Facts of the Case

The Revenue filed multiple appeals before the Delhi High Court against various GE group entities and other assessees. The central issue across all connected matters pertained to 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 favour of the assessees by following an earlier judgment of the Delhi High Court. Aggrieved by the same, 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 where tax is deductible at source.
  • 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 is applicable and should be levied on the assessees.
  • It was argued that the ITAT erred in granting relief by relying on earlier judicial precedents.

Respondent’s Arguments (Assessee)

  • The assessees relied on the Delhi High Court judgment in Director of Income Tax (International Taxation) vs GE Packaged Power Inc. (2015) 373 ITR 65 (Delhi).
  • It was submitted that in cases of non-residents where tax is deductible at source, no liability under Section 234B arises.
  • The ITAT correctly followed binding precedent and therefore committed no error.

Court’s Findings / Order

  • The Court observed that the issue is already covered in favour of the assessees by the earlier judgment in GE Packaged Power Inc.
  • The Court held that it is bound by its previous decision and the ITAT rightly followed the same.
  • Accordingly, no error was found in the ITAT’s order.
  • All appeals filed by the Revenue were dismissed.

Important Clarification by Court

  • The Court clarified that the Revenue has already filed appeals before the Supreme Court against the earlier judgment.
  • It was stated that the final outcome of the issue will be governed by the decision of the Supreme Court in the pending matters.
  • Thus, the dismissal of appeals is subject to the final ruling of the Supreme 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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