Noida Power Company Ltd., Greater Noida V. JCIT, Noida

ITA 3481/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8618 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 10-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: SUSHMITA BASU
• Keywords: Depreciation; Earning of tax free income; Cost of acquisition; Non-deduction of tax; Revised return; Rule 8D
• Section: 142(1); 234B; 14A; 115JB; 40(a)(ia); 201(1); 147

Judgement Text

1 ITA NO. 3481/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI G. D. AGRAWAL, VICE PRES IDENT AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 3481/DEL/2 016 (A.Y 2011-12) NOIDA POWER COMPANY LTD. COMMERCIAL COMPLEX, H-BLOCK, ALPHA-II, SECTOR GREATER NOIDA AAACN4984D (APPELLANT) VS JCIT RANGE-3 NOIDA (RESPONDENT) APPELLANT BY MS. SUSHMITA BASU, CA RESPONDENT BY SH. S. S. RANA, CIT DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 31/3/2016 PASSED BY CIT(A)-1, NOIDA, FOR ASSESSMENT YEAR 20 11-12. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF DISTRIBUTION OF POWER IN THE GREATER NOIDA AREA. ON 29.09.2011, THE ASSESSEE FILED ITS INCOME DECLARING NIL INCOME AFTER SET OFF OF BROUGHT FORWA RD LOSSES OF RS. 20,78,56,147/- AND BROUGHT FORWARD DEPRECIATION OF RS. 36,90,610/- AND BOOK PROFIT U/S 115JB AT RS. 27,33,44,869/-. THE CASE WA S PROCESSED U/S 143(!). THEREAFTER, THE CASE WAS SELECTED FOR COMPULSORY SC RUTINY AND NOTICE U/S 143(2) DATED 20.09.2012. THEREAFTER, THE ASSESSEE E -FILED REVISED RETURN ON 31.03.2013 SHOWING NIL INCOME AFTER SET OFF OF BROU GHT FORWARD LOSSES OF RS. 16,47,92,260/- AND BROUGHT FORWARD DEPRECIATION OF RS. 36,90,610/- AND BOOK PROFIT U/S 115JB AT RS. 27,33,44,869/-. THE REASON FOR FILING REVISED RETURN DATE OF HEARING 13.03.2019 DATE OF PRONOUNCEMENT 10.04.2019 2 ITA NO. 3481/DEL/2016 WAS STATED THAT COMPANY HAS FILED REVISED RETURN CL AIMING FURTHER DEDUCTION ON ACCOUNT OF POWER PURCHASE PRICE NOT DEBITED TO PROF IT AND LOSS ACCOUNT WHICH WAS LESS CLAIMED IN THE ORIGINAL RETURN. NOTICE U/S 142(1) DATED 06.11.2013 ALONG WITH QUESTIONNAIRE WAS ISSUED AND SERVED UPON THE ASSESSEE. IN RESPONSE, COMPANY SECRETARY AND CA ATTENDED ON BEHA LF OF THE ASSESSEE FROM TIME TO TIME AND FURNISHED THE DETAILS / EXPLANATIO N AS CALLED FOR DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE BOOKS OF ACCO UNTS AND BILLS/VOUCHERS WERE ALSO PRODUCED AND VERIFIED BY THE ASSESSING OF FICER. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON 21.03.2013 AND MADE ADD ITION OF RS. 8,02,20,769/- REGARDING POWER PURCHASE PRICE NOT DE BITED TO P & L ACCOUNT BY THE ASSESSEE. THE ASSESSING OFFICER FURTHER MADE AD DITION OF RS. 16,84,82,870/- TOWARDS ON ACCOUNT OF SET-OFF OF BRO UGHT FORWARD BUSINESS LOSSES & UNABSORBED DEP. AS WELL AS DISALLOWANCE U/ S 14A AMOUNTING TO RS. 53,624/- AND DISALLOWANCE OF TRANSMISSION CHARGES U/S 40(A)(IA) AMOUNTING TO RS. 18,41,83,032/-. BEING AGGRIEVED BY THE ASSESSME NT ORDER THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) BY FOLLO WING EARLIER YEARS ORDER DISMISSED THE APPEAL OF THE ASSESSEE. 3. AT THE TIME OF HEARING, THE LD. AR SUBMITTED THA T GROUND NO. 1 & 2 ARE GENERAL IN NATURE. AS GROUND NO. 3 (A), 3(B), 3(C), 4(A), 4(B), THE LD. AR SUBMITTED THAT THE SAME ARE NOT PRESSED/WITHDRAWN. THE REASONS FOR NOT PRESSING THESE GROUND HAS BEEN SUBMITTED BY THE LD. AR ARE HERE IN BELOW: I) NOIDA POWER COMPANY LIMITED ENTERED INTO AN AGR EEMENT WITH UTTAR PRADESH STATE ELECTRICITY BOARD [NOW KNOWN AS UTTAR PRADESH POWER CORPORATION LIMITED (UPPCL)] TO PURCHASE POWER. UPP CL RAISED INVOICES ON THE ASSESSEE FOR SUPPLY OF POWER AT MARGINAL COST BEING A HIGHER RATE. THE ASSESSEE DISPUTED THE RATE BEFORE THE APPROPRIATE F ORUM FORMED FOR THIS PURPOSE. FOR INCOME TAX PURPOSE, FOLLOWING MERCANTI LE SYSTEM OF ACCOUNTING, THE ASSESSEE CLAIMED POWER PURCHASE COST AT THE RAT ES BILLED BY UPPCL. HOWEVER, IN ITS BOOKS OF ACCOUNTS THE ASSESSEE DEBI TED THE POWER PURCHASE 3 ITA NO. 3481/DEL/2016 COST AT THE RATE PROVISIONALLY DETERMINED BY UTTAR PRADESH ELECTRICITY REGULATORY COMMISSION (UPERC) WHICH WAS LOWER THAN THE INVOICE AMOUNT. THE ASSESSING OFFICER ALLOWED THE POWER PURCHASE CO ST AT THE RATES AT WHICH POWER PURCHASE WAS DEBITED IN THE PROFIT AND LOSS A CCOUNT AND NOT THE INVOICED AMOUNT AS CLAIMED BY THE ASSESSEE. THE ASS ESSEE CONTESTED THE ACTION OF THE ASSESSING OFFICER AND HENCE THESE GRO UNDS OF APPEAL. II) AS STATED ABOVE, THE ASSESSEE CHALLENGED THE RA TES AT WHICH UPPCL RAISED THE INVOICES AND THE MATTER TRAVELLED BEFORE THE UP ERC FOR DETERMINATION OF THE FINAL RATE. III) UPERC DECIDED THE RATE ISSUE IN FAVOUR OF THE ASSESSEE AND UPPCL DID NOT FILE ANY APPEAL AGAINST THE SAME, THE ISSUE HAS ATT AINED FINALITY. THEREFORE, THE PRESENT GROUNDS 3(A) TO 4(B) CLAIMING BILLED AM OUNT HAVE BECOME ACADEMIC AND INFRUCTUOUS FOR THE YEAR. IV) IT MAY NOT BE OUT OF PLACE TO MENTION THAT RECE NTLY, THE APPEAL OF UPPCL IN THE EARLIER YEARS ON THE RATE ISSUE WHICH TRAVELLED TO SUPREME COURT HAS BEEN DISMISSED ON THE GROUNDS OF NON-PROSECUTION. V) WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSEE CRA VES LIBERTY TO REVIVE THE APPEAL IN THE EVENT THE HONBLE SUPREME COURT DECID ES TO RE-CONSIDER THE RATE ISSUE ON MERITS FOR THE EARLIER YEARS. THEREFORE, GROUND NO. 1 TO 4(B) ARE DISMISSED. 4 REMAINING GROUNDS OF APPEAL CONTESTED BEFORE US A RE AS UNDER:- 5(A) THAT THE LEARNED CIT(APPEALS) ERRED IN NOT AD JUDICATING GROUND NO. 3 TAKEN BY THE APPELLANT BEFORE HIM RELATING TO ALLOW ING SETOFF OF BROUGHT FORWARD BUSINESS LOSS AND DEPRECIATION ALLOWANCE WH ILE CALCULATING THE TOTAL INCOME TAXABLE. 4 ITA NO. 3481/DEL/2016 5(B) THAT ON FACTS AND CIRCUMSTANCES OF THE CASE ASSESSING OFFICER ERRED IN NOT ALLOWING SETOFF OF BROUGHT FORWARD BUSINESS LOSS AND DEPRECIATION ALLOWANCE WHILE CALCULATING THE TOTAL INCOME TAXABL E UNDER THE PROVISIONS OF THE ACT OTHER THAN SECTION 115JB THEREOF IN THE IMP UGNED ORDER UNDER APPEAL. 6(A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) WITHOUT APPLICATION OF MIND ERRED IN C ONFIRMING THE ACTION OF ASSESSING OFFICER IN DISALLOWING ADDITIONAL SUM OF RS. 53,624 U/S 14 R.W. RULE 8D ON THE WRONG PRETEXT THAT THE ISSUE HAS BEE N DECIDED AGAINST THE APPELLANT BY HONBLE ITAT. 6(B) THAT THE LEARNED CIT(APPEALS) ERRED IN CONFIR MING THE ACTION OF THE ASSESSING OFFICER IN INVOKING THE PROVISIONS OF RUL E 8D OF THE INCOME-TAX RULES, 1962 FOR ARRIVING AT THE AMOUNT DISALLOWABLE U/S. 14A OF THE ACT WITHOUT SATISFYING THE PRE-CONDITIONS FOR APPLICATI ON OF THE SAID PROVISIONS. 7(A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (APPEALS) ERRED IN HOLDING THAT THE APPELLANT I S LIABLE TO DEDUCT TAX AT SOURCE UNDER SECTION 194J OF THE ACT ON THE TRANSMI SSION/WHEELING CHARGES PURPORTEDLY AMOUNTING TO RS. 18,41,83,032 AND ACCOR DINGLY DISALLOWANCE WAS WARRANTED U/S 4O(A)(IA) OF THE ACT. 7(B) THAT THE LEARNED CIT(A) ERRED IN CONFIRMING T HE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE TRANSMISSION/W HEELING CHARGES U/S 40A(IA) OF THE ACT WITHOUT APPRECIATING THE FACT TH AT THE APPELLANT HAS NOT BEEN HELD AS ASSESSE IN DEFAULT U/S 201(1)/ 20I(IA) OF T HE ACT FOR THE YEAR UNDER CONSIDERATION. 7(C) WITHOUT PREJUDICE TO THE ABOVE, THE CIT(A) FAI LED TO APPRECIATE THAT OUT OF THE SAID AMOUNT OF RS. 18,41,83,032, THE SUM OF RS. 9,70,000 AND RS. 61,86,000 RESPECTIVELY ARE PAID ON ACCOUNT OF APPLI CATION FEES AND OPERATING CHARGES WHICH IN ANY EVENT, CANNOT BE COVERED WITHI N THE PURVIEW OF SECTION 194J OF THE ACT. 5 ITA NO. 3481/DEL/2016 7(D) WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CI T (APPEALS) FAILED TO APPRECIATE THAT OUT OF THE SAID AMOUNT OF RS. 18,41 ,83,032 THE APPELLANT, IN ANY EVENT, IS NOT LIABLE TO DEDUCT TAX ON AN AGGREG ATE AMOUNT OF RS. 6,55,09,814 WHICH REPRESENTS REIMBURSEMENT OF EXPEN SES. 8. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED CIT(APPEALS) WITHOUT APPLICATION OF MIND ER RED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN QUANTIFYING BOOK PRO FIT U/S 115JB OF THE ACT TO BE RS. 27,34,44,869 INSTEAD OF RS. 27,33,44,869. 9. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING THE ACTION OF ASSE SSING OFFICER IN CHARGING INTEREST U/S. 234B AND U/S. 234D OF THE ACT AT RS. 3,35,89,080 AND RS. 4,623 RESPECTIVELY. 5. WITH REGARD TO GROUND NOS.5, 5(A) AND 5(B), IT I S STATED BY THE LD. AR THAT THE ASSESSEE HAD RAISED THE ABOVE ISSUE BEFORE THE LEARNED CIT(A) VIDE GROUND NO.3. HOWEVER, THE SAME REMAINED TO BE ADJUDICATED . THEREFORE, THE CIT(A) MAY BE DIRECTED TO ADJUDICATE GROUND NO.3 RAISED BE FORE HIM. THE LD. DR HAD NO OBJECTION TO THE ABOVE REQUEST OF THE ASSESSEES COUNSEL. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND HAVE ALSO GONE THROUGH THE GROUNDS OF APPEAL RAISED BEFO RE THE CIT(A) AS WELL AS HIS ORDER. WE FIND THAT IN THE GROUNDS OF APPEAL BEFOR E THE CIT(A), GROUND NO.3 READS AS UNDER :- 3. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE ASS ESSING OFFICER ERRED IN NOT ALLOWING SETOFF OF BROUGHT FORWARD BUS INESS LOSS AND DEPRECIATION ALLOWANCE WHILE CALCULATING THE TOTAL INCOME TAXABLE UNDER THE PROVISIONS OF THE ACT OTHER THAN SECTION 115JB THEREOF IN THE IMPUGNED ORDER UNDER APPEAL. 6 ITA NO. 3481/DEL/2016 HOWEVER, THE CIT(A) AT PAGE 2 OF HIS ORDER VIDE PA RAGRAPH 5 ADJUDICATED GROUND NO.2 WHILE AT PARAGRAPH 6 GROUND NO.4. THUS , IT IS EVIDENT THAT GROUND NO.3 HAS NOT BEEN ADJUDICATED BY HIM. IN VIEW OF T HE ABOVE, WE ALLOW GROUND NOS.5, 5(A) AND 5(B) OF ASSESSEES APPEAL BY DIRECT ING THE CIT(A) TO ADJUDICATE GROUND NO.3 RAISED BEFORE HIM. 7. GROUND NOS. 6(A) AND 6(B) ARE WITH REGARD TO DIS ALLOWANCE UNDER SECTION 14A AMOUNTING TO RS.53,624/-. 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT DURING THE YEAR UND ER CONSIDERATION, THE ASSESSEE HAS EARNED TOTAL DIVIDEND INCOME OF RS.1,6 0,329/- FROM THE UNITS OF UTI. THE ASSESSEE HIMSELF HAS OFFERED THE DISALLOW ANCE UNDER SECTION 14A AMOUNTING TO RS.42,803/-. THE ASSESSING OFFICER HA S WORKED OUT THE DISALLOWANCE UNDER RULE 8D AT RS.96,427/- AND ACCOR DINGLY, HE MADE THE ADDITIONAL DISALLOWANCE OF RS.53,624/- (96,427 42 ,803). SECTION 14A READS AS UNDER :- 14A. EXPENDITURE INCURRED IN RELATION TO INCOME NO T INCLUDIBLE IN TOTAL INCOME. (1) FOR THE PURPOSES OF COMPUTING THE TOTAL INCOME UNDER THIS CHAPTER, NO DEDUCTION SHALL BE ALLOWED IN RESPECT O F EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHIC H DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT. (2) THE ASSESSING OFFICER SHALL DETERMINE THE AMOU NT OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHI CH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT IN ACCORDAN CE WITH SUCH METHOD AS MAY BE PRESCRIBED, IF THE ASSESSING OFFIC ER, HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, IS NOT SATI SFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE IN RELATION TO INCOME WHICH DOES NOT FO RM PART OF THE TOTAL INCOME UNDER THIS ACT. (3) THE PROVISIONS OF SUB-SECTION (2) SHALL ALSO A PPLY IN RELATION TO A CASE WHERE AN ASSESSEE CLAIMS THAT NO EXPENDITURE HAS BEEN 7 ITA NO. 3481/DEL/2016 INCURRED BY HIM IN RELATION TO INCOME WHICH DOES NO T FORM PART OF THE TOTAL INCOME UNDER THIS ACT: PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHALL EMPOW ER THE ASSESSING OFFICER EITHER TO REASSESS UNDER SECTION 147 OR PASS AN ORDER ENHANCING THE ASSESSMENT OR REDUCING A REFUND ALREADY MADE OR OTHERWISE INCREASING THE LIABILITY OF THE ASSESS EE UNDER SECTION 154, FOR ANY ASSESSMENT YEAR BEGINNING ON OR BEFORE THE 1ST DAY OF APRIL, 2001. FROM SUB-SECTION (2) ABOVE, IT IS EVIDENT THAT THE ASSESSING OFFICER SHALL DETERMINE THE AMOUNT OF EXPENDITURE INCURRED FOR EA RNING OF EXEMPT INCOME IN ACCORDANCE WITH SUCH METHOD AS MAY BE PRESCRIBED IF HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RES PECT OF SUCH EXPENDITURE IN RELATION TO EXEMPT INCOME. ADMITTEDLY, THE METHOD OF DISALLOWANCE IS PRESCRIBED UNDER RULE 8D. HOWEVER, THE ASSESSING O FFICER WILL INVOKE RULE 8D ONLY WHEN HE RECORDS THAT HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE. IN THE CASE UNDER APPEAL, WE DO NOT FIND ANY PROPER SATISFACTION HAVING BEEN RECORD ED BY THE ASSESSING OFFICER IN THE LIGHT OF SECTION 14A(2). IT IS ALSO STATED BY THE LD. AR THAT IN THE PRECEDING AS WELL AS SUBSEQUENT YEARS, THE DISALLOW ANCE MADE BY THE ASSESSEE WAS ACCEPTED BY THE ASSESSING OFFICER HIMSELF AND N O FURTHER DISALLOWANCE HAS BEEN MADE BY INVOKING RULE 8D. IN VIEW OF THE ABOV E, WE DEEM IT APPROPRIATE TO DELETE THE ADDITIONAL DISALLOWANCE OF RS.53,624/ - MADE BY THE ASSESSING OFFICER. 9. AS REGARDS GROUND NO. 7 (A) TO 7(D) RELATING TO DISALLOWANCE UNDER SECTION 40(A)(IA) FOR NON-DEDUCTION OF TAX ON PAYME NT OF TRANSMISSION CHARGES AMOUNTING TO RS. 18,41,83,032/-, THE LD. AR SUBMITT ED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE TRIBUNAL IN ASSESSEES OWN CASE. THE LD. DR RELIED UPON THE ASSESSMENT ORD ER AND THE ORDER OF THE CIT(A). 8 ITA NO. 3481/DEL/2016 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE TRIBUNAL IN A.Y. 2012-13 B EING ITA NO. 4878/DEL/2016 HELD AS UNDER: 17. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RECORDS. AS REGARDS GROUND NOS. 1, 2, 3, 4(A), 4(B), 5(A) AND 5 (B) ARE NOT PRESSED BY THE LD. AR AS THE SAME ARE ACADEMIC AND BECOMES INFRUCT UOUS. THEREFORE, GROUND NOS. 1, 2, 3, 4(A), 4(B), 5(A) AND 5(B) ARE DISMISSED. AS RELATES TO GROUND NOS. 6(A) TO 6(E) REGARDING DISALLOWANCE UND ER SECTION 40(A)(IA) FOR NON-DEDUCTION OF TAX ON PAYMENT OF TRANSMISSION CHA RGES THE SAME IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TR IBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2011-12 & 2012-13 (ITA NOS. 5442 & 5 443/DEL/2015 ORDERS DATED 29.11.2017 16.11.2017. ACIT VS. NOIDA POWER C OMPANY LTD.) RELEVANT EXTRACT OF 2012-13 ORDER IS AS UNDER:- 6 WE FIND THAT SECTION 194J WOULD HAVE APPLICATION ON LY WHEN THE TECHNOLOGY OR TECHNICAL KNOWLEDGE, EXPERIENCES/SKIL LS OF A PERSON IS MADE AVAILABLE TO OTHERS WHICH CAN BE FURTHER USED BY HI M FOR ITS OWN PURPOSE AND NOT WHERE BY USING TECHNICAL SYSTEMS, SERVICES ARE RENDERED TO OTHERS. RENDERING OF SERVICES BY ALLOWING USE OF TECHNICAL SYSTEM IS DIFFERENT THAN CHARGING FEES FOR RENDERING TECHNICAL SERVICES. IN THE PRESENT CASE NO SCIENTIFIC KNOWLEDGE, EXPERIENCE OR SKILL IS MADE A VAILABLE/RENDERED BY THE PGCIL TO THE ASSESSEE. FROM THE RECORDS, WE HAVE SE EN THAT THE ASSESSEE ITSELF HAS ITS OWN ENGINEERS AND TECHNICIANS WHO CO NSISTENTLY MONITOR AND SUPERVISE THE FLOW OF THE ELECTRICITY TO ITS SYSTEM AND ULTIMATELY SUPPLIES TO ITS CUSTOMERS WHICH ACCORDING TO LD. CIT(A) ARE THE DESIGNATED FUNCTION OF POWER GRID WHICH DO NOT AMOUNT TO PROVIDING TECHNIC AL SERVICES WITHIN THE MEANING OFEXPLN.2 TO SECTION G(I)(VII) OF THE ACT. MOREOVER, WE ALSO IN COMPLETE AGREEMENT WITH THE JUDGMENT OF HON'BLE DEL HI HIGH COURT IN THE CASE OF CIT VS. BHARATI CELLULAR LIMITED [175 TAXMA NN 573 (DEL)] AFFIRMED BY THE HONBLE SUPREME COURT IN 193 TAXMAN 97(SC) W HEREIN, IT HAS BEEN HELD THAT TECHNICAL SERVICES WHICH ARE RELEVANT FOR THE PURPOSE OF SECTION 9 ITA NO. 3481/DEL/2016 194J WOULD BE THOSE TECHNICAL SERVICES WHICH INVOLV E HUMAN INTERFACE/ELEMENT. IN OTHER WORDS, THE EXPRESSION ' TECHNICAL SERVICE' COULD HAVE REFERENCE TO ONLY TECHNICAL SERVICE RENDERED B Y A HUMAN AND THAT IT WOULD NOT INCLUDE MY SERVICE PROVIDED BY MACHINES O R ROBOTS. HOWEVER AS AGAINST ABOVE CONTENTION WE FIND THAT THE AO HAS CO MPLETELY FAILED TO BRING RELEVANT MATERIALS, WHATSOEVER, ON RECORD TO PROVE THE EXISTENCE OF HUMAN INTERFACE/ELEMENT IN THE PRESENT CASE. IN VIE W OF THE ABOVE, WE FIND THAT SUCH TRANSMISSION AND WHEELING CHARGES PAID BY THE ASSESSEE DOES NOT COME WITHIN THE PURVIEW OF FEES FOR TECHNICAL S ERVICE AS DEFINED UNDER EXPLANATION 2 TO SEC G(I)(VII) OF THE ACT AND ACCOR DINGLY NO TAX IS REQUIRED TO BE DEDUCTED BY THE ASSESSEE U/S. 194J THEREFROM. HENCE, THE ACTION OF THE AO IN TREATING THE ASSESSEE TO BE AN ASSESSEE-IN- D EFAULT U/S. 201(1) OF THE ACT AND THE ORDER DATED 27.3.2014 PASSED U/S. 201(1 )/201(1A) OF THE I.T. ACT WERE RIGHTLY DELETED BY THE LD. CIT(A), WHICH D OES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ACTI ON OF THE LD. CIT(A) AND REJECT THE GROUND RAISED BY THE REVENUE. AS RELATES TO GROUND NO. 6(A) TO (E) THE HONBLE DE LHI HIGH COURT IN CASE OF CIT VS. DELHI TRANSCO LTD. (SUPRA) CONSIDERING THE PROV ISIONS OF SECTION 194J OF THE ACT HELD THAT WHEELING CHARGES PAID FOR TRANSPORTAT ION OF ELECTRICITY CANNOT BE CHARACTERIZED AS FEE FOR TECHNICAL SERVICE. RELEVAN T PORTION IS REPRODUCED BELOW: 31 THE SYSTEM OPERATED BY PGCIL AND USED FOR TRANSMI SSION OF ELECTRICITY IS NO DOUBT MAINTAINED BY SKILLED TECHN ICAL PERSONNEL PROFESSIONAL. THIS ALSO ENSURES THAT PGCIL COMPLIES WITH THE STANDARDS AND NORMS PUT IN PLACE BY THE STATUTORY REGULATIONS . HOWEVER, THE BENEFICIARY OF SUCH SERVICES IS PGCIL ITSELF. PGCIL IS OPERATING AND MAINTAINING ITS OWN SYSTEM USING THE SERVICE OF ENG INEERS AND QUALIFIED TECHNICIANS. PGCIL IS IN THAT PROCESS NOT PROVIDING TECHNICAL SERVICES TO OTHERS, INCLUDING DTL. 10 ITA NO. 3481/DEL/2016 32. A COMPARISON COULD BE MADE WITH THE SYSTEM OF D ISTRIBUTION OF SOME OTHER COMMODITY LIKE WATER. IT MIGHT REQUIRE THE OP ERATION AND MAINTENANCE OF WATER PUMPING STATION AND THE MAINTE NANCE OF A NETWORK OF PIPES. HOWEVER, WHAT IS CONVEYED THROUGH THE PIP ES AND THE EQUIPMENT TO THE ULTIMATE CONSUMER IS WATER. THE EQUIPMENT AN D PIPES HAVE TO NO DOUBT BE MAINTAINED BY TECHNICAL STAFF BUT THAT DOE S NOT MEAN THAT A PERSON TO WHOM THE WATER IS DISTRIBUTED THROUGH USI NG THE PIPES AND EQUIPMENT IS AVAILING OF ANY TECHNICAL SERVICE AS S UCH. THIS DECISION OF THE HONBLE DELHI HIGH COURT IS CO NFIRMED BY THE HONBLE APEX COURT. THE CONTENTIONS OF THE LD. AR WAS NOT R EFUTED BY THE LD. DR AND THE DECISIONS RELIED BY THE LD. AR SQUARELY COVERS THE ISSUES IN FAVOUR OF THE ASSESSEE THUS, GROUND NO. 6 (A) TO 6 (E) ARE ALLOWE D. THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2012-13 ON IDENTICAL FACTS. THE TRIBUNAL DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 40(A) (IA) OF THE ACT FOR NON DEDUCTION OF TAX AT S OURCE ON TRANSMISSION CHARGES. BESIDES THAT NO TAX IS REQUIRED TO BE DEDUCTED AT S OURCE FROM THE AMOUNT OF RS. 6,55,09,814 OUT OF THE TOTAL EXPENDITURE ON TRA NSMISSION AND WHEELING CHARGES OF RS. 18,41,83,032 INCURRED BY THE ASSESSE E DURING THE YEAR UNDER CONSIDERATION, BEING REIMBURSEMENT OF COST.THE LD. DR COULD NOT CONTROVERT THIS FACTUAL ASPECT. IT IS JUST AND PROPER NOT TO WITHHELD TAX FROM TRANSMISSION CHARGES AND ACCORDINGLY THE DISALLOWANCE MADE BY TH E ASSESSING OFFICER ON ACCOUNT OF NON-DEDUCTION OF TAX FROM SUCH PAYMENT I S PROPER AND IS LIABLE TO BE DELETED. THEREFORE, GROUND NO. 7(A) TO 7(D) ARE ALLOWED. 11. AS REGARDS GROUND NO. 8, THERE IS A WRONG QUANT IFICATION OF BOOK PROFIT U/S 115JB TO THE EXTENT OF EXCESS OF RS. 1 LAKH BY THE ASSESSING OFFICER. THEREFORE, WE REMAND BACK THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER AND AFTER VERIFYING THE SAME, WE DIRECT THE ASSESSING O FFICER TO PASS THE ORDER ACCORDINGLY. THUS, GROUND NO. 8 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 11 ITA NO. 3481/DEL/2016 12. AS REGARDS GROUND NO.9, THE SAME IS CONSEQUENTI AL, HENCE IS NOT ADJUDICATED AT THIS JUNCTURE. 13. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH APRIL, 2019 . SD/- SD/- (G. D. AGRAWAL) (SUCHITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER DATED: 10/04/2019 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 12 ITA NO. 3481/DEL/2016 DATE OF DICTATION 11.03.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 12.03.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 1 0 .0 4 .2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 0 .0 4 .201 9 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 0 .0 4 .2019 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK