Facts of the Case

The present batch of appeals was filed by the Revenue (Commissioner/Principal Commissioner of Income Tax – International Taxation) against multiple General Electric (GE) group entities including General Electric Power Systems Inc., GE Engine Services McAllen LP, GE Caledonian Ltd., and others.

The core issue arose from orders passed by the Income Tax Appellate Tribunal (ITAT), where it was held that interest under Section 234B was not leviable on the non-resident assessees.

The Revenue challenged the Tribunal’s findings before the Delhi High Court contending that such interest should be applicable.

Issues Involved

  • Whether interest under Section 234B of the Income Tax Act, 1961 is leviable on non-resident assessees in cases where tax is deductible at source.
  • Whether the ITAT was justified in following earlier binding precedents of the High Court.

Petitioner’s Arguments (Revenue)

  • The Revenue contended that the assessee was liable to pay advance tax.
  • Failure to pay such advance tax attracted interest under Section 234B.
  • The Tribunal erred in granting relief by relying on earlier judgments.

Respondent’s Arguments (Assessee)

  • The assessee argued that being non-resident entities, their income was subject to tax deduction at source (TDS).
  • Therefore, there was no obligation to pay advance tax independently.
  • Reliance was placed on the Delhi High Court judgment in:
    Director of Income Tax (International Taxation) vs. GE Packaged Power Inc. (2015) 373 ITR 65 (Delhi), which held the issue in favour of the assessee.

Court Findings / Judgment

The Delhi High Court held:

  • The issue of levy of interest under Section 234B is already settled in favour of the assessee by its earlier judgment in GE Packaged Power Inc..
  • The ITAT did not commit any error in following the binding precedent of the High Court.
  • The Court reiterated that it is bound by its own previous decision on the same issue.

Important Clarification by the Court

  • The Court clarified that:
    • The Revenue has already filed appeals before the Supreme Court, which are pending.
    • The final outcome of the issue will be governed by the Supreme Court’s decision.
  • Until then, the existing High Court ruling remains binding.

Final Order

  • All appeals filed by the Revenue were dismissed.
  • The dismissal was subject to the outcome of pending Supreme Court proceedings.

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

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