Facts of the Case

  • The assessees are non-resident entities belonging to the GE group (including GE Engine Service Distribution LLC, GE Engine Services Inc., etc.).
  • The dispute arose regarding levy of interest under Section 234B for failure to pay advance tax.
  • The ITAT ruled in favour of the assessees, holding that such interest was not leviable in the given circumstances.
  • The Revenue filed appeals before the Delhi High Court challenging the ITAT’s decision.

Issues Involved

  1. Whether interest under Section 234B is leviable on non-resident assessees.
  2. Whether the ITAT was justified in following earlier High Court precedent.
  3. Whether pending appeals before the Supreme Court affect the binding nature of High Court judgments.

Petitioner’s Arguments (Revenue)

  • The Revenue contended that the assessees were liable to pay advance tax.
  • Consequently, failure to do so attracted interest under Section 234B.
  • The Revenue sought reconsideration of the issue despite existing precedent, especially since appeals 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 of Section 234B applicability to non-residents had already been settled in their favour.
    • The ITAT correctly followed the binding precedent.

Court’s Findings / Order

  • The Delhi High Court held that:
    • The issue is squarely covered in favour of the assessees by its earlier judgment.
    • The ITAT committed no error in following the binding precedent.
  • The Court further observed:
    • Even though the Revenue’s appeal is pending before the Supreme Court, the existing High Court judgment continues to bind.
  • Final Order:
    • All appeals filed by the Revenue were dismissed.

Important Clarification by Court

  • The Court clarified that:
    • The parties shall ultimately be bound by the final decision of the Supreme Court in the pending appeals and Special Leave Petitions.
  • This ensures that:
    • The present ruling is subject to the outcome of the apex court.

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

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