Telangana HC grants TDS refund after authorities wrongly rejected claim under relaxed circular conditions

Telangana HC allowed petitioner's application for TDS refund of Rs. 1,89,283 after authorities rejected revised return and refund claim. Court held that Circular dated 30.10.2003 relaxed conditions from earlier 1993 Circular, raising upper limit for refund claims to Rs. 5,00,000. Since petitioner's claim was below this threshold and related to TDS from same assessment year income with no additional income in revised return, authorities should have considered the applicable circular. The impugned order rejecting refund was held unsustainable and bad in law.

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Issues Involved:
1. Condonation of delay in filing income tax return for Assessment year 2001-02.
2. Rejection of claim for refund of tax deducted at source on rental income.

Summary:

Issue 1: The petitioner filed a writ petition challenging the rejection of the application seeking condonation of delay in filing the return for Assessment year 2001-02, claiming a refund of Rs. 1,89,283. The original return was filed on 31.07.2001, and a revised return was filed on 10.06.2003. The rejection was based on the claim being considered supplementary in nature, as the revised return was filed after the original assessment for the same year had been completed. The Circular dated 12.10.1993 set conditions for condoning delay, including that the refund claim should not be supplementary. However, a subsequent Circular dated 30.10.2003 relaxed these conditions, increasing the refund limit and modifying the supplementary claim criteria.

Issue 2: The rejection of the claim for refund of tax deducted at source on rental income was based on the Circular dated 12.10.1993, without considering the subsequent Circular dated 30.10.2003, which was already in force. The Court found that the petitioner's claim fell within the relaxed conditions of the later Circular, as the refund amount was below the increased limit of Rs. 5,00,000 and the claim was not supplementary in nature. The Court held that the rejection was unsustainable and allowed the writ petition, directing the refund of the tax deducted at source to the petitioner.

In conclusion, the Court held the rejection of the petitioner's claim for condonation of delay and refund of tax deducted at source to be invalid, based on the subsequent Circular dated 30.10.2003, and granted the petitioner the entitled refund amount.

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