Facts of the Case

The present batch of appeals was filed by the Revenue before the Delhi High Court involving multiple assessees, including GE Engine Service Distribution LLC, GE Engine Services Inc., GE Engine Service McAllen LP, and other related entities.

The dispute arose from the levy of interest under Section 234B of the Income Tax Act, 1961 on non-resident entities. The Income Tax Appellate Tribunal (ITAT) had ruled in favor of the assessees by following an earlier decision of the Delhi High Court.

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

Issues Involved

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

Petitioner’s Arguments (Revenue)

  • The Revenue contended that interest under Section 234B was rightly chargeable on the assessees.
  • It challenged the correctness of the ITAT’s reliance on earlier judicial precedent.
  • The Revenue also indicated that similar issues were pending before the Supreme Court.

Respondent’s Arguments (Assessee)

  • The assessees argued that the issue was already settled in their favor by the Delhi High Court.
  • Reliance was placed on the judgment in Director of Income Tax (International Taxation) vs GE Packaged Power Inc. (2015) 373 ITR 65 (Delhi).
  • It was submitted that the ITAT correctly followed binding precedent and committed no error.

Court Findings / Order

  • The Delhi High Court observed that the sole question of law pertained to levy of interest under Section 234B.
  • The Court held that the issue was already covered in favor of the assessees by its earlier judgment in GE Packaged Power Inc. case.
  • It was held that the ITAT did not commit any error in following the binding precedent.
  • Accordingly, all appeals filed by the Revenue were dismissed.

Important Clarification by the Court

  • The Court clarified that although the issue is presently covered by its earlier judgment,
  • The final outcome will be subject to the decision of the Supreme Court, where related appeals and Special Leave Petitions are pending.

Sections Involved

  • Section 234B of the Income Tax Act, 1961 – Interest for default in payment of advance tax

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:8725-DB/SRB21052018ITA6052018_144505.pdf

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