M/s Western Electricity Supply Company of Orissa Ltd.(WESCO), Bhubaneswar V. CIT, Bhubaneswar

ITA 312/CTK/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65092 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 29-06-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 07-06-2011
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: P VENUGOPAL RAO
• Keywords: Depreciation; Assessment record; Prejudicial to interest; Revised return; Revenue expenditure
• Section: 263; 194C; 201(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 312/CTK/2011 ( / ASSESSMENT YEAR 2006 - 07) M/S. WESTERN ELECTRICITY SUPPLY COMPANY OF ORISSA LTD (WESCO), N1/22, IRC VILLAGE,NAYAPALLI, BHUBANESWAR 751 015. PAN: AAAC W 3510 C - - - VERSUS - COMMISSIONER OF INCOME - TAX, BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / I.T.A.NO. 433/CTK/2011 ( / ASSESSMENT YEAR 2007 - 08) DCIT(TDS), BHUBANESWAR. - - - VERSUS - M/S. WESTERN E LECTRICITY SUPPLY COMPANY OF ORISSA LTD (WESCO), N1/22, IRC VILLAGE, NAYAPALLI, BHUBANESWAR 751 015. PAN: AAACW 3510 C ( /APPELLANT ) ( / RESPONDENT ) / FOR THE ASSESSEE : / SHRI P.VENUGOPAL RAO, AR / FOR THE DEPARTMENT : / SHRI . PARAMITA TRIPATHY, CIT - DR / DATE OF HEARING: 29.06.2012 / DATE OF PRONOUNCEMENT: 14.08.2012 / ORDER . . . , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . ASSESSEE BEING C OMMON, BOTH THESE APPEALS WERE TAKEN UP TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE APPEAL - WISE AS UNDER . ITA NO.312/CTK/2011(A.Y. 2006 - 07) . THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE LEARNED CIT DT. 28.03.2011 PASSED U/S.263 OF THE I.T.ACT,1961 FOR THE I.T.A.NO. 312/CTK/2011(BY ASSESSEE) I.T.A.NO. 433/CTK/2011(BY DEPARTMENT) 2 ASSESSMENT YEAR 2006 - 07. THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES IN ITS GROUNDS OF APPEAL. 1. THE LEARNED COMMISSIONER OF INCOME TAX, BHUBANESWAR (CIT) ERRED IN PASSING AN ORD ER U/S.263 OF THE ACT AND THEREBY CANCELLING THE ORDER OF ASSESSMENT AND DIRECTING THE ASSESSING OFFICER TO PASS DE NOVO ASSESSMENT. YOUR APPELLANT SUBMITS THAT THE ORDER OF THE CIT IS BAD - IN - LAW, ILLEGAL AND SAME OUGHT TO BE CANCELLED. 2. THE LEARNED CIT ERRED IN HOLDING THAT THE ORDER OF ASSESSMENT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREBY ERRED IN CANCELLING THE ORDER OF ASSESSMENT. YOUR APPELLANT SUBMITS THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS NEITHER PREJ UDICIAL TO THE INTEREST OF REVENUE NOR WAS ERRONEOUS AND THEREFORE THE ACTION OF CIT IN CANCELLING THE ASSESSMENT ORDER IS INCORRECT AND THAT THE ORDER OF CIT OUGHT TO BE CANCELLED. 3. THE LEARNED CIT ERRED IN HOLDING THAT THERE WAS FAILURE ON THE PART OF THE ASSESSING OFFICER IN NOT CONSIDERING THE REVISED COMPUTATION SUBMITTED IN COURSE OF ASSESSMENT AND THEREBY THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. YOUR APPELLANT SUBMITS THAT THE LEARNED CIT FAILED TO APPRECIATE THAT THE REVISED COMPUTATION WAS SUBMITTED AT THE INSTANCE OF THE ASSESSING OFFICER AND THE ISSUES RAISED IN THE SAID COMPUTATION WERE ELABORATELY CONSIDERED IN THE COURSE OF ASSESSMENT AND THEREAFTER THE ASSESSING OFF ICER HAD NOT PROCEEDED TO MAKE ADDITION BASED ON THE SAID REVISED COMPUTATION. YOUR APPELLANT THEREFORE SUBMITS THAT THE ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE AND HENCE THE ORDER PASSED BY CIT BE CANCELLED. 4. TH E LEARNED CIT ERRED IN APPRECIATING THAT THE PAYMENT OF INTEREST ON POWER BOND AND INTEREST TO IBRD AND APDRP WERE NOT DISALLOWABLE AND ACCORDINGLY THE ORDER OF THE ASSESSING OFFICER IN NOT ADDING BACK THE SAME IN THE COMPUTATION WAS CORRECT IN LAW AND IN FACTS. YOUR APPELLANT SUBMITS THAT THE ORDER OF THE ASSESSING OFFICER ON THE ABOVE ISSUES IS NOT ERRONEOUS AND NOT PREJUDICIAL TO THE INTEREST OF REVENUE AND ACCORDINGLY THE ORDER OF CIT OUGHT TO BE CANCELLED. 5. YOUR APPELLANT CRAVES LEAVES TO ADD TO, AL TER, AMEND OR VARY ALL OR ANY OF THE AFORESAID GROUND OF APPEAL AS THEY/THEIR REPRESENTATIVE MAY DEEM FIT. I.T.A.NO. 312/CTK/2011(BY ASSESSEE) I.T.A.NO. 433/CTK/2011(BY DEPARTMENT) 3 3. THE FACTS, IN BRIEF, ARE THAT ASSESSMENT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS COMPLETED U/S.143(3) OF THE I.T.ACT ON 14.12.2008. SUBS EQUENTLY, THE LEARNED CIT UPON VERIFICATION OF THE ASSESSMENT RECORDS FOUND THAT T HE ASSESSEE FILED THE RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ELECTRONICALLY ON 23.11.2006 WHICH WAS REVISED ON 30.10.2007. IN THE REVISED RETURN THE ASSESSEE HAD SHOWN BUSINESS PROFIT OF 8,72,54,855, WHICH WAS SET OFF FULLY WITH PREVIOUS LOSSES SHOWING A RETURN INCOME OF NIL. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE FLIED A REVISED COMPUTATION WHEREIN THE ASSESSEE HA D SHOWN REVISED BUSINESS PROFIT OF 37, 18,06,074 WHICH WAS AGAIN FULLY SET OFF WITH EARLIER YEARS LOSSES SHOWING A TAXABLE INCOME OF NIL. THE LEARNED CIT OBSERVED THAT DURING THE ASSESSMENT THE ASSESSING OFFICER CONSIDERED ONLY THE ORIGINAL COMPUTATION WHERE 8,72,54,855 WAS SHOWN AS BUSINESS PROFIT BUT DID NOT CONSIDER THE BUSINESS PROFIT DISCLOSED BY THE ASSESSE E IN THE REVISED COMPUTATION FOR 37,18,06,074. HE FURTHER OBSERVED THAT THE ASSESSING OFFICER HAD DISALLOWED EXCESS DEPRECIATION ORIGINALLY COMPUTED BY THE ASSESSEE WHICH WAS TAKEN CARE OF IN THE REVISED COMPUTATION BUT DID NOT CONSIDER OTHER INCOME OF 8,04,69,093 DISCLOSED BY THE ASSESSEE. FROM PAYMENT DETAILS OF INTEREST & FINANCE CHARGES (SCH.1 7) , THE LEARNED CIT FOUND THAT 2,31,75,000 W AS THE AMOUNT DUE ON POWER BOND, WHICH A PPEARS TO HAVE BEEN PAID 15,50,00,000 I.E. , EXCESS OF 9,46,16,250 . THE LEARNED CIT WAS OF THE VIEW THAT THIS EXCESS PAYMENT AT BEST CAN BE TREATED AS AN ADVANCE PAYMENT BUT SURELY NOT AN ALLOWABLE DEDUCT ION, WHICH FACT HAS NOT BEEN EXAMINED BY THE ASSE SSING OFFICER AT THE TIME OF MAKING ASSESSMENT U/S.143(3). THE LEARNED CIT ASSUMING JURISDICTION U/S.263 ISSUED SHOW - CAUSE NOTICE AND AFTER CONSIDERING THE SAME CANCEL LED THE ASSESSMENT DT.4.12.2008 AND DIRECTED I.T.A.NO. 312/CTK/2011(BY ASSESSEE) I.T.A.NO. 433/CTK/2011(BY DEPARTMENT) 4 THE ASSESSING OFFICER TO PASS A DE NOVO ASSE SSMENT ORDER AFTER MAKING PROPER EXAMINATION OF THE ABOVE ISSUES AND AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE IN THIS REGARD. 4. THE LEARNED AR OF THE ASSESSEE CONTENDED BEFORE US THAT THE LEARNED CIT CAME TO A WRONG CONCLUSION THAT THE ASSESSING OFFICER HAS NOT CARRIED OUT ANY PRUDENT ENQUIRY INTO THE MERITS OF THE ISSUES INVOLVING SPECIFIC ADDITIONS/DISALLOWANCES CONTAINED IN A REVISED COMPUTATION SHEET. THE ASSESSEE EXPLAINED IN DETAIL THAT THE SPECIFIC ADDITIONS/DISALLOWANCES ARE NOT CALLED FOR AND SUBMITTED THE RELEVANT DOCUMENTS TO THE ASSESSING OFFICER, WHO AFTER HAVING BEEN FULLY SATISFIED WITH THE EXPLANATION OF THE ASSESSEE DID NOT PROCEED TO MAKE THE SPECIFIC ADDITION/DISALLOWANCE . HE SUBMITTED THE ASSESSEE HAD EXPLAINED THE REASON FOR CO NSIDERING THE EXPENDITURES I.E., (1) T HE LOAN FROM APDRP/ IBRD GOO LOAN IS RECEIVED FR OM GOVT. OF ORISSA AND (2) INTEREST ON NTPC BO ND , AS REVENUE EXPENDITURE. HE SUBMITTED THAT THESE TWO EXPENDITURES ARE BASICALLY ALLOWABLE EXPENDITURES AND THEREFORE, THE RE IS NO QUESTION OF THE ORIGINAL ASSESSMENT BEING PREJUDICIAL TO INTEREST OF REVENUE. H ENCE, THE ORDER U/S 263 IS BAD IN LAW AND NEEDS TO BE DISMISSED. HE RELIED ON THE DECISIONS IN THE CASE OF GEE VEE ENTERPRISES V.ADDL.CI/T & ORS (1975) 99 ITR 375 (DEL) , SWARUP VEGETABLEPRODUCTS INDUSTRIES LTC., V.CIT (1991) 187 ITR 412 (ALL) AND MALBAR INDUSTRIES CO. LTD. V. CIT (198 ITR 611)(KER). 5. THE LEARNED DR ON THE OTHER HAND SUPPORTED THE IMPUGNED ORDER OF THE LEARNED CIT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS AN ADMITTED FACT THAT THE ASSESSEE FILED A REVISED RETURN. THE ASSESSING OFFICER DURING THE ASSESSMENT CONSIDERED ONLY THE I.T.A.NO. 312/CTK/2011(BY ASSESSEE) I.T.A.NO. 433/CTK/2011(BY DEPARTMENT) 5 ORIGINAL CO MPUTATION WHERE 8,72,54,855 WAS SHOWN AS BUSINESS PROFIT BUT DID NOT CONSIDER THE BUSINESS PROFIT DISCLOSED BY THE ASSESSEE IN FORM OF REVISED COMPUTATION FOR 37,18,06,764. FURTHER THE ASSESSING OFFICER HAS NOT EXAMINED THE ISSUE WHETHER THE EXCESS PAY MENT ON POWER BOND WHETHER COULD BE TREATED AS AN ADVANCE PAYMENT BEING NOT ALLOWABLE. WE FIND THAT THE ASSESSEE HAS TRIED TO EXPLAIN THE REASON BEFORE THE LEARNED CIT AS WELL AS IN SUPPORT OF THE ASSESSMENT MADE BY THE ASSESSING OFFICER, BUT THERE IS NO W HISPER ABOUT CONSIDERING OF SUCH SUBMISSIONS IN THE ASSESSMENT ORDER CLAIMED BY THE ASSESSEE TO HAVE BEEN SUBMITTED BEFORE THE ASSESSING OFFICER AS WELL. CONSIDERING THE REASONS ASSIGNED BY THE LEARNED CIT IN HIS ORDER, WE UPHELD HIS ORDER ASSUMING JURISDI CTION U/S.263 OF THE I.T.ACT. SINCE THE ASSESSING OFFICER HAS NOT EXAMINED THE ISSUES, AS POINTED OUT BY THE LEARNED CIT IN THE IMPUGNED ORDER, AT THE TIME OF ASSESSMENT, WE FIND NO GROUND TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). IN VIEW OF THE A BOVE, THE DECISIONS RELIED ON BY THE LEARNED AR OF THE ASSESSEE ARE NOT APPLICABLE TO THE PRESENT CASE AT HAND. THEREFORE, WE CONFIRM THE IMPUGNED ORDER OF THE LEARNED CIT AND DISMISS THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ITA NO.433/CTK/2011 (ASSESSMENT YEAR 2007 - 08) 8. THIS APPEAL IS FILED BY THE REVENUE HAVING BEEN AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) DT. 4.7.2011 DELETING THE INTEREST OF 1,59,20,375 LEVIED BY THE ASSESSING OFFICER U/S.201(1A) OF THE I.T.ACT,1961 FOR THE ASSESSMENT YEAR 2007 - 08. 9. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED IN THE APPEAL AND THEIR LEGAL IMPLICATIONS. I.T.A.NO. 312/CTK/2011(BY ASSESSEE) I.T.A.NO. 433/CTK/2011(BY DEPARTMENT) 6 10. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL AND ANALYZING THE SAME IN THE LIGHT OF THE SUBMISSIONS OF BOTH THE PARTIES, THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE THAT FOR NON - DEDUCTION OF TAX AT SOURCE AS REQUIRED U/S.194 - I OF THE I.T.ACT, ON THE PAYMENTS OF 67,73,28,618 MADE BY THE ASSESSEE TO OPTCL TILL THE DATE OF FILING OF ORIGINAL RETURN BY OPTCL, THE ASSESSING OFFICER LEVIED INTEREST OF 1,59,20,375 U/S.201(1A) OF THE I.T.ACT . ON APPEAL, THE LEARNED CIT(A) DELETED THE INTEREST SO LEVIED RELYING ON THE DECISION OF THIS BENCH OF THE ITAT IN ASSESSEES OWN CASE FO R THE ASSESSMENT YEAR 2008 - 09 AND 2009 - 10 , VIDE CONSOLIDATED ORDER DT.19.11.2010 IN ITA NOS.193 AND 282/CTK/2010 & OTHERS . THE RELEVANT PORTION OF THE SAID ORDER OF ITAT IS REPRODUCED AS UNDER: 7. WE HAVE HEARD THE RIVAL CONTENTIONS AT CONSIDERABLE LENGTH , PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE, AS ALSO THE FACTS. AT THE OUTSET, IT IS NOTICED THAT EXCEPT THE ORDER OF OERC, THERE IS NO CONNECTION BETWEEN THE ASSESSEES HEREIN AND OPTCL. THE AGREEMENT, RIGHT FROM THE BEGINNING, IS BETWEEN GRIDCO AND ASSESSEES. GRIDCO IS TO SUPPLY THE ELECTRICITY. GRIDCO IS TO DELIVER THE ELECTRICITY TO THE SPECIFIED POINTS AS PER THE AGREEMENT. OPTCL WAS ORIGINALLY A PART OF GRIDCO AND OPTCL WAS HIVED UP FROM GRIDCO IN 2005. GRIDC O IS LIABLE TO PAY OPTCL FOR THE TRANSMISSION OF THE ELECTRICITY TILL THE POINT OF DELIVERY AS SPECIFIED IN THE BULK SUPPLY AGREEMENT WITH ASSESSEES. ONLY TO PROTECT THE INTEREST OF OPTCL IN REGARD TO RECEIPT OF PAYMENTS, OERC HAS DIRECTED OPTCL TO RAISE INVOICES ON THE ASSESSEES. THIS IS EVIDENT FROM THE FACT THAT THE REGULATORY COMMISSION HAS SPECIFICALLY STATED THAT OPTCL WOULD HAVE THE FIRST CHARGE ON THE RECEIVABLES OF GRIDCO FROM THE ASSESSEES. THUS, WHAT THE ASSESSEES ARE PAYING, IS IN FACT THE PU RCHASE PRICE FOR THE ELECTRICITY SUPPLIED BY GRIDCO. THE PURCHASE PRICE HAS BEEN BROKEN DOWN ON ACCOUNT OF THE ORDERS OF OERC INTO COST OF ELECTRICITY AND TRANSPORTATION COST WHICH IS BASED ON THE TRANSMISSION LOSS OF ELECTRICITY. THE ASSESSEES HAVE NOT U SED ANYTHING BELONGING TO OPTCL NOR THE ASSESSEES ARE A PARTY IN THE PETITION FILED BY OPTCL TO OERC FOR THE FIXATION OF THE TARRIF. IF THE ASSESSEES WERE PAYING RENT OR WERE USING ANY EQUIPMENTS OF OPTCL, THEN THE ASSESSEES SHOULD HAVE BEEN A PARTY BEF ORE THE OERC IN RESPECT OF THE FIXATION OF THE PRICE IN THE CASE OF OPTCL. THIS IS BECAUSE THE ASSESSEES WOULD BE AN AFFECTED I.T.A.NO. 312/CTK/2011(BY ASSESSEE) I.T.A.NO. 433/CTK/2011(BY DEPARTMENT) 7 PARTY. THE ASSESSEES ARE ONLY A PARTY IN THE FIXATION OF THE PRICE BETWEEN THE GRIDCO AND ASSESSEES AND IT IN THAT ORDER THAT A P ARALLEL IDENTICAL DIRECTION IS ALSO AVAILABLE IN PARA 37 AND 294 AND 295 OF THE ORDER IN THE CASE OF GRIDCO. THUS, IT IS EVIDENT THAT THE RAISING OF INVOICES BY OPTCL ON THE ASSESSEES IS FOR THE PURPOSE OF RAISING FOR FIRST CHARGE ON THE RECEIPTS OF GRIDC O AND FOR NO OTHER PURPOSES. AS MENTIONED ABOVE, THE ASSESSEES HAVE NOT USED ANY OF THE EQUIPMENTS OF OPTCL AND IN ABSENCE OF USE IN ANY MANNER WHATSOEVER, OF THE EQUIPMENTS OF OPTCL BY THE ASSESSEE, NO RENT CAN BE DEEMED TO HAVE BEEN PAID FOR THE PURPOSE OF INVOKING OF SECTION 194(I) OF THE ACT. THIS VIEW FINDS SUPPORT FROM THE DECISION OF THE MUMBAI TRIBUNAL IN THE CASE OF INDIAN PETROCHEMICALS CORPORATION LTD REFERRED (SUPRA), WHEREIN, THE CO - ORDINATE BENCH HAS HELD UNDER SIMILAR CIRCUMSTANCES AS FOLLO WS: - 11. . THE TITLE PASSED TO THE ASSESSEE ONLY AFTER THE GAS CROSSED THE DOWNSTREAM FLANGE OF THE PIPELINE AT THE OUTLET OF THE GAS METERING STATION. THOUGH IN THE INVOICE THE TRANSMISSION CHARGES WERE SEPARATELY SHOWN, IN THE LIGHT OF THE JUDGMENT OF THE SUPREME COURT, THE TRANSPORT CHARGES HAD TO BE INCURRED BY GAIL IN MAKING THE GAS AVAILABLE TO THE ASSESSEE AT THE PLACE OF SALE AND THEY WOULD CONSTITUTE AN ADDITION T THE COST OF THE GOODS TO GAIL AND THUS CONSTITUTE A COMPONENT OF THE PRICE OF THE GAS TO THE ASSESSEE. THE RATIO LAID DOWN BY THE SUPREME COURT IN PARAGRAPHS 20 & 21 OF THE JUDGMENT, WHICH HAVE BEEN QUOTED ABOVE, FULLY COVERS THE PRESENT CASE. 12. THE LEARNED CTI DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CASE IS CLEARLY COVERED B Y SUB - CLAUSE (C) OF EXPLANATION (IV) BELOW SECTION 194C. THE JUDGMENT OF THE SUPREME COURT THROWS LIGHT ON THE LEGAL POSITION WHERE IT IS THE DUTY OF THE SELLER TO MAKE AVAILABLE THE GOODS AT THE PREMISES OF THE BUYER UNDER THE CONTRACT AND HAS TO INCUR F REIGHT CHARGES ON BRINGING THE GOODS TO THE POINT OF DELIVERY. IF THE CONTRACT IN SUCH CASES ALSO PROVIDES THAT THE TITLE TO THE GOODS WOULD PASS ONLY WHEN THE GOODS ARE DELIVERED TO THE BUYER, IT HAS BEEN HELD BY THE SUPREME COURT IN THE JUDGMENT CITED S UPRA THAT THE FREIGHT CHARGES WILL FORM PART OF THE SALE PRICE OF THE GOODS NOTWITHSTANDING THAT THEY ARE SEPARATELY SHOWN AND COLLECTED BY THE SELLER. THE STATUTORY PROVISION HAS TO BE READ IN THE LIGHT OF THE LAW LAID DOWN BY THE SUPREME COURT, ESPECIAL LY WHEN THE FACTUAL POSITION RELATING TO PASSING OF TITLE, DELIVERY, ETC ARE THE SAME IN THE ASSESSEES CASE AS IN THE CASE BEFORE THE SUPREME COURT. IT WOULD BE TOO SIMPLISTIC A VIEW TO TAKE, IF WE ACCEPT THE CONTENTION OF THE LEARNED CIT DR THAT WE HAVE TO SIMPLY LOOK TO THE FACTS OF THE PRESENT CASE AND THE STATUTORY PROVISION WITHOUT HAVING REGARD TO THE CONTRACT BETWEEN THE PARTIES AND THE JUDGMENT OF THE SUPREME COURT. THE REFERENCE I.T.A.NO. 312/CTK/2011(BY ASSESSEE) I.T.A.NO. 433/CTK/2011(BY DEPARTMENT) 8 BY THE LEARNED CIT DR TO ARTICLES 6.0, 6.03, 7.01, ETC, IN THE CONT RACT TO SHOW THAT GAIL HAS UNDERTAKEN SEVERAL OTHER SERVICES IN CONNECTION WITH THE SUPPLY OF GAS, IS A POINT WHICH HAS NOT BEEN TAKEN BY THE DEPARTMENTAL AUTHORITIES. THEIR CONTENTION HAS ONLY BEEN THAT SINCE THE TRANSMISSION CHARGES ARE PAID FOR CARRIAG E OF GOODS, NAMELY THE GAS, THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX UNDER SECTION 194 C OF THE ACT. THEY HAVE NOT REFERRED TO ANY OTHER SERVICES RENDERED BY GAL WHICH MAY AMOUNTS TO WORK WITHIN THE MEANING OF SECTION 194C OF THE ACT. WE DO AGREE WITH T HE LEARNED CIT DR THAT THE CONTRACT HAS TO BE READ AS A WHOLE WITH ALL ITS COMPLEXITIES BUT EVEN IF WE DO SO THE QUESTION WHICH ARISES IN THIS CASE IS SQUARELY COVERED BY THE JUDGMENT OF THE SUPREME COURT, THE CRUCIAL TERMS OF CONTRACT IN THE CASE BEING TH E SAME AS IN THE CASE BEFORE THE SUPREME COURT. IN THIS VIEW OF THE MATTER AND RESPECTFULLY FOLLOWING THE JUDGMENT OF THE SUPREME COURT IN M/S. INDIA METERS LIMITED (SUPRA), WE HOLD THAT THE ASSESSEE WAS UNDER NO OBLIGATION TO DEDUCT TAX FROM THE TRANSMIS SION CHARGES PAID TO GAIL UNDER SECTION 194C OF THE ACT. IN OUR VIEW, HAVING DUE REGARD TO ARTICLE 4.05 OF THE CONTRACT, THE TRANSMISSION CHARGES WERE PART OF THE PRICE PAID FOR THE GAS IN THE LIGH T OF THE LAW LAID DOWN BY THE SUPREME COURT IN THE CASE CITED SUPRA. THE ASSESSEE WAS THEREFORE WRONGLY TREATED AS AN ASSESSEE IN DEFAULT UNDER SECTION 201(1) OF THE ACT. CONSEQUENTLY, THE INTEREST CHARGED UNDER SECTION 201(1A) IS ALSO CANCELLED. 8. IT IS NOTICED THAT THE MUMBAI TRIBUNAL HAS RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF M/S. INDIA MEGTERS LIMITED REFERRED (SUPRA) FOR COMING TO THIS VIEW. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSEES HEREIN ARE NO T LIABLE FOR DEDUCTING TDS ON THE PAYMENTS MADE BY THE ASSESSEES TO GRIDCO ON THE BASIS OF INVOICES RAISED BY OPTCL ON THE ASSESSEES BY INVOKING THE PROVISIONS OF SECTION 194(I) OF THE ACT AS THE PAYMENT MADE BY THE ASSESSEES HEREIN ARE ONLY THE PURCHASE PRICE OF ELECTRICITY FROM GRIDCO. 11. BEFORE US, THE LEAR NED DR DID NOT DISPUTE THE FACT THAT THE FACT AN D ISSUE IN THE PRESENT CASE ARE IDENTICAL TO THOSE CASES DECIDED BY THIS BENCH OF THE ITAT (SUPRA) . HE ALSO COULD NOT BROUGHT ON RECORD ANY OTHER DEC ISION CONTRARY TO THE SAID DECISION OF THIS BENCH OF THE ITAT. THEREFORE, THE LEARNED CIT(A) HAVING DELETED THE IMPUGNED INTEREST LEVIED U/S.201(1A) OF THE I.T.ACT,1961 BY FOLLOWING THE SAID DECISION OF THIS BENCH OF ITAT, WE DO I.T.A.NO. 312/CTK/2011(BY ASSESSEE) I.T.A.NO. 433/CTK/2011(BY DEPARTMENT) 9 NOT FIND ANY INFIRMITY IN T HE IMPUGNED ORDER OF THE LEARNED CIT(A) AND HENCE, WE UPHOLD THE SAME AND DISMISS THE PRESENT APPEAL OF THE REVENUE BEING DEVOID OF MERITS. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. 13. TO SUMP THE RESULT, ITA NO.312/CTK/2012 FILED BY THE ASSESSEE AND ITA NO.433/CTK/2011 FILED BY THE REVENUE ARE DISMISSED . S D/ - S D/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( ) DATE: 14.08.2012 - COPY OF THE ORDER FORWARDED TO: 1 . / THE ASSESSEE : M/S. WESTERN ELECTRICITY SUPPLY COMPANY OF ORISSA LTD (WESCO), N1/22 , IRC VILLAGE, NAYAPALLI, BHUBANESWAR 751 015. 2 / THE DEPARTMENT : COMMISSIONER OF INCOME - TAX, BHUBANESWAR./ COMMISSIONER OF INCOME - TAX, BHUBANESWAR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. I.T.A.NO. 312/CTK/2011(BY ASSESSEE) I.T.A.NO. 433/CTK/2011(BY DEPARTMENT) 10 APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 24.07.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 25.07 .2012 OTHER MEMBER . 3. D ATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S 14.08.2012 . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 14.08.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..