ACIT Vs GE Power Solutions (Malaysia) (Supreme Court of India)
The matter arose from a batch of writ petitions filed before the Delhi High Court by various non-resident GE group entities, including GE Steam Power Inc., GE Steam Power Systems, GE (Shanghai) Power Technology Co. Ltd., GE Power GmbH, GE Power Solutions (Malaysia), General Electric (Switzerland) GmbH and GE Power SP.Z.O.O., challenging notices issued by the Assessing Officer (AO) under Section 148 of the Income Tax Act, 1961 for Assessment Years 2013-14 to 2017-18. Since the material facts and issues were identical, the High Court heard and disposed of all the petitions through a common judgment.
The petitioners were companies incorporated in the United States, France, China, Germany, Malaysia, Switzerland and Poland and were not tax residents of India. Some petitioners had filed returns of income in India in respect of income characterised as Fees for Technical Services (FTS), while others stated that they had not earned income chargeable to tax in India for the relevant assessment years and therefore had not filed returns.
Following the issuance of notices under Section 148, the petitioners furnished returns of income and sought the recorded reasons for reopening, which were supplied by the AO. The recorded reasons were substantially similar and were primarily based on a survey conducted under Section 133A(1) of the Act on 6–7 June 2019 at the premises of GE Power India Ltd. and GE T&D India Ltd.
The AO recorded that the survey indicated that companies of the erstwhile Alstom Group engaged in the power business had a Permanent Establishment (PE) in India in the form of a Dependent Agent PE and a Fixed Place PE, making part of their business income attributable to such PE chargeable to tax in India. The AO further recorded that, after the survey, it was found that the petitioners had made supplies to Indian entities, that no tax had been deducted on payments for those supplies, and that the corresponding income had not been declared in India. The AO also relied on statements of employees of GE Power India Ltd. and GE T&D India Ltd. recorded during the survey to conclude that the petitioners had a Dependent Agent PE and a Fixed Place PE in India and that business income attributable to such PE had escaped assessment.
The petitioners objected to the reopening proceedings under Section 147, contending that there was no tangible material to conclude that they had a Permanent Establishment in India during the relevant previous years. Those objections were rejected by the tax authorities.
The Delhi High Court examined the reasons recorded for reopening and held that a plain reading of those reasons showed that there was no tangible material for forming the belief that the petitioners had a Dependent Agent PE or a Fixed Place PE in India during the relevant previous years for which the impugned notices under Section 148 had been issued. The High Court also noted that the issue was covered in favour of the petitioners by its earlier decisions in Grid Solutions OY (Ltd.) v. Assistant Commissioner of Income Tax, UK Grid Solutions Ltd. v. ACIT, GE Hydro France v. ACIT, GE Grid (Switzerland) GmbH v. ACIT and GE Renewables Grid LLC (formerly known as Alstom Grid Inc. / Alstom Grid LLC) v. ACIT. Accordingly, the High Court allowed the writ petitions, set aside the impugned notices issued under Section 148 and disposed of the petitions.
The Revenue challenged the High Court’s judgment before the Supreme Court in ACIT Vs GE Power Solutions (Malaysia) by filing Special Leave Petitions.
The Supreme Court first condoned the delay in filing the Special Leave Petitions. It thereafter recorded that it found no good ground to interfere with the impugned order(s) passed by the High Court. Consequently, the Special Leave Petitions were dismissed. The Court also directed that any pending applications stood disposed of.
As a result, the Supreme Court declined to interfere with the Delhi High Court’s judgment, leaving intact the High Court’s order allowing the writ petitions and setting aside the reassessment notices issued under Section 148.
Cases Discussed
- GE Renewables Grid LLC (formerly known as Alstom Grid Inc. / Alstom Grid LLC) v. ACIT (Delhi High Court), 2025:DHC:2911 — DB
- GE Grid (Switzerland) GmbH v. ACIT (Delhi High Court), Neutral Citation No.: 2025:DHC:1280-DB
- GE Hydro France v. ACIT (Delhi High Court), order dated 12.02.2025 in WP(C) No.1629/2022
- UK Grid Solutions Ltd. v. ACIT (Delhi High Court), order dated 07.02.2025 in WP(C) No.5095/2022
- Grid Solutions OY (Ltd.) v. Assistant Commissioner of Income Tax (Delhi High Court), Neutral Citation No.: 2025:DHC:214-DB
Read HC Judgment in this case: Reassessment Notices Quashed Due to Lack of Tangible Material for PE Allegation
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Delay condoned.
2. We find no good ground to interfere with the impugned order(s) passed by the High Court.
3. The Special Leave Petitions are, accordingly, dismissed.
4. Pending application(s), if any, stands disposed of.
