High court rejects IT department’s plea against Nirma (Lead)
March 23rd, 2011 - 8:28 pm ICT by IANSGandhinagar, March 23 (IANS) The Gujarat High Court has rejected the Income Tax department’s appeal against Nirma Chemicals Works Limited (NCWL) in a tax refund case.
The department challenged the order of an Income Tax Appellate Tribunal (ITAT) before the division bench of Justice Akil Kureshi and Justice Sonia Gokani.
“The tribunal in our opinion rightly directed the assessing officer to refund the same (tax). No question of law arises. Appeal is, therefore, dismissed,” the court said in an order made available Wednesday.
When Nirma Limited had deducted tax at source on such transaction and when it was found that such tax was in excess of the tax liability of the assessee, the tribunal was right in directing the assessing officer to refund it, the court said.
The company filed returns of income Nov 20, 2000, for the assessment year 2000-01. During the year, it had purchased 54,368 special premium notes of Nirma Limited at the rate of Rs.355 per note.
The notes were redeemed during the same year at the rate of Rs.361. The NCWL thus earned a net income of Rs.268,908 and added it to its business income for the assessment.
Nirma Ltd had deducted tax at source on entire difference between the notes’ face value of Rs.200 and redemption price of Rs.361 and thus collected Rs.19.25 lakh. It claimed refund of the tax deducted at source but the assessing officer declined the claim.
This issue was raised before commissioner of income tax (appeals) who also rejected the refund claim. The ITAT accepted the company’s appeal.
Senior counsel Manish Bhatt appeared in court for the Income Tax department.
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Tags: akil, appellate tribunal, business income, division bench, face value, gujarat high court, income tax department, itat, kureshi, net income, plea, question of law, redemption price, rs 200, senior counsel, sonia, tax deducted at source, tax liability, tax refund, year 2000