Credit is to be allowed in respect of TDS made on higher amount of reimbursement than actually offered to tax

Undisputedly, the assessee company earned income of Rs. 4,65,00,000/- only by way of Engineering fees. Another amount of Rs 4,65,00,000/- had been received as tooling advance. This latter amount was to be paid to the vendors of M/s. Mahindra and Mahindra Ltd. This payment was a reimbursement. That being so, it could not be considered as the income of the assessee company. It was by sheer mistake that M/s. Mahindra and Mahindra Ltd. has deducted TDS on the whole amount of Rs 9,30,00,000/-. The TDS amount was thus in excess of the asses sable tax on the payment made by M/s. Mahindra and Mahindra Ltd. to the assessee company. This had to be refunded, as held by the Hon’ble Supreme Court in the case of ‘Sandvik India LTd. v. CIT’ 280 ITR 643(SC). This position has duly been considered and rightly so, by the ld. CIT(A) in the impugned order. If wrong tax has been paid, it is of  necessity to be returned, lest the department be charged of unjust enrichment.

HIGH COURT OF DELHI AT NEW DELHI

ITA 110/2010

COMMISSIONER OF INCOME TAX

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