Facts of the Case

  • The Revenue filed multiple appeals against various General Electric group entities and related foreign companies.
  • The dispute pertained to levy of interest under Section 234B of the Income Tax Act.
  • The Income Tax Appellate Tribunal (ITAT) had decided the issue in favour of the assessees by following earlier High Court rulings.
  • The Revenue challenged the ITAT’s decision before the Delhi High Court.

Issues Involved

  1. Whether interest under Section 234B can be levied on non-resident assessees.
  2. Whether such levy is justified when tax is required to be deducted at source by the payer.
  3. Whether the ITAT erred in following binding precedent of the High Court.

Petitioner’s Arguments (Revenue)

  • The Revenue contended that interest under Section 234B is applicable.
  • It challenged the ITAT’s reliance on earlier High Court judgments.
  • It also pointed out that appeals against earlier rulings are pending before the Supreme Court.

Respondent’s Arguments (Assessee)

  • The assessees argued that the issue is already settled in their favour.
  • Reliance was placed 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 contended that when tax is deductible at source, no liability under Section 234B arises.

Court Findings / Order

  • The Delhi High Court held that:
    • The issue is already covered in favour of the assessee by its earlier judgment.
    • The ITAT committed no error in following the binding precedent.
  • Accordingly:
    • All appeals filed by the Revenue were dismissed.

Important Clarification by Court

  • The Court clarified that:
    • Since the matter is pending before the Supreme Court,
    • The final outcome will be subject to the Supreme Court’s decision in the pending appeals and Special Leave Petitions

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:8726-DB/SRB01062018ITA6612018_145352.pdf

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