AI Insights
The case involves GE Global Parts & Products GMBH, a Swiss company, which filed a stay application against the recovery of an outstanding tax demand of Rs. 7,09,98,473/- for the assessment year 2022-23. The demand arose from an assessment order that increased the assessee's declared income significantly based on the findings that the company had a Permanent Establishment (PE) in India and business connections that warranted taxation under Indian law. The assessee argued that it was entitled to the benefits of the Double Taxation Avoidance Agreement (DTAA) between India and Switzerland and that previous ITAT decisions had found no PE in India for the years in question. The Revenue opposed the stay, suggesting the assessee should deposit the entire outstanding demand.
Appeal details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 669226 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Appellant
Respondent
Appeal Type
Stay Application
Pronouncement Date
27-06-2025
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
D
Assessment Year
2022-2023
Judgement Text
"1 SA No. 296/Del/2025 (In ITA No. 1932/Del/2025) GE Global Parts and Products GMBH v. ACIT , Circle International Taxation 1(3)(1), Delhi A.Y: 2022-23 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘D’ NEW DELHI) BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER SA No. 296/Del/2025 (In ITA no. 1932/Del/2025) Assessment Year.: 2022-23 GE Global Parts & Products GMBH Brown Boveri Strasse 8, Baden, Switzerland v. The ACIT, Circle International Taxation 1(3)(1), Civic Centre, Minto Road, New Delhi- 110002 PAN No:AAGCG3668K APPLICANT RESPONDENT Assessed by :Shri Ajay Vohra, Sr. Advocate, Shri Aditya Vohra, Advocate Revenue by : Shri Dheeraj Kumar Jain, Sr. DR Date of Hearing :27.06.2025 Date of Pronouncement :27.06.2025 ORDER PER RAMIT KOCHAR, AM: The assessee has filed this stay application in SA No. 296/Del/2025 which has arisen from ITA no. 1932/Del/2025 for assessment year 2022-23, seeking grant of stay on recovery of the outstanding demand to the tune of Rs. 7,09,98,473/- (Rupees Seven Crores Nine Lac Ninety Eight Thousand Four Hundred and Seventy Three only). It is the say of the ld. Sr. Advocate, Shri Ajay Vohraappearing for the assessee that the AO has framed 2 SA No. 296/Del/2025 (In ITA No. 1932/Del/2025) GE Global Parts and Products GMBH v. ACIT , Circle International Taxation 1(3)(1), Delhi A.Y: 2022-23 assessment order dated 10th January, 2025 u/s 143(3) read with Section 144C(13) of the Income-tax Act, 1961(DIN & Order No. ITBA/AST/S/ 143(3)/ 2024-25/1072064267(1)) , computing income of the assessee at Rs. 19,34,60,147/- , as against returned income of Rs. 5,03,76,330/-,in pursuance to the directions u/s. 144C(5) (DIN:ITBA/DRP/M/144C(5)/ 2024-25/1071377307(1)) issued ld. DRP , dated 19.12.2024. Our attention was also drawn to notice of demand u/s 156 and computation of income both dated 10.01.2025 issued by the AO, raising an demand of Rs. 7,09,98,470/- against the assessee. The ld. Sr. Advocate stated before the Bench that the assessee is incorporated under the laws of Switzerland, and is entitled to avail the beneficial provisions of DTAA entered into between India and Switzerland. It is stated by ld. Sr. Advocate that the assessee is engaged in the business of supply of spare parts including replacement , refurbishment, supply of rotatable parts to various customers in India on an offshore basis. It was stated that the assessee undertakes these business activities under standalone contracts/purchase orders entered into between the assessee and its customers based in India. The supply of parts are in the nature of offshore supplies. The assessee has claimed total income of Rs. 1,43,08,38,172/- from offshore supplies of spare parts which was claimed as an exempt income. It is stated that in case of repair or refurbishment of gas turbines, the customers ships the equipment to be repaired to the workshops located outside India, where such repairs/refurbishments are conducted and once the work is done , the said equipment is shipped back to the customers in India. It was submitted that the assessee has received US$ 6,76,99,243 from 9 customers in India. The authorities have made additions to the income of the assessee to the tune of Rs. 14,30,83,817/- by holding that the assessee has Fixed Place PE and Dependent Agent PE. It was also held that the assessee has business connections in India . The AO has made additions and assessed business income wherein total income from offshore supplies of goods to the tune of Rs. 14,30,83,817/- was brought to tax u/s 44BBB 3 SA No. 296/Del/2025 (In ITA No. 1932/Del/2025) GE Global Parts and Products GMBH v. ACIT , Circle International Taxation 1(3)(1), Delhi A.Y: 2022-23 @10% of Rs. 1,43,08,38,172/-, on a presumptive basis, attributable to PE in India. It is stated that the AO relied upon the survey conducted in the year 2019 and came to the conclusion that the assessee has PE in India. It was further submitted that the ITAT has in assessee’s own case for assessment year 2018-19,2019-20 and 2020-21 based on the prevailing factual matrix in those years came to the conclusion that the assessee does not have PE in India( ITA nos. 2035-36/Del/2022 for ay:2019-20 and 2018-19 vide order dated 25.07.2023, as well ITA no. 736/Del/2023 for ay:2020-21 vide order dated 29.11.2023).It was stated that Hon’ble Delhi High Court in several writ petitions filed by the associated companies of the GE group after considering the survey conducted by Revenue in the year 2019 , came to the conclusion that the findings of the survey cannot be considered for arriving at a conclusion that there was PE of these entitiesin India for other years covered in those writ petitions(WP(C) 4411/2022, 1294/2022, 1560/2022. It was stated that none of expatriate officer/employees of the assessee visited India during the previous year relevant to the assessment year. It was submitted that finding of survey conducted by Revenue in the year 2019 cannot be extrapolated to the impugned assessment year. It was further stated before the Bench by ld. Sr. Advocate that none of the expatriate employees of the assessee visited India during the financial year under consideration in connection with the offshore supply of parts and performance of repair work outside India . It was submitted that none of the offices of the GE group situated in India is at disposal of the assessee. It was submitted that it is true that some of the employees of the GE group companies in India participated in the bidding process but the same were merely for communication on behalf of the assessee, and none of the said employees of the group companies have authority to conclude contract on behalf of the assessee. It was submitted that the authorities below have not provided copies of the enquiries made during the year ,and principles of natural justice are breached. It was 4 SA No. 296/Del/2025 (In ITA No. 1932/Del/2025) GE Global Parts and Products GMBH v. ACIT , Circle International Taxation 1(3)(1), Delhi A.Y: 2022-23 submitted by ld. Sr. Advocate that these were different contract for off shore supply of spare parts etc. ,and it is not true that the contracts were split by the assessee merely to avoid tax liability. Without prejudice, It was submitted that even if income of the supplies are to be brought to tax, it is the income attributable to the PE in India, which can be brought to the tax , and ld. DRP has directed to bring to tax income @2.6% of the offshore supply receipts of Rs. 1,43,08,38,172/- , being net profit attributable as income of the AE, but the AO brought to income-tax by attributing income of the alleged PE@10% of gross revenue of Rs. 1,43,08,38,172/-. It was submitted that the AO has not followed the directions of ld. DRP , which is against the provisions of law. Our attention was drawn to the decision(s) of ITATin Bechtel v. ACIT(2024) 159 taxmann.com 319(Del-Trib.) : Global One India Private Limited v. DCIT, New Delhi ((2020) 182ITD355(Del.-ITAT). It was further submitted that during the assessment proceedings as well before ld. DRP, the assessee has raised a ground that the assessee has inadvertently offered to income-tax , income of Rs. 5,03,76,331/- being Fee for Technical Services being consideration for the provision of routine repairs from outside India to customers in India, in absence of PE in India, as business income in the return of income filed with Revenue, but none of the authorities have adjudicated the said issue. The assessee has now raised this issue vide ground number 10 in its appeal filed with the ITAT. It is claimed that the prepaid taxes to the tune of Rs.47,60,457/- is with department w.r.t. aforesaid returned income. The ld. Sr. Advocate stated that the assessee also filed rectification application with department, and now department has issued SCN dated 24.06.2025 as to why the said rectification application u/s 154 be not dismissed as the same does not come with in the purview of provisions of Section 154. Thus, prayers were made to the grant stay on recovery of outstanding demand. 5 SA No. 296/Del/2025 (In ITA No. 1932/Del/2025) GE Global Parts and Products GMBH v. ACIT , Circle International Taxation 1(3)(1), Delhi A.Y: 2022-23 2. Ld. Sr. DR vehemently opposed the stay application filed by the assessee, and submitted that the assessee may be asked to deposit entire outstanding demand. 3. After hearing both the parties and without commenting on the merits of the issues arising in the appeal, we are of the view that the assessee has made out a prima-facie case for grant of stay on recovery of outstanding demand to the tune of Rs. 7,09,98,473/-, for a period of 180 days or till the disposal of the appeal in ITA no. 1932/Del/2025 for assessment year 2022-23, which ever is earlier. We once again reiterate and clarify that we have not commented on the merits of the issue’s arising in the appeal.The ITAT is the last fact finding authority , and the issues arising in the appeal will be dealt with by the ITAT in detail on merits after considering the entire factual matrix of the case. The appeal in ITA no. 1932/Del/2025 is now directed to be fixed before the Division Bench on 29.07.2025. The date is announced in the open court in the presence of both the parties , and issuance of separate notice is dispensed with. The assessee is directed not to seek un- necessary adjournments and co-operate in early disposal of the appeal in ITA no. 1932/Del/2025 for assessment year 2022-23.We order accordingly. 4. In the result, stay application in SA No.296/Del/2025 arising out of ITA No. 1932/Del/2025 for assessment year 2022-23is allowed in the manner as indicated in this order. Order pronounced in the open court on 27th June, 2025. Sd/- Sd/- (SUDHIR PAREEK) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 02.07.2025. 6 SA No. 296/Del/2025 (In ITA No. 1932/Del/2025) GE Global Parts and Products GMBH v. ACIT , Circle International Taxation 1(3)(1), Delhi A.Y: 2022-23 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. DRP 5. DR 6. Guard File Asst. Registrar, ITAT, New Delhi "
