ACIT, Delhi V. M/s. BSES Rajdhani Power Ltd., New Delhi

ITA 138/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3642 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 08-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIKANT GUPTA
• Assessee Lawyers: ROHIT JAIN
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A , NEW DELHI BEFORE SH. AMIT SHUKLA , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO. 137 /DE L/ 2015 ASSESSMENT YEAR: 2009 - 10 ACIT, CIRCLE - 73(1), DELHI VS. BSES YAMUNA POWER LTD., SHAKTI KIRAN BUILDING, KARKARDOMA, DELHI PAN : AABCC8569N ( APPELLANT ) (RESPONDENT) AND ITA NO. 138 /DEL/2015 ASSESSMENT YEAR: 2009 - 10 ACIT, CIRCLE - 73(1), DELHI VS. BSES RAJDHANI POWER LTD., BSES BHAWAN, NEHRU PLACE, NEW DELHI PAN : AAGCS3187H ( APPELLANT ) (RESPONDENT) DEPARTMENT BY SH. RAVI KANT GUPTA, SR. DR ASSESSEE BY SH. ROHIT JAIN, ADV. & MS. DEEPASHREE RAO, CA DATE OF HEARING 24.01.2018 DATE OF PRONOUNCEMENT 31.01.2018 ORDER PER O.P. KANT , A. M. : THESE TWO APPEALS BY THE R EVENUE ARE DIRECTED AGAINST TWO SEPARATE ORDERS , DATED 31/10/2014 PASSED BY THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) - IX, NEW DELHI , (IN SHORT THE CIT - A ) FOR A SSESSMENT YEAR 2009 - 10. IN BOTH THE APPEALS IDENTICAL ISSUES ARE 2 INVOLVED AND , THUS , BOTH WERE HEARD TOGETHER AND DISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER FOR CONVENIENCE. 2. THE GROUNDS RAISED IN ITA NO. 137/DEL/2015 ARE REPRODUCED AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT PAYMENT IN RESPECT OF TRANSMISSION CHARGES, WHEELING CHARGES, SLDC CHARGES, OPEN ACCESS CHARGES, CONGESTION CHARGES & COMFORT CHARGES ARE NOT IN THE NATURE OF TECHNICAL SERVICES ATTRACTING PROVISION OF SECTION 194J OF THE IT ACT. 1961. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 2.1 T HE GROUNDS RAISED IN ITA NO. 138/DEL/2015 ARE REPRODUCED AS UN DER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT PAYMENT IN RESPECT OF TRANSMISSION CHARGES, WHEELING CHARGES, SLDC CHARGES, OPEN ACCESS CHARGES, CONGESTION CHARGES & COMFORT CHARGES ARE NOT IN TH E NATURE OF TECHNICAL SERVICES ATTRACTING PROVISION OF SECTION 194J OF THE IT ACT, 1961. 2. THE APPELLANT CRAVES LEAVE TO ADD , ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. B OTH THE ASSESSEE COMPANIES ARE ENGAGED IN THE BUSINESS OF DISTRIBUTION OF ELECTRICITY. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE HAS NOT D EDUCTED TAX AT S OURCE (TDS) ON PAYMENTS MADE FOR TRANSMISSION OF ELECTRICITY UNDER THE FORM OF WHEELING CHARGES, TRANSMISSION CHARGES AND OPEN ACCESS CHARGES ETC. THE ASSESSING OFFICER REJECTED THE SUBMISSION OF THE ASSESSES AND PASS ED THE ORDER ON 31/03/2011 UNDER SECTION 201( 1)/201(1A) HOLDING THE ASSESSEE - IN - 3 DEFAULT FOR FAILURE TO MAKE TDS. IN BOTH THE CASES, THE ASSESSEE HAS BEEN HELD AS ASSESSEE - IN - DEFAUL T TO MAKE TDS OF IDENTICAL AMOUNT OF RS. 45,41,74,592/ - AND IDENTICAL DEMAND OF RS.2,73,52, 761/ - H AS BEEN RAISED UNDER SECTION 201(1)/201(1A) OF THE ACT IN BOTH THE CASES. 4. THE LD. CIT - ( A ) AFTER GOING THROUGH THE DETAILS SUBMISSION OF THE ASSESSEE HELD T HAT PAYMENTS MADE BY THE ASSESSEE UNDER THE HEAD TRANSMISSION CHARGES, WHEELING CHARGES, SLDT CHARGES ETC, ARE NOT LIAB LE TO TDS UNDER SECTION 19 4J OF THE ACT. IN THE BOTH THE CASES, THE LD. CIT - ( A ) HAS GIVEN IDENTICAL FINDING. THE FINDING OF THE LD. CIT - ( A ) IN THE CASE OF BSES YAMUNA POWER LTD. ( ITA NO. 137/DEL/2015) IS REPRODUCED AS UNDER: 5.3 THE REASON GIVEN BY AO AND SUBMISSION OF THE APPELLANT ARE CONSIDERED. THE A.O. DID NOT ACCEPT THE APPLICABILITY OF THE DECISION IN THE CASE OF CIT VS. BHARTI CEL LULAR LTD ON THE GROUND THAT THERE WAS NO GENERATION OF ANY PRODUCT AND THERE WAS NO SYSTEM MAINTAINED THAT REQUIRE TECHNICAL SKILL. THE AO ONLY EXPRESSED OPINION ABOUT APPLICABILITY OF SECTION 194J IN THE CASE OF PAYMENTS MADE BY APPELLANT UNDER THE HEAD TRANSMISSION CHARGES, WHEELING CHARGES, SLDC CHARGES AND OTHER CHARGES THE INTERPRETATION AND OPINION OF THE AO CANNOT BE ACCEPTED IN VIEW OF THE VARIOUS JUDICIAL DECISIONS CITED BY THE APPELLANT. PARTICULARLY, THE CASE OF JAIPUR VIDYUT VITARAN NIGAM LTD. (SUPRA) IS DIRECTLY APPLICABLE IN THIS CASE WHERE IT IS SPELT OUT THAT RENDERING OF SERVICES BY ALLOWING USE OF TECHNICAL SYSTEM IS DIFFERENT THAN CHARGING FEES FOR RENDERING TECHNICAL SERVICES . THERE IS NO SCIENTIFIC KNOWLEDGE, EXPERIENCE OR SKILL IS M ADE AVAILABLE/RENDERED IN APPELLANT S CASE. THE FLOW OF ELECTRICITY AND TIMELY SUPPLY TO THE CONSUMER IS MONITORED BY ENGINEERS OF THE APPELLANT. IN VIEW OF THIS, IT IS HIGHLY AMBITIOUS TO CONSIDER THESE PAYMENTS AS PAYMENTS TOWARDS TECHNICAL FEE FOR APPLY ING SECTION 194J. ACCORDINGLY, THE GROUND OF APPEAL NO.2 IS ALLOWED. 4 5. IN VIEW OF THE FINDING THAT TAX WAS NOT DEDUCTIBLE ON SUCH SERVICES, THE LD. CIT - ( A ) DIRECTED THE ASSESSING OFFICER TO DELETE DEMAND RAISED IN THE SECTION 201(1) AND 201(1A) OF THE A CT. THE RELEVANT FINDING OF THE LD. CIT - A IS REPRODUCED AS UNDER: 7.3 AS DISCUSSED ABOVE, THE PAYMENTS DISCUSSED IN THE IMPUGNED ORDER ARE NOT IN 7 THE NATURE OF TECHNICAL FEE ATTRACTING PROVISIONS OF SECTION 194J. SINCE ASSESSEE IS NOT IN DEFAULT, IN CAS E OF TRANSMISSION CHARGES PAID, THERE IS NO APPLICABILITY OF PROVISIONS OF SECTION 201(1 A). ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE DEMAND RAISED. HOWEVER AS DISCUSSED UNDER GROUND OF APPEAL NO. 3, THE APPELLANT SHOULD HAVE DEDUCTED TAX ON SALARY AN D FOR THAT AMOUNT, INTEREST U/S 201(4A) IS APPLICABLE. THE ASSESSING OFFICER IS DIRECTED TO RE - COMPUTE THE INTEREST ON THIS AMOUNT. THE GROUND OF APPEAL IS PARTLY ALLOWED. 6. THE GROUND NO. 2 RAISED IN BOTH THE APP EALS ARE GENERAL IN NATURE AND, THUS , DISMISSED AS INFRUCTUOUS. 7. THE GROUND NO. 1 IN BOTH THE APPEAL RELATES TO APPLICABILITY OF SECTION 19 4J OF THE ACT ON TRANSMISSION CHARGES, WHEELING CHARGES, SLDT CHARGES, OPEN ACCESS CHARGES ETC . 8. BEFORE US, THE LD. SR. DR RELYING ON THE ORDER OF THE ASSESSING OFFICER SUBMITTED THAT SAID SERVICES ARE IN THE NATURE OF TECHNICAL SERVICES AND THEREFORE LIABLE FOR DEDUCTION OF TAX AT SOURCE. 9. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT TRIBUNAL IN ITA NO. 12 52/DEL/2015 AND ITA NO. 1253/DEL/2015 IN THE CASE OF BOTH THE ASSESSEES RESPECTIVELY FOR ASSESSMENT Y EAR 2010 - 11 HAS DELETED DEMAND O N IDENTICAL ISSUES FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. DELHI TRANSCO LTD (2015) 62 TAXMANN.COM 166(DEL). ACCORDINGLY , HE REQUESTED TO UPHOLD THE ORDER OF THE LD. CIT - ( A ) . 5 10. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT IN CASE OF BOTH THE ASSESSES, IN ITA NO. 1252 AND 1253/DEL/2015 FOR ASSESSMENT YEAR 2010 - 11 THE TRIBUNAL HAS HELD THAT WHEELING CHARGES, TRANSMISSION CHARGES AND OPEN ACCESS CHARGES ETC ARE NOT LIABLE TO TAX DEDUCTED AT SOURCE AND ACCORDINGLY DISMISSED THE APPEAL S OF THE R EVENUE. THE RELEVANT FINDING OF THE TRIBUNAL IS REP RODUCED AS UNDER: 4. I HEARD THE RIVAL SUBMISSIONS AND WENT THROUGH THE ORDERS OF THE TAX AUTHORITIES BELOW. I NOTED THAT SURVEY WAS CARRIED OUT ON THE PREMISES OF THE ASSESSEE AND DURING THE COURSE OF THE SURVEY IT WAS NOTED BY THE SURVEY PARTY THAT THE ASSESSEE HAD NOT DEDUCTED TDS ON THE PAYMENT MADE FOR TRANSMISSION OF THE ELECTRICITY UNDER THE FORM OF WHEELING CHARGES, TRANSMISSION CHARGES AND OPEN EXCESS CHARGES ETC. THEREFORE, THE AO ISSUED THE SHOW CAUSE NOTICE TO ASSESSEE AND ULTIMATELY THE AO TR EATED THE ASSESSEE TO BE IN DEFAULT U/S 201(1), AS IN HIS OPINION THE PROVISIONS OF SECTION 194J WERE APPLICABLE ON THESE PAYMENTS. THE AO, THEREFORE, PASSED AN ORDER U/S 201(1 )/201(1 A) OF THE I.T. ACT AND CREATED A DEMAND AGAINST THE ASSESSEE ON ACCOUNT OF TDS LIABILITY OF RS. 2,79,911/ - AND LEVIED INTEREST U/S 201(1A) OF RS. 15,36,906/ - . SIMILAR TYPE OF LIABILITIES HAVE BEEN RAISED AGAINST BSES RAJDHANI POWER LTD., EVEN THOUGH THE FIGURES WERE DIFFERENT. 5. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT A THE CIT(A) TOOK THE VIEW THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS U/S 194J BY HOLDING AS UNDER: 5.3 THE REASON GIVEN BY AO AND SUBMISSION OF THE APPELLANT ARE CONSIDERED. THE AO DID NOT ACCEPT THE APPLICABILITY OF THE DECISION IN THE CASE OF CIT VS . BHARTI CELLULAR LTD. ON THE GROUND THAT THERE WAS NO GENERATION OF ANY PRODUCT AND THERE WAS NO SYSTEM MAINTAINED THAT REQUIRE TECHNICAL SKILL. THIS ISSUE HAS BEEN DECIDED IN APPELLANT'S OWN CASE FOR A Y 2009 - 10 IN ITA NO 152/14 - 15 GIVING RELIEF TO THE A PPELLANT. THE JUDICIAL DECISIONS ARE IN FAVOUR OF THE APPELLANT. PARTICULARLY, THE CASE OF JAIPUR VIDYUT VITARAN NIGAM LTD. (SUPRA) IS 6 DIRECTLY APPLICABLE IN THIS CASE WHERE IT IS SPELT OUT THAT 'RENDERING OF SERVICES BY ALLOWING USE OF TECHNICAL SYSTEM IS DIFFERENT THAN CHARGING FEES FOR RENDERING TECHNICAL SERVICES'. THERE IS NO SCIENTIFIC KNOWLEDGE, EXPERIENCE OR SKILL IS MADE AVAILABLE/RENDERED IN APPELLANT'S CASE. THE FLOW OF ELECTRICITY AND TIMELY SUPPLY TO THE CONSUMER IS MONITORED BY ENGINEERS OF TH E APPELLANT. IN VIEW OF THIS, THE GROUND OF APPEAL NO. 2 &3 ARE ALLOWED. 6. I NOTED THAT THIS ISSUE IS NO MORE RES - INTEGRA IN VIEW OF THE DECISION OF JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF CIT VS. DELHI TRANSCO LTD. (2015) 62 TAXMANN.COM 166 (DEL.), IN WHICH THE HON BLE HIGH COURT HELD AS UNDER: '34. TO REITERATE, BY VIRTUE OF THE BPTA AGREEMENT BETWEEN DTL THERE IS TRANSPORTATION OF THE ELECTRICITY FROM PGCIL TO DTL, THROUGH THE EQUIPMENT AND NETWORK REQUIRED STATUTORILY TO BE MAINTAINED BY PHCIL THROUGH ITS TECHNICAL PERSONNEL USING TECHNICAL EXPERTISE. THIS, HOWEVER, DOES NOT RESULT IN PGCIL PROVIDING TECHNICAL SERVICES TO DTL. THEREFORE THE WHEELING CHARGES PAID BY DTL TO PGCIL FOR SUCH TRANSPORTATION OF ELECTRICITY CANNOT BE CHARACTERIZED AS FEE FOR TECHNICAL SERVICE. 35. THE ULTIMATE CONCLUSION OF THE HAT IS THEREFORE NOT ERRONEOUS. ACCORDINGLY THE QUESTION FRAMED BY THE COURT IS ANSWERED IN THE NEGATIVE I.E., AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. SINCE THE SAME QUESTION IS INVOLVED IN ALL THE A YS IN QUESTION, ALL THESE APPEALS ARE DISMISSED AFFIRMING THE IMPUGNED ORDER OF THE IT AT, BUT IN THE CIRCUMSTANCES WITH NO ORDER AS TO COSTS. 7, THE SLP FILED BY THE REVENUE AGAINST THE SAID JUDGMENT STANDS DISMISSED BY THE HON BLE SUPREME COURT VIDE ITS ORDER DATED 22.1.2016. I, RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DELHI TRANSCO LTD. (SUPRA), SUSTAIN THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE IN BOTH TH E CASES. 7 11. IN VIEW OF IDENTICAL QUESTION INVOLVED IN PRESENT APPEALS, RESPECTFULLY , FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL (SUPRA), WE DISMISS THE G ROUNDS OF APPEAL RAISED BY THE R EVENUE. 12. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 3 1 S T JAN . , 201 8 . S D / - S D / - ( AMIT SHUKLA ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 1 S T JANUARY , 201 8 . RK / - (D.T.D) COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI