Shares of Vodafone Idea were climbing on Thursday after a court ordered a refund of income tax paid by the firm.

What Happened: The Bombay High Court has issued a directive to the income tax department, compelling them to refund the ₹1,128 crore in taxes previously paid by Vodafone Idea, the Times of India reported. The court declared an assessment order against the struggling telecom giant as “unsustainable” and “time-barred”.

The case revolved around Vodafone Idea’s request for a refund after filing returns for the assessment year 2016-17. The Dispute Resolution Panel (DRP) issued an order concerning the refund on March 25, 2021, and promptly uploaded it on the Income Tax Business Application (ITBA) portal the same day. However, the assessing officer issued the final order two years later, in August 2023.

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The Bombay High Court has recommended an inquiry into and ordered strict action against the assessment officer responsible for the delay, citing that it resulted in significant losses to the exchequer. The court has set a 30-day deadline for the completion of this process.

In June, Vodafone Idea filed a petition with the High Court against the central processing centre in Bengaluru and the assistant commissioner of income tax. The petition questioned the failure to refund the excess tax amount on income.

Vodafone Idea argued that the assessing officer did not issue the final order within the mandatory 30 days following the directions of the DRP. Therefore, the company asserted its entitlement to a refund with interest. The senior counsel for Vodafone Idea contended that once the DRP’s order is uploaded and available, and no order is passed within a month, the income declared by Vodafone Idea is deemed accepted by the I-T department, entitling the petitioner to a refund of excess tax.

The income tax department argued that the assessing officer received the 2021 order on August 23, due to the commencement of the faceless assessment regime, and subsequently issued the order within a month.

Price Action: Vodafone Idea’s share price was up 1.83% at ₹13.90 around noon on Thursday.

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