Asst.C.I.T., Hubli V. Hubli Electricity Supply Company Limited, Hubli

ITA 1115/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0228 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 14-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 30-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V K GURUNATHAN
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, BANGALORE BEFORE S HRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO S . 1115 & 1116 / BANG/2 0 15 (ASSESSMENT YEAR S : 20 09 - 10 & 2011 - 12 ) ASST. COMMISSIONER OF INCOME - TAX , CIRCLE 1(1), HUBLI. VS. APPELLANT HUBLI ELECTRICITY SUPPLY CO. LTD., PB ROAD, NAVNAGAR, HUBLI. RESPONDENT APPELLANT BY : SHRI SANJAY KUMAR, CIT(DR) RESPONDENT BY : SHRI V.K.GURUNATHAN, ADVOCATE. DATE OF HEARING : 1 4/06/2016 DATE OF PRONOUNCEMENT : 30 /06/2016 O R D E R PER I NTURI RAMA RAO, AM : THESE APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST DIFFERENT ORDER S OF THE CIT(A), HUBLI, DATED 27/5/2015 FOR THE ASSESSMENT YEARS 2009 - 10 AND 2011 - 12. 2. THE REVENUE RAISED THE FOLLOWING COMMON GROUNDS OF APPEAL: ITA NO S . 1115 & 1116 /BANG/201 5 PAGE 2 OF 5 1. THE ORDER OF THE LEARNED CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. WHETHER IN THE CIRCUMSTANCES AND FACTS OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME - TAX(APPEALS) IS RIGHT IN HOL DING THAT THE ASSESSEE IS NOT REQUIRED TO MAKE TDS ON THE PAYMENTS MADE TO KPTCL AS TRANSMISSION CHARGES. 3. WHETHER IN THE CIRCUMSTANCES AND FACTS OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME - TAX(APPEALS) IS RIGHT IN HOLDING THAT THE ASSESSEE IS NOT REQUIRED TO MAKE TDS ON THE PAYMENTS MADE TO KPTCL AS SLDC CHARGES. 4. FOR ANY OTHER GROUND(S) THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 3. BRIEFLY FACTS OF THE CASE ARE THAT THE RESPONDENT - ASSESSEE IS A COMPANY DULY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT AND IS A WHOLLY OWNED BY THE GOVERNMENT OF KARNATAKA. IT IS ENGAGED IN THE BUSINESS OF POWER DISTRIBUTION. IT FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 - 10 ON 29/09/2009 RETURNING LOSS OF RS.581,15,09,619/ - . THE SAID RETURN OF INCOME WAS SELECTED FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT WAS COMPLETED AT A LOSS OF RS.568,50,56,094/ - . SUBSEQUENTLY, THE COMMISSIONER OF INCOME - TAX [CIT], HUBLI, EXERCISING POWER OF REVISION VESTED UNDER THE PROVISIONS OF SEC.263 OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] SET ASIDE THE ASSESSMENT TO VERIFY CERTAIN ISSUES. CONSEQUENT TO THE ORDER PASSED BY THE CIT U/S 263, ASSESSMENT ORDER WAS PASSED U/S 143(3) R.W.S.263 ON 10/06/2014 WHEREIN THE ASSE SSING OFFICER [AO] DISALLOWED TRANSMISSION CHARGES PAID TO KPTCL OF RS.215, 45,72,897/ - AND ITA NO S . 1115 & 1116 /BANG/201 5 PAGE 3 OF 5 SLDC CHARGES OF RS.145,28,16,815/ - ON THE GROUND THAT NO TAX WAS DEDUCTED AT SOURCE. HENCE, DISALLOWED UNDER THE PROVISIONS OF SECTION 40A(IA) OF THE ACT. 4. BEING AGGRIEVED, APPEAL WAS PREFERRED BEFORE THE CIT(A) WHO, VIDE IMPUGNED ORDER HELD THAT THE AMOUNT CANNOT BE DISALLOWED AS THERE WAS NO OBLIGATION TO DEDUCT TAX AT SOURCE U/S 194J, FOLLOWING THE DECISION OF THE TRIBUNAL IN THE ASSESSEE S OWN CASE FOR AS SESSMENT YEAR 2008 - 09 IN ITA NO.896/BANG/2011 DATED 31/07/2012 AND DIRECTED FOR DELETION OF THE ADDITION MADE. 5. BEING AGGRIEVED BY THIS DIRECTION OF THE CIT(A), REVENUE IS BEFORE US IN THE PRESENT APPEALS. 6 . THE ISSUE IN PRESENT APPEAL IS WHETH ER THERE WAS AN OBLIGATION ON THE PART OF THE ASSESSEE FOR DEDUCTING TAX AT SOURCE IN RESPECT OF TRANSMISSION CHARGES PAID TO KPTCL. THE ISSUE IS NO MORE RES INTEGRA AS THE HON BLE HIGH COURT OF KARNATAKA, DHARWAD BENCH, IN ASSESSEE S OWN CASE IN ITA NO.4 37/2012 DATED 15/12/2015 HELD AS FOLLOWS: 12. WE HAVE CAREFULLY PERUSED THE CONTENTS OF THE POWER TRANSMISSION AGREEMENT. THERE IS NO MENTION OF ANY OFFER WITH REGARD TO ANY TECHNICAL SERVICES BY THE KPTCL. PLAN AND SIMPLE INTENTION OF THE PART IES TO THE AGREEMENT AS DISCERNABLE FROM THE POWER TRANSMISSION AGREEMENT IS THAT THE ASSESSEE WAS DESIROUS OF USING THE TRANSMISSION NETWORK BELONGING TO THE KPTCL IN ACCORDANCE WITH THE PROVISIONS OF THE ELECTRICITY ACT SUBJECT TO PAYMENT OF CHARGES APPL ICABLE AND DETERMINED BY KERC. KPTCL WAS WILLING TO PROVIDE ITS TRANSMISSION NETWORK FOR THE PURPOSE OF CARRYING, ELECTRICITY TO ITS USERS SUBJECT TO PAYMENT OF TRANSMISSION AND OTHER CHARGES AS DETERMINED BY ITA NO S . 1115 & 1116 /BANG/201 5 PAGE 4 OF 5 KERC. THERE IS NEITHER AN OFFER NOR AN ACCEPTAN CE OF ANY TECHNICAL SERVICE INTER SE BETWEEN THE PARTIES. ADMITTEDLY, KPTCL IS A STATE OWNED COMPANY AND THE ONLY POWER TRANSMITTING AGENCY. IT HAS INSTALLED AND DEVELOPED ITS OWN INFRASTRUCTURE. ASSESSEE IS ALSO A STATE OWNED ELECTRICITY DISTRIBUTION C OMPANY. THE ONLY SERVICE WHICH THE ASSESSEE HAS AVAILED FROM THE KPTCL IS TRANSMISSION OF POWER ON PAYMENT OF CHARGES FIXED BY KERC. NO MATERIAL IS PLACED BY THE REVENUE BEFORE THIS COURT TO SUBSTANTIATE ITS CONTENTION THAT ASSESSEE HAD AVAILED OF ANY T ECHNICAL SERVICES. IN OUR CONSIDERED VIEW, ASSESSEE HAS DONE NOTHING MORE THAN TRANSMITTING CERTAIN QUANTUM OF POWER FROM ONE PLACE TO THE OTHER FOR A PRICE FIXED BY KERC. ASSESSEE WAS OBLIVIOUS TO THE TECHNICAL EXPERTISE WHICH THE KPTCL MAY POSSESS. THER E WAS NEITHER TRANSFER OF ANY TECHNOLOGY NOR ANY SERVICE ATTRIBUTABLE TO A TECHNICAL SERVICE OFFERED BY THE KPTCL AND ACCEPTED BY THE ASSESSEE. THEREFORE, APPLICATION OF SECTION 194J OF THE ACT TO THE FACTS OF THIS CASE BY THE REVENUE IS MISCONCEIVED. RE SPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE ASSESSEE S OWN CASE (SUPRA), WE HOLD THAT THERE WAS NO OBLIGATION TO DEDUCT TAX IN RESPECT OF TRANSMISSION CHARGES PAID TO KPTCL. HENCE, THE DISALLOWANCE MADE U/S 40A(IA) OF THE ACT IS NOT CALLED FOR. 7. IN THE RESULT, APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2016 SD/ - SD/ - (SUNIL KUMAR YADAV ) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BANGALORE D A T E D : 30/06/2016 SRINIVASULU, SPS ITA NO S . 1115 & 1116 /BANG/201 5 PAGE 5 OF 5 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) - II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE