Case Law Details
National Association of Software and Services Companies Vs DCIT (Exemption) (Delhi High Court)
Introduction: The National Association of Software and Services Companies contested an adjustment of a disputed tax demand against refunds due to them. This adjustment occurred despite pending rectification applications and a stay application. The Delhi High Court examined the legality of this action.
Analysis: The petitioner argued that the adjustment was arbitrary and illegal because their stay application wasn’t considered. The respondents claimed the adjustment was justified as the petitioner hadn’t deposited 20% of the demand as per an office memorandum (OM).
The court noted that the OM didn’t mandate a 20% deposit as a precondition for a stay. It emphasized the discretionary power of the Assessing Officer (AO) under Section 220(6) of the Income Tax Act. The court cited precedents to highlight that the 20% deposit wasn’t an inflexible rule, and each case should be examined based on factors like prima facie case and financial hardship.
It rejected the respondents’ argument that a 20% deposit was necessary, emphasizing that such a requirement wasn’t absolute. The court criticized the respondents’ arbitrary adjustment without considering the stay application.
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