Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: 07 October 2026

Case Overview

  • Parties: Appellant – LG Electronics India Pvt. Ltd (principal officer Mr. Ashish Agrawal); Respondents – Assistant Commissioner of Income Tax, Noida and others.
  • The dispute concerned reassessment notices issued under Sections 147 and 148 of the Income Tax Act, 1961 for Assessment Years 2006‑07, 2007‑08 and 2008‑09.
  • Notices dated 28‑03‑2013, 21‑03‑2014 and 31‑03‑2015 alleged that LG Electronics Korea (parent) and associated enterprises operated a Permanent Establishment (PE) in India, requiring LG India to deduct TDS on remittances and leading to disallowance of related expenses under Section 40(a)(i).
  • LG India argued limitation, lack of concealment, and reliance on the India‑Korea Double Taxation Avoidance Agreement (DTAA).
  • High Court upheld the reassessment, noting proceedings against the Korean company and the appellant under Section 201 for non‑deduction of tax, and left DTAA consideration for reassessment proceedings.
  • Senior Counsel for the appellant highlighted procedural irregularities, including a blank order under Section 250 and the suspension of the issuing CIT.
  • Additional Solicitor General (ASG) Raghavendra P. Shankar pointed to parallel proceedings under Section 201 where the Income Tax Appellate Tribunal (ITAT) had modified the order, determining profits at a 20% markup on 50% of salary cost of expatriate employees attributable to the PE of LG Korea.
  • ITAT had quashed assessment proceedings against LG Korea for non‑implementation of Dispute Resolution Panel directions and held that there was no tax liability on LG Korea; consequently, LG India was not an ‘assessee‑in‑default’ under Section 201 and no disallowance under Section 40(a)(i) could arise.
  • The Court noted that the reassessment notice under Section 147 was solely linked to the default under Section 201 and the disallowance; without a valid ground, the reassessment is unenforceable.

Final Outcome

  • The Supreme Court allowed the appeals (Civil Appeals Nos. 18067, 18068 and 18281 of 2017).
  • It held the reassessment proceedings for AY 2006‑07 to 2008‑09 unenforceable and directed the Assessing Officer to close them.
  • All pending applications, if any, were ordered to stand disposed.

Topics: Tax Reassessment, Permanent Establishment, Double Taxation Avoidance Agreement