Facts of the Case

The Revenue filed multiple appeals before the Delhi High Court against various GE group entities (non-resident assessees), challenging the orders of the Income Tax Appellate Tribunal (ITAT). The dispute centered around the levy of interest under Section 234B of the Income Tax Act, 1961 on non-resident entities.

The ITAT had ruled in favour of the assessees, holding that such interest was not leviable. The Revenue contested this finding, leading to the present batch of appeals.

Issues Involved

  • Whether interest under Section 234B of the Income Tax Act, 1961 is leviable on non-resident assessees where tax is deductible at source.

Petitioner’s (Revenue’s) Arguments

  • The Revenue contended that the assessee was liable to pay advance tax and consequently liable for interest under Section 234B for failure to do so.
  • It was argued that the ITAT erred in following earlier judgments without independently examining the liability.

Respondent’s (Assessee’s) Arguments

  • The assessees argued that being non-residents, their income was subject to tax deduction at source (TDS), and therefore, liability to pay advance tax did not arise.
  • They relied 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 that Section 234B interest is not applicable in such cases.

Court’s Findings / Order

  • The Court held that the issue was already covered in favour of the assessee by its earlier judgment in Director of Income-Tax (International Taxation) vs GE Packaged Power Inc..
  • The High Court observed that it was bound by its previous decision.
  • It further held that the ITAT had not committed any error in following the earlier ruling.
  • Accordingly, all appeals filed by the Revenue were dismissed.

Important Clarification by the Court

  • The Court clarified that the issue is pending before the Supreme Court, where appeals have already been admitted.
  • It was observed that the final outcome will be subject to the Supreme Court’s decision in the pending matters.

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

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