The Tokyo High Court on Thursday supported a lower court decision invalidating a controversial tax imposed by the Tokyo Metropolitan Government on major banks, ordering Tokyo to return 162.87 billion yen collected from 17 banks in fiscal 2000 and 2001.

Unlike the lower court ruling, the high court acknowledged the local government's right to levy taxes based on the banks' gross profits, turning down the banks' demand for payment of 2.1 billion yen in damages.

However, it concluded that the tax increase on each of the banks under the new system was too high in light of the Local Tax Law.