ITO, UDAIPUR V. M/s. Aditya Cement, CHITTORGARH

ITA 162/JODH/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 5756 (ITAT-JODHPUR)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 18-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T C GUPTA
• Assessee Lawyers: BHUPENDRA MANTRI
• Keywords: TDS
• Section: 194C; 201; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NO. 161, 162 & 152/JU/2010 ASSTT. YEAR : 2005-06, 2006-07 & 2007-08 INCOME-TAX OFFICER (TDS), VS. M/S. ADITYA CEMENTS LTD., UDAIPUR GRASIM INDUSTRIES LTD., CHITTORGARH. (PAN JDHGO 1606 D) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.C. GUPTA, D.R. RESPONDENT BY : SHRI BHUPENDRA MANTRI, A.R. ORDER PER JOGINDER SINGH, J.M.: THIS IS BUNCH OF THREE APPEALS, OF THE SAME ASSESS EE, FOR DIFFERENT ASSESSMENT YEARS, BY THE REVENUE AGAINST THE CONSOLIDATED ORDE R DATED 24.12.2009, PASSED BY THE LD. CIT(A), UDAIPUR WHEREIN THE FIRST GROUND IS WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY IS JUSTIFIED IN LAW IN HOLDING THAT THE PAYMENTS MADE IN THE FORM OF TRANS MISSION/WHEELING/SLDC CHARGES ARE NOT LIABLE TO BE DEDUCTED AT SOURCE U/S . 194J OF THE ACT? ALTERNATIVELY, A GROUND HAS BEEN RAISED THAT THE PROVISIONS OF SECTI ON 194C WILL BE APPLICABLE. 2. DURING HEARING OF THESE APPEALS, WE HAVE HEARD S HRI T.C. GUPTA, LD. DR AND SHRI BHUPENDRA MANTRI, LD. COUNSEL FOR THE ASSESSEE . THE CRUX OF ARGUMENT ON BEHALF OF THE REVENUE IS IDENTICAL TO THE GROUND RA ISED BY FURTHER SUBMITTING THAT IF THE PROVISION OF SECTION 194 J IS NOT APPLICABLE TH EN THE PROVISION OF SECTION 194C 2 IS APPLICABLE TO THE FACTS OF THE PRESENT APPEAL. I N NUTSHELL THE ASSESSMENT ORDER WAS DEFENDED. ON THE OTHER HAND, THE LD. COUNSEL FOR TH E ASSESSEE DEFENDED THE IMPUGNED ORDER BY SUBMITTING THAT THE ISSUE IS COVE RED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF M/S. JAIPUR VIDYUT VITRAN NIGAM LTD. (ITA NO. 127 TO 131/JP/2009 )AND ALSO THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF M/S. DAKSHIN H ARYANA BIJALI VITRAN NIGAM LTD. (ITA NO. 3576 TO 3578/DEL./2009). COPIES OF BO TH THESE ORDERS HAVE BEEN MADE AS PART OF THE PAPER BOOK (PAGES 31 TO 69 AND 70 TO 88 RESPECTIVELY). 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL AVAILABLE ON THE FILE AND ALSO CONSIDERED THE DECISIONS OF THE T RIBUNAL CITED BEFORE US. SINCE COMMON ISSUES ARE INVOLVED IN ALL THE APPEALS, THER EFORE, THESE CAN BE DISPOSED OF BY A COMMON AND CONSOLIDATED ORDER FOR THE SAKE OF BREVITY AND AT THE SAME TIME THE IMPUGNED ORDER IS ALSO CONSOLIDATED ONE. THE CA SE OF THE REVENUE IS THAT SINCE HUGE PAYMENTS ON ACCOUNT OF TRANSMISSION CHARGES, S LDC CHARGES AND WHEELING CHARGES WERE MADE TO M/S. RAJASTHAN RAJYA VIDYUT PR ASARAN NIGAM LTD. (HEREINAFTER REFERRED TO AS RRVPNL FOR THE SAKE OF BREVITY) AND NO TAX WAS DEDUCTED AT SOURCE ON SUCH PAYMENTS WHICH WERE MADE DURING FINANCIAL YEARS 2004-05, 2005-06 AND 2006-07. THEREFORE, THERE IS A VIOLATION OF SECTION 194J OF THE ACT. THE PAYMENTS SO MADE ARE SUMMARIZED AS UND ER : SL. NO. FINANCIAL YEAR AMOUNT OF TRANSMISSION CHARGES AMOUNT OF SLDC CHARGES AMT. OF WHEELING CHARGES TOTAL AMOUNT (RS.) 1 2004-05 46,06,200 - - 46,06,200 2. 2005-06 43,52,652 - 1,08,242 44,60,894 2006-07 37,93,504 1,71,600 79,427 40,44,531 1,27,52,356 1,71,600 1,87,669 1,31,11,625 3 FROM THE AGREEMENT DATED 07.06.2003 ENTERED INTO WI TH RRVPNL AND THE ASSESSEE IT WAS OBSERVED THAT THE PAYMENTS ARE MADE FOR TAKI NG SERVICES OF THE ASSESSEE FOR TRANSMISSION OF ELECTRICITY THROUGH THE TRANSMISSIO N SYSTEM OWNED AND OPERATED BY RRVPNL AS PER THE TERMS AND CONDITIONS MENTIONED IN THE AGREEMENT. THE WHOLE CASE OF THE REVENUE IS THAT SINCE THE SERVICES PROV IDED BY RRVPNL ARE OF TECHNICAL NATURE, THEREFORE, TAX SHOULD HAVE BEEN D EDUCTED AS PER THE PROVISIONS OF SECTION 194J OF THE ACT WHICH THE ASSESSEE FAILED T O DO. SINCE THE TOTAL PAYMENTS WERE TO THE TUNE OF RS.1,31,11,625/-, THEREFORE, TH E AMOUNT OF RS.7,35,225/- WAS CALCULATED FOR SUCH NON-DEDUCTION ALONGWITH INTERES T OF RS.2,96,057/- U/S. 201 (1A) OF THE ACT. THE ASSESSEE PREFERRED APPEAL BEFORE TH E LD. FIRST APPELLATE AUTHORITY WHEREIN THE DECISION OF THE TRIBUNAL WAS FOLLOWED A ND WAS DECIDED IN FAVOUR OF THE ASSESSEE. THE RELEVANT PORTION AS CONTAINED IN PARA 2.3 (PAGE 24) OF THE IMPUGNED ORDER IS REPRODUCED HEREUNDER : I HAVE CONSIDERED THE FINDINGS OF THE AO GIVEN IN THE ORDER UNDER REFERENCE. THE SUBMISSION OF THE LD. AR HAVE ALSO BEEN CONSIDERED CAREFULLY. IN MY VIEW, THE SUBMISSION OF THE LD. AR FOR THE APPELLANT ARE ACCEPTABLE AS IT HAS COVERED BY THE J URIDICAL PRONOUNCEMENT OF THE JURISDICTIONAL ITAT AS WELL AS OTHER JUDICIAL AUTHORITIES. THE JURISDICTIONAL ITAT JAIPUR BENCH, JAIPUR HAS CONSIDERED THE SAME ISSUE, I.E., DEDUCTION OF TDS O N PAYMENT TRANSMISSION CHARGES, SLDC AND WHEELING CHARGES IN THE CASE VIDYUT VITRAN NIGAM LTD. VS. ITO, ITA NO. 127 TO 131/JP/20 09 FOR THE A.Y. 2005-06 TO 2009-10 AND THE DEMAND CREATED FOR NON D EDUCTION OF TAX HAS BEEN DELETED BY HOLDING THAT NO TAX IS DEDUCTIB LE U/S. 194J OR 194C OF THE ACT ON PAYMENT OF TRANSMISSION CHARGES, SLDC AND WHEELING CHARGES. IT IS SEEN THAT THE JAIPUR BENCH OF THE TRIBUNAL IN ITS ORDER DATED 30.04.2009 HAS DULY CONSIDERED THE PROVISIONS OF THE ELECTRICITY A CT, 2003, COMPANIES ACT, 1956, VARIOUS AGREEMENTS WITH THE ASSESSEE UNDER RAJASTHA N POWER SECTOR REFORMS ACT, 4 1999, SCHEME NOTIFIED BY THE GOVERNMENT OF RAJASTHA N ON 19.07.2000. SECTION 39 OF THE ELECTRICITY ACT, 2003 WHICH MANDATES THE STU TO UNDERTAKE VARIOUS FUNCTIONS, SECTION 40 WHICH PRESCRIBES THE VARIOUS DUTIES REGARDING TRANSMISSION LICENSE, FUNCTION OF GENERATION, TRANSMISSION AND D ISTRIBUTION OF ELECTRICITY, TECHNICAL STANDARD OF OPERATION AND MAINTENANCE OF TRANSMISSION LINES IN ACCORDANCE WITH GRID STANDARDS, OPEN ACCESS TRANSMI SSION CAPACITY, COMPLIANCE OF GRID CODE AND SLDC DIRECTIONS, INTERCONNECTION POIN T AND DELIVERY VOLTAGE, TRANSMISSION PERFORMANCE STANDARD, TARIFF FOR TRANS MISSION AND BILLING, SLDC CHARGES ETC. ALONGWITH THE CASES OF SINGAPORE AIR L INES LTD. VS. ITO 7 SOT 84, CANARA BANK VS. ITO, 305 ITR 180, DR. HUTAREW AND P ARTNERS (I)(P) LTD. VS. ITO, ITO VS. DR. WILLMAR SCHWABE INDIA (P) LTD. 95 ITJ 5 3 (DELHI), CBDT CIRCULAR NO. 715 DATED 08.08.1995 ETC. AND ULTIMATELY CONCLUDED THAT THE ASSESSEE IS NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE ON SUCH PAYMENTS. TH E RELEVANT PORTION OF THE ORDER IS NOT BEING REPRODUCED HEREIN BEING PART OF THE PA PER BOOK AND MAY BE CONSIDERED PART AND PARCEL OF THIS ORDER. NO CONTRARY DECISIO N WAS CITED BEFORE US BY EITHER SIDE. THEREFORE, RESPECTFULLY FOLLOWING THE DECISIO N FROM JAIPUR AND DELHI BENCHES OF THE TRIBUNAL, WE FIND NO INFIRMITY IN THE STAND TAKEN BY THE LD. CIT(A), CONSEQUENTLY, IT IS AFFIRMED. 4. THE NEXT GROUND PERTAINS TO CHARGING OF INTEREST U/S. 201(1A) OF THE ACT FOR VIOLATION OF SECTION 194J OF THE ACT. TO CUT SHORT THE MATTER, SINCE THIS ISSUE IS ALSO COVERED BY THE AFORESAID DECISION OF THE TRIBUNAL A ND WHILE DISPOSING OF THE ISSUE OF SECTION 194J IN FAVOUR OF THE ASSESSEE WHEREIN I T HAS BEEN HELD THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE AND THE ALLE GED VIOLATION OF SECTION 201(1(, (1A) IS CONSEQUENT TO ALLEGED VIOLATION OF SECTION 194J, THEREFORE, ON THIS ISSUE ALSO WE AFFIRM THE STAND TAKEN BY THE LEARNED FIRST APPE LLATE AUTHORITY. THE TRIBUNAL WHILE DISPOSING OF IDENTICAL ISSUE HAS ALREADY CONS IDERED VARIOUS JUDICIAL 5 PRONOUNCEMENTS LIKE HINDUSTAN COCA COLA BEVERAGES P VT. LTD. VS. CIT, 293 ITR 226 (SC), CBDT CIRCULAR NO. 275/201/95-IT(B) DATED 29.01.1997, SINGAPORE AIRLINES LTD. VS. ITO 7 SOT 84 (CHENNAI), HONBLE A PEX COURT IN CIT VS. ELI LILLY & CO. (INDIA)(P) LTD. (2009) 21 DTR (SC) 74 E TC. IN VIEW OF THESE FACTS AND JUDICIAL PRONOUNCEMENTS, NO INTEREST U/S. 201(1A) I S LEVIABLE. FINALLY, THESE APPEALS OF THE REVENUE ARE DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF HEARING ON 28. 09.2010. SD/- SD/- (K.G. BANSAL) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: 30 TH SEPTEMBER, 2010 *AKS/- COPY FORWARDED TO:- 1. APPELLANT, 2. RESPONDENT, 3. INCOME-TAX OFFICER, 4. CIT, 5. D/R 6. GUARD FILE