Judgment Intelligence
Petition AllowedPrincipal Officer, LG Electronics India Pvt. Ltd. v. Assistant Commissioner of Income Tax, NOIDA & Anr.
Civil Appeal No. 18067 of 2017 with Civil Appeal Nos. 18068 and 18281 of 2017
- Court
- Supreme Court of India
- Date of Decision
- 7 October 2026
- Bench
- Justice J.B. Pardiwala and Justice K. Vinod Chandran
- Relevant Acts & Sections
- Income Tax Act, 1961 - Sections 40(a)(i), 147, 148, 195, 201 and 250
Final Outcome
Appeals allowed: the reassessment proceedings for AY 2006-07 to 2008-09 were held unenforceable, and the Assessing Officer, on production of this order and the ITAT's Section 201 order, must close them (paras 8-9).
Key holdings
- The ITAT's finding of no withholding duty knocked out a reassessment built on a TDS default (para 7).
- A reassessment cannot be sustained on grounds other than those on which it was initiated (para 8).
- No remand was needed: the Assessing Officer must close the reassessment as unenforceable (paras 7-8).
- Reassessment for AY 2006-07 to 2008-09 was held unenforceable (para 8).
Judgment digest by NyayVidhan: a summary of the court's judgment, not its text. The judgment itself is the authoritative version.
Brief Facts
Reassessment notices under Section 148, dated 28.03.2013, 21.03.2014 and 31.03.2015, alleged that LG Electronics Korea and associated enterprises had a permanent establishment in India, so LG India should have deducted TDS on remittances to them and its expenses were liable to disallowance under Section 40(a)(i) (para 2). The High Court refused to interfere: it rejected the limitation plea because the permanent establishment had not been disclosed, and left the India-Korea DTAA issue to the reassessment (paras 3-4). LG India's counsel stated that its first appeal had ended in a blank order from the CIT (Appeals), NOIDA, who was later suspended (para 5).
Court's Findings
The Additional Solicitor General pointed out that the parallel Section 201 proceedings had ended in LG India's favour before the ITAT (para 6). Reading that order, the Court noted that the ITAT held there was no tax liability on LG Korea as payee and hence no obligation on LG India to withhold tax under Section 195, so LG India could not be treated as an assessee-in-default under Section 201 (para 7). The Court treated the Section 40(a)(i) disallowance as falling with that finding, so no remand to the Assessing Officer was needed even though the reassessment had been carried out (para 7). It rejected the suggestion that the reassessment might rest on other grounds: the notice concerned only the Section 201 default and the Section 40(a)(i) disallowance, and where the ground on which reassessment was initiated is untenable, no other ground coming up in the reassessment can be used to determine escapement of income (para 8).
Legal Principle
Where reassessment is initiated only on an alleged failure to deduct tax at source and the consequent Section 40(a)(i) disallowance, a finding that the assessee is not an assessee-in-default under Section 201 makes the reassessment unenforceable; the Revenue cannot fall back on other grounds found during the reassessment (paras 7-8).
