Case Law Details
Sony India Pvt Ltd Vs DCIT (ITAT Delhi)
Delhi ITAT Rules in Favor of Sony India Pvt Ltd in Interest Charge Dispute for AY 2017-18
The Income Tax Appellate Tribunal (ITAT), Delhi, has delivered a favorable order for Sony India Pvt Ltd against the Department of Income Tax concerning the assessment year 2017-18. The primary dispute revolved around the chargeability of interest under section 220(2) of the Income-tax Act, 1961, related to an outstanding Fringe Benefit Tax (FBT) demand from the assessment year 2009-10.
Sony India filed its return for the AY 2017-18, declaring an income of over Rs. 176 crores and was due a refund. However, a part of this refund was adjusted against an FBT demand from 2009-10, including a significant interest charge under section 220(2) for delayed payment. Sony contested this adjustment, claiming that it had already fulfilled its FBT obligations at the time of the original filing, but due to a processing error, their payment was applied entirely towards income tax, creating an apparent outstanding FBT demand.
The ITAT, after examining the submissions and the evidence on record, found that Sony India had indeed paid the FBT through a composite challan along with their income tax for the AY 2009-10. It was noted that the Department’s adjustment of the entire amount towards income tax led to an erroneously generated FBT demand. Importantly, the tribunal observed that Sony was not properly notified of this demand as required, impacting the validity of the subsequent interest charge under section 220(2).
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