Facts of the Case

  • The appeals were filed by the Revenue against multiple GE Group entities including General Electric Power Systems Inc., GE Engine Services McAllen LP, GE Caledonian Ltd., GE Wind Energy GmbH, and others.
  • The central dispute revolved around whether interest under Section 234B is leviable on non-resident assessees.
  • The Income Tax Appellate Tribunal (ITAT) had ruled in favor of the assessees, holding that such interest was not applicable.
  • The Revenue challenged the ITAT’s decision before the Delhi High Court.

Issues Involved

  1. Whether interest under Section 234B of the Income Tax Act is leviable on non-resident assessees.
  2. Whether the ITAT was justified in following earlier binding precedents of the Delhi High Court.

Petitioner’s Arguments (Revenue)

  • The Revenue contended that interest under Section 234B should be levied on the assessees for default in payment of advance tax.
  • It argued that the ITAT erred in relying on earlier judgments and should have independently examined the liability.

Respondent’s Arguments (Assessees – GE Entities)

  • The assessees argued that the issue is already settled by binding precedent of the Delhi High Court.
  • They relied on the judgment in Director of Income Tax (International Taxation) vs GE Packaged Power Inc. (2015) 373 ITR 65 (Delhi).
  • It was contended that no interest under Section 234B is leviable on non-residents where tax is deductible at source.

Court’s Findings / Order

  • The Delhi High Court held that the issue is already covered in favor of the assessees by its earlier judgment.
  • The Court observed that the ITAT correctly followed the binding precedent.
  • It was held that no error was committed by the ITAT in deciding the matter.
  • Accordingly, all appeals filed by the Revenue were dismissed.

Important Clarification by Court

  • The Court clarified that:
    • The issue is pending before the Supreme Court in further appeals.
    • The final outcome will be subject to the Supreme Court’s decision.
  • Thus, while the High Court followed its own precedent, it acknowledged the pending final adjudication.

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

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