr Utkarsha Kumar Gupta and Mr Sanat Kapoor, Advocates. versus DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 16 1 NEW DELHI & ORS. .....Respondents Through: Mr Gaurav Gupta, SSC, Mr Shivendra Singh and Mr Yojit Pareek, JSCs. CORAM: HON'BLE THE ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE TUSHAR RAO GEDELA O R D E R % 12.12.2024 1. The petitioner has filed the present petition, inter alia, praying as under :- “A. Issue a writ in the nature of Mandamus directing the Respondents to issue refund of Rs. 12,61,85,164/- along with up-to-date interest for AY 2023-24 which is illegally adjusted against the non-recoverable demand of AY 2016-17 as the action of the Respondents is unjust, arbitrary and against the provision of the Income Tax Act, 1961; B. Issue a writ in the nature of Certiorari quashing the intimation issued under Section 245 of the Act dated 19.01.2024 illegally adjusting refund due to the Petitioner for AY 2023-24 against the non- recoverable demand of AY 2016-17; C. Issue any other Writ, order, or Direction which This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 19/12/2024 at 13:05:00

this Hon’ble Court may deem fit and proper in the facts and circumstances of the case;” 2. The petitioner had filed its return of income for the assessment year (AY) 2016-17 declaring a total income of ₹13,01,14,770/-. The same was selected for scrutiny and the assessment proceedings culminated into the assessment order dated 13.01.2020 and the Assessing Officer (AO) determined the petitioner’s income at ₹37,13,20,003/-. The petitioner challenged the assessment order before the Commissioner of Income Tax (Appeals) [hereafter the CIT(A)]. The petitioner also sought a stay of the demand which was granted subject to deposit of 20% of the demand along with interest which was quantified at ₹2,64,27,224/-. The said amount was recovered from the refund due to the petitioner for the AYs’ 2007-08, 2011- 12 and 2015-16. 3. The petitioner is aggrieved by the intimation dated 19.01.2024 issued under Section 245 of the Income Tax Act, 1961 (hereafter the Act) informing the petitioner of the adjustment of ₹12,81,51,872/- along with the interest, which was due to the petitioner against an outstanding demand for AY 2016-17. The Central Processing Centre, Bangalore, after adjusting the said demand, has refunded the amount of ₹19,66,666/- to the petitioner. 4. It is the case of the petitioner that the refunds due to the petitioner could not be adjusted against the outstanding demand for AY 2016-17 beyond 20% of the said demand, being a condition imposed for the grant of stay order. 5. We find merit in the aforesaid contention. Para no.4 (E) (iii) of the office memorandum dated 29.02.2016 issued by the Central Board of Direct Taxes (CBDT) expressly provides that the AO may impose such conditions This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 19/12/2024 at 13:05:00

for grant of the stay including right to adjust refund, if any, against the demand to the extent required for grant of stay, subject to the conditions as provided under Section 245 of the Act. Para No.4(E)(iii) of the circular dated 29.02.2016 is set out below:- “4. In order to streamline the process of grant of stay and standardize the quantum of lump sum payment required to be made by the assessee as a pre-condition for stay of demand disputed before CIT(A), the following modified guidelines are being issued in partial modification of instruction No. 1914: A to D *** *** (E) In granting stay, the Assessing Officer may impose such conditions as he may think fit. He may, inter alia,- (i) & (ii) *** ***; (iii) reserve the right to adjust refunds arising, if any, against the demand, to the extent of the amount required for granting stay and subject to the provisions of section 245.” 6. In view of the above, we consider it apposite to direct the respondent to process the petitioner’s refund along with the applicable interest within a period of eight weeks from date to the extent of amount adjusted against the balance 80% of the demand for AY 2016-17. 7. The petition is allowed and disposed of in the aforesaid terms. VIBHU BAKHRU, ACJ TUSHAR RAO GEDELA, J DECEMBER 12, 2024 M Click here to check corrigendum, if any This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 19/12/2024 at 13:05:00

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