Tuesday, February 7 2006 14:26 Hrs (IST) - World Time -

New Delhi: State-owned MTNL will soon reap a tax refund windfall, as the Income Tax department has been asked to return a whopping Rs 1,233 crore to the telecom PSU, which could use the money to meet all its investments, especially in expansion of GSM operations.

The Income Tax Appellate Tribunal has directed the Income Tax department to refund to MTNL, Rs 956 crore as tax and Rs 277 as interest on it, Anita Soni, Director (Finance), MTNL told sources.

MTNL had been pursuing a fierce battle against the I-T department before the appellate tribunal on allowing licence fee as an expense for running the business, as MTNL cannot provide telecom services without paying fee for the licence.

MTNL's net profit last year stood at Rs 940 crore and the figure for the first nine months in the current financial year was Rs 480 crore. Refund of Rs 1,233 crore would give the company a major boost, Soni said.

Asked when the refund was expected and how it would be utilised, Soni said "We expect to get the amount in the current financial year. "As far as utilisation is concerned, I am looking at various options. We have 16.3 lakh GSM subscribers and the segment is expanding very fast and requires lots of funds," Soni added.