Relief to General Electric: Delhi HC Quashes Income Tax Reassessment Noting Lack of Material Evidence and Mere Reliance on Past Surveys [Read Order]

The Delhi High Court has quashed the reassessment proceedings initiated against GE Grid (Switzerland) GmbH, a subsidiary of General Electric (GE), ruling that the Income Tax Department failed to provide any fresh material evidence to justify reopening assessments for AYs 2013-14 to 2017-18.

The factual matrix follows an allegation raised by the Income Tax Department that GE Grid Switzerland had a Permanent Establishment (PE) in India and was liable to pay tax on business profits derived from its operations in the country. It was alleged by the Income Tax Authorities that GE T&D India Ltd. (GETDIL), which had taken over the Alstom Group's Transmission and Distribution business, functioned as a Dependent Agent PE (DAPE) and a Fixed Place PE for the GE Group.

Read More: Indian Subsidiary’s Classification as Dependent Agent PE in Software Sales: ITAT Sets Aside AO’s Decision

Furthermore, it was averred that the Indian Entity of GE was intensely involved in the marketing, pre-bid, bid and post-bid negotiations, customer identification, and sales on behalf of GE Grid Switzerland, thus making such services taxable as per Indian law.

Senior Advocate Ajay Vohra, along with Aditya Vohra and Shashvat Dhamija representing General Electric argued that the reassessment was legally untenable as it relied solely on past surveys without conduct of fresh inquiry. It was further contended before the Court that the Assessing Officer (AO) failed to demonstrate any independent assessment of business activities for the specific Assessment Years (A.Y.) 2013-14 to 2017-18, making the reassessment action flawed.

Read More: Secondment of Employees by Samsung does not Prove PE under Art.5 of India-Korea DTAA: Delhi HC

Standing Counsel Ruchir Bhatia, along with Anant Mann and Aditi Sabharwa appearing for the Revenue contended that the referenced 2019 survey served as due evidence to assert the functioning of a PE in India.

A Division Bench comprising Justice Yashwant Varma and Justice Ravinder Dudeja examined whether the survey findings from 2007 and 2019 could be used as the sole basis for reassessment. The Court ruled that the Assessing Officer had merely extrapolated past survey results without conducting an independent evaluation for the relevant years.

Referencing a prior decision by the same Court in Grid Solutions OY (Ltd.) v Assistant Commissioner of Income Tax International Taxation and Another (2025 TAXSCAN (HC) 158) where it was held that reassessment based purely on past survey results is impermissible, the Delhi High Court ruled that the Revenue had unfairly carried out reassessment proceedings against the Petitioner.

Read More: Delhi HC quashes Income Tax Additions based on Historical Data and Facts

The Bench went on to quash the reassessment notices issued under Section 148 of the Income Tax Act observing that the Revenue failed to bring any fresh material to justify reopening the assessment.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates