Facts of the Case

  • The petitioner, Nokia Solutions and Networks India Pvt. Ltd., filed:
    • An application seeking compliance with a prior court order and release of interest under Section 244A.
    • A writ petition challenging an order dated 10 August 2020 directing payment of tax demand for AY 2016–17.
  • The tax demand arose due to disallowances relating to “other provisions” and contingencies.
  • The petitioner claimed that a substantial amount of interest (approx. ₹26.64 crore) was due for AY 2008–09 under Section 244A.

Issues Involved

  1. Whether the tax demand raised by the Income Tax Department can be adjusted against the refundable interest due under Section 244A.
  2. Whether the petitioner is entitled to relief from immediate payment of the disputed tax demand during pendency of appeal.

Petitioner’s Arguments

  • The petitioner submitted that:
    • A substantial refund of interest under Section 244A was due and payable.
    • It had no objection if the tax demand directed to be deposited is adjusted against such refundable interest.
    • The balance amount should be paid within a reasonable time.

Respondent’s Arguments

  • The Revenue, while not admitting the petitioner’s calculations, stated:
    • It had no objection to the adjustment of the demand against the refund as proposed by the petitioner.

Court Order / Findings

  • The Delhi High Court held that:
    • The petitioner’s request was fair and reasonable.
    • The tax demand raised vide order dated 10 August 2020 shall be adjusted against the refund of interest under Section 244A for AY 2008–09.
    • The balance amount shall be paid to the petitioner within eight weeks.
  • Consequently, all petitions and applications were disposed of.

Important Clarification by Court

  • Adjustment of tax demand against refund (including interest under Section 244A) is permissible where:
    • The claim is reasonable, and
    • The Revenue does not raise substantive objection.
  • The Court emphasized practical and equitable resolution in tax recovery matters pending appeal.

Link to download the order - https://delhihighcourt.nic.in/app/case_number_pdf/2020:DHC:2753-DB/MMH11092020CW110692019_135325.pdf

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