Facts of the Case

  • The Revenue filed multiple appeals against various General Electric group entities and related foreign companies.
  • The core dispute across all appeals related to the levy of interest under Section 234B on non-resident assessees.
  • The Income Tax Appellate Tribunal (ITAT) had ruled in favour of the assessees by following earlier Delhi High Court judgments.
  • The Revenue challenged the ITAT orders before the Delhi High Court.

Issues Involved

  1. Whether interest under Section 234B of the Income Tax Act, 1961 is leviable on non-resident assessees.
  2. Whether the ITAT was justified in following the earlier binding precedent of the Delhi High Court.

Petitioner’s Arguments (Revenue)

  • The Revenue contended that interest under Section 234B should be levied on the assessees.
  • It challenged the correctness of the ITAT’s reliance on earlier High Court judgments.
  • It was also indicated that similar matters were pending before the Supreme Court.

Respondent’s Arguments (Assessee)

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

Court’s Findings / Order

  • The Court held that:
    • The issue is squarely covered in favour of the assessees by earlier judgment of the Delhi High Court.
    • The ITAT committed no error in following the binding precedent.
  • 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.
    • The final outcome will be governed by the Supreme Court’s decision 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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