Facts of the Case

As noted from the judgment (Page 6) , multiple appeals were filed by the Revenue against various GE group entities (non-resident assessees). The central dispute revolved around the levy of interest under Section 234B of the Income Tax Act.

The assessees were foreign companies, and the Revenue sought to impose interest for failure to pay advance tax. The Income Tax Appellate Tribunal (ITAT) had ruled in favour of the assessees, relying on earlier precedents of the Delhi High Court.

Issues Involved

  • Whether interest under Section 234B is leviable on non-resident assessees where tax is deductible at source (TDS)?
  • Whether the ITAT was correct in following earlier binding precedents of the Delhi High Court?

Petitioner’s (Revenue) Arguments

  • The Revenue contended that the assessees were liable to pay advance tax.
  • Consequently, failure to pay advance tax attracted interest under Section 234B.
  • The Revenue challenged the ITAT’s reliance on earlier judgments.

Respondent’s (Assessee) Arguments

  • The assessees argued that being non-residents, their income was subject to tax deduction at source (TDS).
  • Therefore, the obligation to pay advance tax did not arise.
  • Reliance was placed on the Delhi High Court ruling in Director of Income Tax (International Taxation) vs GE Packaged Power Inc. (2015) 373 ITR 65.

Court’s Findings / Judgment

As clearly recorded on Page 6 of the judgment :

  • The Court held that the issue is already covered in favour of the assessee by its earlier decision in:

Director of Income-Tax (International Taxation) vs. GE Packaged Power Inc. (2015) 373 ITR 65 (Delhi)

  • The Court observed:
    • The ITAT committed no error in following the binding precedent.
    • The previous ruling continues to bind the Court.
  • Accordingly, all appeals filed by the Revenue were dismissed.

Important Clarification by the Court

  • The Court clarified that:
    • The issue is pending before the Supreme Court.
    • Final determination of law will be subject to the outcome of those appeals.
    • Until then, the existing High Court precedent remains binding.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:8726-DB/SRB01062018ITA6612018_145352.pdf

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