HC directs Credit of Full TDS amount and Refund of Excess TDS Credit

Vajra Global Consulting Services LLP Vs Assistant Director of Income Tax (Madras High Court)

Introduction: The legal battle between Vajra Global Consulting Services LLP and the Assistant Director of Income Tax reached its culmination with a significant judgment from the Madras High Court on the 27th of March 2021. The subsequent order on the 10th of July 2023 added depth to the challenge. This article delves into the details of the case, focusing on a claimed refund and discrepancies in TDS credits.

Detailed Analysis: The petitioner, Vajra Global Consulting Services LLP, filed its income tax return for the assessment year 2020-2021, asserting a TDS credit of Rs. 10,88,863/-. However, an anomaly arose as the TDS of Rs.7,65,000/- deducted by M/s. Richfeel Health and Beauty Private Limited was not initially reflected in Form 26AS.

Despite filing a rectification petition and subsequent disposal on 09.12.2021, the petitioner found no resolution. The discrepancy became apparent as the Form 26AS detailed the total TDS deduction as Rs.18,53,863/ but the credit was given only for Rs.10,88,863/-.

During the legal proceedings, learned counsel highlighted these discrepancies, asserting the petitioner’s right to the full TDS credit. The standing counsel for the respondents acknowledged the oversight, conceding that the petitioner was indeed entitled to the differential amount of Rs.7,65,000/-.

Conclusion: The Madras High Court, recognizing the merit in the petitioner’s claim, quashed the impugned orders and directed the income tax authorities to refund the rightful sum of Rs.7,65,000/- within a maximum period of two months from the date of the order. This judgment not only rectifies the TDS credit issue but also upholds the principle of fairness in income tax assessments.

This legal victory for Vajra Global Consulting Services LLP signifies the importance of accurate TDS credit reflection, ensuring a just and equitable income tax assessment process. The court’s directive to expedite the refund process further emphasizes the commitment to timely justice in matters of taxation.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

An order dated 27.03.2021 and the consequential order dated 10.07.2023 are challenged. The petitioner also seeks a refund of the differential amount as between the sum of Rs. 18,53,863/- and Rs. 10,88,863/-.

The petitioner states that the return of income was filed for assessment year 2020-2021. In the said return, the petitioner had claimed TDS credit of Rs. 10,88,863/-. At the time of filing the return, TDS of Rs.7,65,000/-, which was deducted by M/s. Richfeel Health and Beauty Private Limited was not reflected in Form 26AS. Subsequently, the said entity filed its return and the corresponding credit of Rs.7,65,000/- was reflected in Form 26AS pertaining to the petitioner’s PAN. In those circumstances, the petitioner filed a rectification petition. Such rectification petition was disposed of by order dated 09.12.2021 stating that no payment was due. The present writ petition was filed in the said facts and circumstances.

3. Learned counsel for the petitioner invited my attention to the details of the petitioner’s Form 26AS. She points out that the total amount deducted by way of TDS for assessment year 2020-2021 was 18,53,863/-. By referring to the rectification order, she points out that credit was given only for a sum of Rs.10,88,863/-.

4. Mr. R.S. Balaji, learned standing counsel, appears for the respondents. He concurs in the submission that credit was not given to the petitioner in respect of the aggregate sum of Rs.18,53,863/-, which was deducted by way of TDS.

5. In these circumstances, the orders impugned herein warrant interference. The documents on record indicate that the total amount deducted as TDS was Rs.18,53,863/-. Since credit was provided only in respect of Rs.10,88,863/- and not in respect of the differential amount of Rs.7,65,000/-, the petitioner is entitled to refund in respect thereof.

6. Hence, the impugned orders are quashed and the respondents are directed to take all necessary steps to refund the sum of Rs.7,65,000/- to the petitioner. This exercise shall be completed within a maximum period of two months from the date of receipt of a copy of this order.

7. The writ petition is allowed. There will be no order as to costs. Consequently, connected miscellaneous petitions are closed.