Facts of the Case

The Revenue filed multiple appeals against various GE group entities (non-resident assessees), challenging the orders of the Income Tax Appellate Tribunal (ITAT).

The central dispute revolved around the levy of interest under Section 234B for alleged default in payment of advance tax by the assessees.

The ITAT had ruled in favour of the assessees, relying on earlier binding precedents of the Delhi High Court.

Issues Involved

  1. Whether interest under Section 234B is leviable on non-resident assessees.
  2. Whether liability to pay advance tax arises when tax is deductible at source (TDS).
  3. Whether the ITAT was justified in following earlier High Court judgments.

Petitioner’s (Revenue) Arguments

  • The Revenue contended that the assessees were liable to pay advance tax, and failure to do so attracted interest under Section 234B.
  • It argued that the ITAT erred in deleting the interest liability.

Respondent’s (Assessee) Arguments

  • The assessees argued that being non-residents, their income was subject to TDS obligations on the payer.
  • Therefore, they had no liability to pay advance tax, and consequently, Section 234B interest was not applicable.
  • Reliance was placed on prior Delhi High Court rulings.

Court’s Findings / Order

  • The Delhi High Court held that the issue was already settled in favour of the assessees.
  • It relied on its earlier judgment in:
    Director of Income Tax (International Taxation) vs GE Packaged Power Inc. (2015) 373 ITR 65 (Delhi).
  • The Court observed:
    • The ITAT correctly followed binding precedent.
    • No error was committed by the Tribunal.
  • Result:
    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 been admitted.
    • The final outcome will be subject to the Supreme Court’s ruling.

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

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