TaxTMI 
TaxTMI 
2016 (5) TMI 724
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.... for the said AYs. 2. The facts in brief are that the Petitioner is engaged in the business of providing telecom services. It is stated that the Petitioner has over the years accumulated losses in excess of Rs. 31,000 crores. As such in the returns of income filed for the AYs 2012-13 to 2015-16, the Petitioner claimed refund. A tabular depiction of the losses and the corresponding claims for refund for the aforementioned AYs is as under: Assessment year Date of filing return Losses for the year(Rs.) Refund Amount (Rs.) 2012-13 27.09.2012 4709,13,65,986 124,68,14,550 2013-14 28.11.2013 4603,27,58,892 186,65,37,090 2014-15 25.11.2014 4725,77,13,003 245,58,74,460 2015-16 26.11.2015 3676,14,81,626 176,81,67,453 Total 733,73,93,553 3. It is pointed out that the refunds arose mainly on account of the tax deducted at source ("TDS") by the payers and deposited with the Government towards an anticipated income tax liability of the Petitioner. It is pointed out that the payers continued to deduct TDS despite the fact that the Petitioner has been incurring losses year after year. It is pointed out that the Petitioner is an eligible undertaking u....
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....ent after the expiry of one year from the end of the financial year in which the return is made." 5. Relevant to the present case is Section 143 (1) (e) which states that the amount of refund due to the Assessee, pursuant to the determination of the tax under sub-clause (c) computed "shall be granted to the Assessee". 6. By the Finance Act, 2012, with effect from 1st July 2012, sub-section (1D) was inserted in Section 143 and it reads as under: "(1D) Notwithstanding anything contained in sub-section (1), the processing of a return shall not be necessary, where a notice has been issued to the assessee under sub-section (2)". 7. The Memorandum to the Finance Bill, 2012 gives the following explanation for insertion of the above provision: "Processing of return of income where scrutiny notice issued Under the existing provisions every return of income is to be processed under sub-section (1) of Section 143 and refund, if any, due is to be issued to the taxpayer. Some returns of income are also selected for scrutiny which may lead to raising a demand for taxes although refunds may have been issued earlier at the time of processing. It is therefore proposed to amend the pro....
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....utiny assessments in such cases are completed expeditiously. 5. This may be brought to the notice of all concerned for strict compliance." 10. The impugned Instruction therefore interprets the language of Section 143(1D) as „preventing‟ the issue of refund once notice is issued under Section 143(2) of the Act. It is as a result of the above impugned instruction and with the notices having been issued to the Petitioner under Section 143(2) of the Act by the Respondent No.2 in relation to the returns filed by it for the AYs in question where it had claimed refund, that the Respondent No. 2 declined to issue the refund by the impugned communication dated 8th September 2015. 11. While directing notice to be issued in the present petition on 23rd December 2015, the Court inter alia noted that as far as the AY 2015-16 is concerned no notice under Section 143(2) of the Act had been issued till that date and therefore directed that the returns for the said AYs should be processed "at the earliest". The Court also expected the assessments in relation to the returns for the other AYs, namely 2013-14 to 2014-15, to be expedited. 12. A further detailed order was passed by thi....
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.... under Section 143(2) of the Act in respect of the returns filed by the Petitioner were issued as a matter of routine thus, obviating the need for the Department to process its returns. The net result is that the refund would be either denied or delayed and this is hurting the Petitioner since its losses are mounting year after year. 16. Indeed, as already noticed at the time the present petition was filed, a aggregate figure of the refund that the Petitioner was owed for the four AYs i.e. 2012-13 to 2015-16 was to the tune of Rs. 733.73 crores. This is a very substantial figure considering the huge losses that the Petitioner has been suffering over the years. Section 119 of the Act, on the strength of which the impugned Instruction has been issued by the CBDT, no doubt enables the CBDT to issue "such orders, instructions and directions" to the income tax authorities "for the proper administration of this Act". However, this power of the CBDT is hedged in by certain limitations. One such limitation is provided in a proviso to Section 119(1) of the Act. The other limitation is under Section 119(2) of the Act where it is mentioned that the direction or instructions issued by the CBD....
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....pplying a beneficial interpretation to the provision in question so as to benefit the assessee and make the application of the fiscal provision, in the present case, in consonance with the concept of income and in particular, notional income as also the treatment of such notional income under accounting practice." 20. The Constitution Bench of the Supreme Court in Commissioner of Central Excise, Bolpur, v. Ratan Melting & Wire Industries (2008) 13 SCC 1 was interpreting the circulars/instructions issued by the Central Board of Excise and Customs under the corresponding provision of the Central Excise Act, 1944. The Court observed as under: "7. Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their und....