FACTS OF THE CASE

The Revenue filed multiple appeals against various General Electric (GE) group entities, including General Electric Power Systems Inc., GE Engine Services McAllen LP, GE Caledonian Ltd., and others.

The dispute arose regarding whether interest under Section 234B could be levied on non-resident assessees in situations where tax was required to be deducted at source.

The Income Tax Appellate Tribunal (ITAT) ruled in favor of the assessees, relying on earlier Delhi High Court judgments. Aggrieved by this, the Revenue preferred appeals before the Delhi High Court.

ISSUES INVOLVED

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

PETITIONER’S ARGUMENTS (REVENUE)

  • The Revenue contended that interest under Section 234B should be levied on the assessees.
  • It argued that the issue is still pending before the Supreme Court and therefore should be reconsidered.

RESPONDENT’S ARGUMENTS (ASSESSEE – GE GROUP ENTITIES)

  • 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)
  • They contended that where tax is deductible at source, liability to pay advance tax does not arise, and hence Section 234B interest is not applicable.

COURT’S FINDINGS / ORDER

  • The Delhi High Court held that the issue is already covered in favour of the assessee by its earlier judgment.
  • It reaffirmed that ITAT committed no error in following the binding precedent.
  • The Court dismissed all the Revenue’s appeals.

IMPORTANT CLARIFICATION BY COURT

  • The Court clarified that although the issue is decided based on existing precedent,
    the final outcome will be subject to the decision of the Supreme Court in pending appeals.

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

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