TDS Refund
HC holds 2-yr limitation on TDS refunds on payment to non-residents invalid
This story was originally published at 21:07 IST on 31 January 2025
Register to read our real-time news.Informist, Friday, Jan. 31, 2025
NEW DELHI – The Delhi High Court on Friday held that the provision in the Central Board of Direct Taxes circular to provide for a two-year limitation on claiming refunds of tax deducted at source on payment to non-residents as ultra vires of the Income Tax Act, 1961. Consequently, the high court allowed applications by Sun Pharmaceutical Industries Ltd. seeking a refund of excess tax wrongly deducted and deposited for the financial years 2010-11 to 2012-13.
The high court said that the applications by Sun Pharmaceutical for refund had been originally made way back in 2014. Those applications ultimately were rejected by the tax department after a lapse of more than three years in 2018. "Viewed in that light, it is manifest that the stand as taken by the respondents is clearly rendered unjust and arbitrary," the court said.
The Delhi High Court noted previous rulings from the Bombay High Court that CBDT circulars cannot curtail the statutory provisions by prescribing limitation periods. "The prescription so introduced by the CBDT is clearly ultra vires and beyond the power which Section 119 (of the 1961 Act) sought to confer upon that entity," the court said.
In 2006, erstwhile Ranbaxy Laboratories Ltd. invited investment in foreign currency convertible bonds to the tune of $440 million. Though the remittances to bondholders and banks were not subjected to any deduction at source, out of abundant caution, Ranbaxy deposited the tax deducted at source on the entire premium and interest paid on the bonds for the financial years 2010-11 to 2012-13. Thereafter, Ranbaxy claimed a refund of tax deposited.
Ranbaxy merged with Sun Pharmaceutical Industries in 2015. In 2018, the tax department rejected Sun Pharmaceutical's refund application citing a limitation period from the 2007 circular.
On Friday, the shares of Sun Pharmaceutical Industries Ltd. ended 0.3% higher at INR 1,743.95 on the National Stock Exchange. End
US$1 = INR 86.61
Reported by Surya Tripathi
Edited by Saji George Titus
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (11) 4220-1000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2025. All rights reserved.
To read more please subscribe
Share this Story:
