Facts of the Case

The present batch of appeals was filed by the Revenue against multiple General Electric group entities (including General Electric Power Systems Inc., GE Engine Services McAllen LP, GE Caledonian Ltd., GE Wind Energy GmbH, etc.).

The central dispute revolved around the levy of interest under Section 234B on non-resident assessees.

The Income Tax Appellate Tribunal (ITAT) had ruled in favor of the assessees by following an earlier judgment of the Delhi High Court in Director of Income Tax (International Taxation) vs. GE Packaged Power Inc. (2015) 373 ITR 65 (Delhi).

Aggrieved by the ITAT’s decision, the Revenue preferred appeals before the Delhi High Court.

Issues Involved

  1. Whether interest under Section 234B is leviable on non-resident assessees.
  2. Whether the ITAT was correct in following the earlier binding precedent of the Delhi High Court.

Petitioner’s (Revenue’s) Arguments

  • The Revenue contended that the ITAT erred in deleting the interest levied under Section 234B.
  • It was argued that the assessees were liable to pay advance tax, and consequently interest under Section 234B should be imposed.

Respondent’s (Assessee’s) Arguments

  • The assessees relied on the binding precedent of the Delhi High Court in GE Packaged Power Inc.
  • It was submitted that in cases involving non-residents where tax is deductible at source, liability to pay advance tax does not arise, and hence Section 234B interest is not applicable.

Court’s Findings / Order

  • The Delhi High Court held that the issue is squarely covered in favour of the assessee by its earlier judgment in Director of Income Tax (International Taxation) vs. GE Packaged Power Inc..
  • The Court observed that:
    • The previous ruling is binding.
    • The ITAT committed no error in following the earlier decision.
  • Accordingly, the appeals filed by the Revenue were dismissed.

Important Clarification by the Court

  • The Court clarified that since the Revenue has already filed appeals before the Supreme Court in similar matters,
  • The final outcome on the question of law will be governed by the decision of the Supreme Court in the pending batch of appeals and Special Leave Petitions.

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

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