The Bombay High Court has ordered the Income Tax Department to refund nearly ₹1,000 crore to Vodafone Idea Ltd in two separate cases. While the court asked the tax department to refund ₹788 crore for the year 2017-18, another ₹224 crore will be refunded for the year 2015-16.

The order to refund ₹788 crore has its origin in the assessment order of March this year for 2017-18, the financial year in which the company suffered losses of over ₹6,600 crore. The tax department had withheld the refund stating that since the company had declared an income of ₹286 crore the previous year, there was a need to investigate how the company had reported huge losses the following year.

The court, however, dismissed the stand taken by the tax department. “Merely because in the immediately preceding assessment year 2016-17, the assessee had declared a positive income as against substantial loss declared in the present assessment year, by itself, cannot be a ground to doubt the contents of the return or the claim of the assessee with respect to the loss suffered,” the court said.

In the case related to refund of ₹224 crore, the tax department had blamed technical glitches for the delay in making the payment.

The court, however, said: “Whatever the technical difficulties in releasing the refund, the department must sort it out. If for some reason of technical glitch, the system in the present case fails to permit the payment of refund, the concerned authorised officer must manually do so.”

The court added: “When material facts are not disputable, we do not see any reason why the petitioner should not get the refund which flows from the order of assessment. The department does not dispute that the demands for other assessment years of the petitioner are presently not enforceable. That being the position, the refund of the petitioner arising out of the order of assessment for the said assessment year 2015-16, cannot be withheld.”