2013 (7) TMI 961 - AT - Income Tax

Summary

Issues involved: Reopening of assessments, existence of Permanent Establishment, attribution of profits to the Permanent Establishment, levy of interest u/s 234B of the Income Tax Act.

Reopening of assessments: The Assessing Officer initiated reassessment proceedings on 22 entities of G.E.Group by issuing notices u/s 148 of the Income Tax Act for the AYs 2000-2001 to 2006-07. The Assessing Officer completed assessments u/s 143(3) read with S.147 of the Act after rejecting objections to the reopening of assessments.

Existence of Permanent Establishment: The Assessing Officer held that the 22 GE Overseas entities have a Permanent Establishment in India, including a dependent agency Permanent Establishment in the form of G.E.India Industrial P.Ltd. Profit was attributed to the Permanent Establishment and brought to tax, with interest levied u/s 234A and S. 234B of the Act.

Attribution of profits to the Permanent Establishment: The Ld.Commissioner of Income Tax (Appeals) confirmed the action of the Assessing Officer on the issues of reopening of assessments, existence of Permanent Establishment, and attribution of profits to the Permanent Establishment. However, the Ld.Commissioner decided in favor of the assessee on the issue of levy of interest u/s 234B based on a binding judgment of the Jurisdictional High Court.

Levy of interest u/s 234B: The Revenue appealed the deletion of interest levied by the Assessing Officer u/s 234B of the Act by the Ld.Commissioner of Income Tax (Appeals). The issue revolved around the mandatory nature of interest u/s 234B and the applicability of relevant legal provisions and court judgments.

Judgment: The Tribunal upheld the decision of the Ld.Commissioner of Income Tax (Appeals) based on the binding judgment of the Jurisdictional High Court. The Tribunal found that interest u/s 234B was not leviable in the present case due to the obligations under S.195 of the Act regarding deduction of tax at source for non-resident companies. The Tribunal referenced various legal decisions and concluded that the Revenue's appeal was dismissed, affirming the order of the First Appellate Authority.

Separate Judgment: No separate judgment was delivered by the judges in this case.