Case Law Details
Max Life Insurance Company Limited Vs Assistant Commissioner of Income Tax Circle (Delhi High Court)
Introduction: The Delhi High Court has delivered a significant judgment concerning Max Life Insurance Company Limited and the Assistant Commissioner of Income Tax Circle. The court directed the refund of the Income Tax amount which is in excess of 20% of the outstanding demand for the Assessment Year (AY) 2017-18. This article provides an insight into the details of the case, the arguments, and the court’s reasoning behind the decision.
Background: The petitioner, Max Life Insurance Company Limited, filed a writ petition against the Assistant Commissioner of Income Tax Circle, alleging illegal and arbitrary adjustment of the refund against the disputed demand for AY 2017-18. The grievances are broadly articulated, and multiple reliefs were sought, including a refund and restraint on further recovery until the disposal of the appeal filed by the petitioner.
Central Issue: The crux of the matter was whether the revenue department could recover more than 20% of the demand of approximately Rs. 221 crores, as guided by the Central Board of Direct Taxes (CBDT) OM dated 31.07.2017.
Court’s Observation: The court recognized that more than 20% of the outstanding demand was already adjusted, and the recovery of anything more than this percentage was prohibited. It observed that the amount recovered, i.e., Rs. 86 crores, was more than the stipulated 20% of the demand.
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