Case Law Details
ACIT Vs GE Steam Power Systems (Supreme Court of India)
The case concerns Special Leave Petitions filed before the Supreme Court challenging a High Court decision that had set aside reassessment notices issued under Section 148 of the Income Tax Act, 1961 for Assessment Years 2013–14 to 2017–18. The notices were issued by the Assessing Officer (AO) seeking to reassess the income of several non-resident entities forming part of a global power business group.
The petitioners were companies incorporated in various foreign jurisdictions including the United States, France, China, Germany, Malaysia, Switzerland, and Poland. These entities were not tax residents of India but had engaged in activities such as supply of power generation equipment, technical services, and related operations. Some of the petitioners had received income in the nature of Fees for Technical Services (FTS) and had filed returns in India, while others claimed that they had not earned taxable income in India for certain assessment years and had not filed returns accordingly.
The reassessment notices were based primarily on findings from a survey conducted under Section 133A of the Act at the premises of Indian group entities. The AO formed a belief that the foreign entities had a Permanent Establishment (PE) in India in the form of a Dependent Agent PE or Fixed Place PE. It was alleged that these entities had made supplies to Indian entities without appropriate tax deduction, and that income attributable to such PE had escaped assessment.
The petitioners challenged the reopening of assessments, contending that there was no tangible material available with the AO to support the conclusion that they had a PE in India during the relevant assessment years. They argued that the reassessment proceedings were initiated solely on the basis of general findings from the survey and statements recorded during the survey, without any specific or concrete evidence linking the petitioners to a taxable presence in India.
The High Court examined the reasons recorded by the AO and found that there was no tangible material to form a valid belief that the petitioners had either a Dependent Agent PE or a Fixed Place PE in India for the relevant years. The court held that the initiation of reassessment proceedings was not sustainable in law. It further noted that similar issues had already been decided in favour of the petitioners in earlier judgments involving related entities, where reassessment notices were quashed on identical grounds.
In view of these findings, the High Court allowed the petitions and set aside the reassessment notices issued under Section 148. The petitions were disposed of accordingly.
The matter was then carried to the Supreme Court through Special Leave Petitions. Upon hearing the parties and reviewing the record, the Supreme Court found no reason to interfere with the orders passed by the High Court. It upheld the High Court’s decision, dismissed the Special Leave Petitions, and disposed of any pending applications.
Thus, the final outcome is that the reassessment notices issued to the petitioners for the relevant assessment years stand quashed, and the High Court’s ruling in favour of the petitioners has been affirmed by the Supreme Court.
Read Delhi HC Judgment in the case: GE Steam Power Systems Vs ACIT (Delhi High Court)
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Delay condoned.
2. Having heard the learned counsel appearing for the petitioners and having gone through the materials on record, we see no reason 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.
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