DCIT, New Delhi V. M/s Delhi Transco Ltd., New Delhi

ITA 3527/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77727 (ITAT-DELHI)
• Duration Of Justice: 44 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2014
• Appeal Filed By: Department
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Assessee Lawyers: H P AGRAWAL
• Keywords: Business income
• Section: 201(1); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B: NEW DELHI) BEFORE SHRI S.V.MEHROTRA, ACCOUNTANT M EMBER AND SHRI SHRI R.P.YADAV, JUDICIAL MEMBER ITA NO.3526,3527,3528,3529 AND 3530 /DEL/ 2013 (ASSESSMENT YEAR: 2003-2004) (ASSESSMENT YEAR : 2005-06) (ASSESSMENT YEAR : 2009-10) (ASSESSMENT YEAR : 2008-09) (ASSESSMENT YEAR : 2007-08) DCIT VS. DELHI TRANSCO LTD. CIRCLE 49 (1), SHAKTI SADAN KOTIA ROAD NEW DELHI N EW DELHI AABCD6342A APPELLANT RESPONDENT APPELLANT BY : SMT. NIDHI SRIVASTAVA, SR. DR RESPONDENT BY : SRI H.P.AGRAWAL, CA ORDER PER BENCH: THE PRESENT FIVE APPEALS ARE DIRECTED AT THE INSTAN CE OF REVENUE AGAINST THE SEPARATE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 28.3.2013. ITA NO. 3527 IS AN APPEA L AROSE FROM PENALTY PROCEEDING INITIATED U/S 271 (1) (C) OF THE INCOME TAX ITA. N0S.3526/DEL /2013, IT A.NO.3527/DEL/2013 ITA.NO .3528/DEL/2013 ITA NO. 3529/DEL/2013 ITA NO . 3530/DEL/2013 2 ACT. THE GRIEVANCE OF REVENUE IS THAT LD. COMMISSIO NER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE PENA LTY IMPOSED BY THE ASSESSING OFFICER U/S 271 (1) (C) OF THE INC OME TAX ACT. 2. IN OTHER FOUR APPEALS GRIEVANCE OF RE VENUE IS THAT ASSESSEE WAS REQUIRED TO DEDUCT TDS U/S 194(J) ON W HEELING CHARGES PAID BY IT FOR TRANSMISSION OF ELECTRICITY. IT HAS DEDUCTED THE TAX SHORT AND THEREFORE ASSESSING OFFICER HAS R IGHTLY TAKEN ACTION U/S 201/201A. 3. THE BRIEF FACTS OF THE CASE ARE THAT A SURVEY U/S 133(A) WAS CARRIED OUT IN THE BUSINESS PREMISES OF THE ASSESSEE AT SHAKTI SADAN, ROUSE AVENUE KOTLA ROAD, NEW DELHI, O N 22/1/2009. DURING THE COURSE OF SURVEY, IT WAS NOT ICED THAT THE ASSESSEE HAS DEDUCTED TDS @ 2% U/S 194(C) ON PAYMEN TS OF WHEELING CHARGES PAID TO M/S POWER GRID CORPORATION OF INDIA LTD. (HEREINAFTER REFERRED TO AS PGCIL FOR THE SAKE OF BREVITY). THE ASSESSEE HAD ALSO MADE PAYMENT TO M/S BHAKARA B EAS MANAGEMENT FOR TRANSMISSION OF ELECTRICITY. THE ASS ESSING OFFICER WAS OF THE VIEW THAT ASSESSEE WAS REQUIRED TO DEDUC T THE TAX AT SOURCES @ 5% OF THE PAYMENT U/S 194(J) AS PGCIL WAS PROVIDING ITA. N0S.3526/DEL /2013, IT A.NO.3527/DEL/2013 ITA.NO .3528/DEL/2013 ITA NO. 3529/DEL/2013 ITA NO . 3530/DEL/2013 3 TECHNICAL SERVICES TO THE ASSESSEE BY TRANSMITTING THE ELECTRICITY. THEREFORE, AN ORDER WAS PASSED U/S 201(1) AND 201(1 ) (A) OF THE ACT RAISING DEMAND AGAINST THE ASSESSEE IN ALL THES E YEARS. 4. ON APPEAL LD. COMMISSIONER OF INC OME TAX (APPEALS) HAS DELETED THE DEMAND BY OBSERVING THAT ASSESSEE WAS N OT REQUIRED TO DEDUCT TAXES AT SOURCE U/S 194(J) AS HELD BY ITAT I N ASSESSMENT YEAR 2005-06 IN THE CASE OF ASSESSEE LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THE DEDUCTEE HAS ALREADY PAID THE TAXES AND CLAIMED REFUND THUS THE DEDUCTEE HAS ALREADY DISCHA RGED ITS ENTIRE TAX LIABILITY WELL IN ADVANCE AND EVEN PAID MORE TAXES THEN, WHAT WAS REQUIRED TO BE PAID THEREFORE NO INTEREST LIABILITY CAN BE PUT UPON THE ASSESSEE COMPANY. 5. BEFORE US LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT SIMILAR ISSUE WAS CONSIDERED BY THE ITAT IN ASSESSMENT YEAR 2005-06 IN ITA NO. 755 DELHI 2011. HE PLACED ON RECORD COPY OF THE TRIBUNALS ORDER. IT WAS ALSO BR OUGHT TO OUR NOTICE THAT IN THE CASE OF CHHATTISGARH STATE ELECTRICITY BOARD VS. ITO SIMILAR DEMAND WAS RAISED, THAT ASSESSEE WAS ALSO A BULK PU RCHASER OF ELECTRICITY FROM NTPC WHICH WAS TRANSMITTED FROM TH E NTPC UP TO THE ITA. N0S.3526/DEL /2013, IT A.NO.3527/DEL/2013 ITA.NO .3528/DEL/2013 ITA NO. 3529/DEL/2013 ITA NO . 3530/DEL/2013 4 POINT OF ASSESSEE WHERE IT WAS REQUIRED BY PGCIL. T HE LD. ASSESSING OFFICER IN THAT CASE OBSERVED THAT ASSESSEE HAD PAI D RENTAL FOR THE USE OF TRANSMISSION LINE. THEREFORE, IT OUGHT TO HAVE D EDUCT TDS U/S 194(I) OF THE ACT, WHEREAS ASSESSEE HAS DEDUCTED THE TDS U /S 194(C). THE TRIBUNAL HAS ALLOWED THE APPEAL OF ASSESSEE AND HEL D THAT TDS WAS NOT TO BE DEDUCTED U/S 194(I). 6. LD. DEPARTMENTAL REPRESENTATIVE W AS UNABLE TO CONTROVERT THE CONTENTION OF THE LD. COUNSEL FOR TH E ASSESSEE. 7. WE HAVE DULY CONSIDERED T HE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY THE ITAT IN ASSES SMENT YEAR 2005- 06 HAS CONSIDER AN INDENTICAL ISSUE. THE FINDING RE CORDED BY THE ITAT READ AS UNDER : WE HAVE CONSIDERED THE FACTS OF THE CAS E AND SUBMISSIONS MADE BEFORE US. IN THE CASE OF BHARTI CELLULAR LTD. (SUPRA), THE HONBLE COURT BY APPLYIN G THE RULE OF NOSCITUR A SOCIIS, HAS COME TO A CONCLU SION THAT INVOLVEMENT OF HUMAN ELEMENT IS ESSENTIAL FOR RENDERING ANY SERVICE AS TECHNICAL SERVICE. IN TH E CASE OF SKYCELL COMMUNICATIONS LTD. (SUPRA), THE STRESS HAS BEEN LAID ON IMPARTING TECHNICAL KNOWLEDGE. HOWEVER , IT CANNOT BE SAID WHETHER ANY ONE OF THE ELEMENT OR BOTH THE ELEMENTS SHOULD BE PRESENT FOR TERMING A SERVIC E TO BE A TECHNICAL SERVICE. COMING TO THE FACTS OF THIS CASE, NONE OF THESE ELEMENTS ARE PRESENT. THE PAYEE DOES NOT UPGRADE THE KNOWLEDGE OF THE ASSESSEE WHEN IT TRANSMITS ELECTRICITY. WHILE THERE MAY BE SUPERVISI ON OF ITA. N0S.3526/DEL /2013, IT A.NO.3527/DEL/2013 ITA.NO .3528/DEL/2013 ITA NO. 3529/DEL/2013 ITA NO . 3530/DEL/2013 5 TRANSMISSION WORK BY THE TECHNICAL PERSONNEL OF THE PAYEE, THERE IS NO HUMAN INTERVENTION IN SO FAR AS THE ASSESSEE IS CONCERNED REGARDING THE TRANSMISSION. THEREFORE, NONE OF THE CONDITIONS IS SATISFIED IN T HIS CASE. EVEN IF IT IS ASSUMED THAT TECHNICAL KNOWLEDG E CAN BE UPGRADED WITHOUT THE PRESENCE OF HUMAN BEINGS BY WAY OF HANDING OVER DRAWINGS AND DESIGNS OR A TECHNICAL SERVICE CAN BE RENDERED BY ROBOT (MACHINE S) WITHOUT INTERVENTION OF HUMAN ELEMENT, THE CLASSIFICATION OF THE SERVICES RENDERED BY THE ASSE SSEE AS TECHNICAL SERVICE IS NOT FREE FROM DOUBT. IN SUCH CIRCUMSTANCES, THE ASSESSEE CANNOT BE SADDLED WITH HIGHER LIABILITY FOR TAX DEDUCTED AT SOURCE AS IT I S ONLY EXPECTED TO DEDUCT TAX ON THE BASIS OF COMMONLY UNDERSTOOD MEANING OF THE PROVISION. 4.1 WE MAY ALSO LOOK AT THE ISSUE FROM THE PO INT OF VIEW OF THE RECIPIENT. THE TRANSMISSION OF ELECTRIC ITY FOR THE ASSESSEE HAS BEEN UNDERTAKEN IN THE NORMAL COUR SE OF ITS BUSINESS AND THE INCOME IS TO BE CLASSIFIED AS BUSINESS INCOME. THIS MAY LEAD TO NO LIABILITY FOR TAX DEDUCTION AT ALL. THUS, THE ISSUE IS VEXED AND IN S UCH A SITUATION, THE ASSESSEE IS NOT LIABLE TO BE SADDLED WITH HIGHER LIABILITY FOR DEDUCTION OF TAX AT SOURCE. ACCORDINGLY, IT IS HELD THAT NO FURTHER LIABILITY C OULD BE FASTENED ON THE ASSESSEE AND THE LD. CIT(APPEALS) ERRED IN ALLOWING THE APPEAL PARTLY. 8. THIS FINDING HAS BEEN FOLLOWED BY THE ITAT IN ITA N O. 3965/ DEL/2011 IN THE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2006-07. A PART FROM THE FINDING OF TRIBUNAL RECORDED IN THE ASSESSEES OWN CASES, W E DEEM IT PERTINENT TO TAKE NOTE OF THE FINDING RECORDED BY THE TRIBUNAL I N THE CASE OF CHHATTISGARH ITA. N0S.3526/DEL /2013, IT A.NO.3527/DEL/2013 ITA.NO .3528/DEL/2013 ITA NO. 3529/DEL/2013 ITA NO . 3530/DEL/2013 6 STATE ELECTRICITY BOARD. THE ORDER IS REPORTED IN 1 8 TAXMAN, PAGE 150. THE RELEVANT FINDING READ AS UNDER : 11. WE FIND THAT THE POWER PURCHASE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH NTPC, (COPY PLACED BEFORE US AT PAGES 15-27 OF THE PAPER-BOOK), SPECIFICALLY PROVIDES THAT 'POWER SHALL BE MADE AVA ILABLE BY THE NTPC AT THE BUSBARS OF THE STATION AND IT SHALL BE OBLIGATION A ND RESPONSIBILITY OF THE CSEB TO MAKE THE REQUIRED ARRANGEMENT FOR EVACUATION OF POWER FROM SUCH DELIVERY POINTS OF NTPC'. IT IS PURSUANT TO THESE OBLIGATION S THAT THE ASSESSEE, ALONG WITH OTHER BULK POWER BENEFICIARIES - NAMELY M P STATE E LECTRICITY BOARD, GUJARAT ELECTRICITY BOARD, MAHARASHTRA STATE ELECTRICITY BO ARD, ELECTRICITY DEPARTMENT - GOVERNMENT OF GOA, ADMINISTRATION OF DAMAN & DIU, A ND ELECTRICITY DEPARTMENT - ADMINISTRATION OF DADRA AND NAGAR HAVE LI, HAS ENTERED INTO A 'BULK POWER TRANSMISSION AGREEMENT' WITH PGCIL. THE PREAMBLE OF THIS AGREEMENT, INTER ALIA , NOTES THAT THE PGCIL 'IS DESIROUS TO TRANSMIT ENE RGY FROM THE CENTRAL SECTOR POWER STATION(S) TO THE BULK POW ER BENEFICIARIES AND THAT THE SAID BULK POWER BENEFICIARIES ARE DESIROUS OF RECEI VING THE SAME THROUGH POWERGRID TRANSMISSION SYSTEM ON MUTUALLY AGREED TE RMS AND CONDITIONS'. THIS AGREEMENT PROVIDES THAT 'POWERGRID SHALL OPERA TE AND MAINTAIN THE TRANSMISSION SYSTEM BELONGING TO IT IN THE WESTERN REGION AS PER AGREED GUIDELINES AND THE DIRECTIVES OF THE WESTERN REGION AL ELECTRICITY BOARD AND THE REGIONAL LOAD DISPATCH CENTERS, AND COOPERATE WITH THE BULK POWER BENEFICIARIES OF THE REGION, SO AS TO MAINTAIN THE SYSTEM PARAMETERS WITHIN ACCEPTABLE/REASONABLE LIMITS EXCEPT WHERE IT IS NEC ESSARY TO TAKE MEASURES TO PREVENT IMMINENT DAMAGE TO ANY EQUIPMENT'. IN RESPE CT OF THESE SERVICES, THE BULK POWER BENEFICIARIES ARE TO PAY TO PGCIL A MONT HLY CHARGES COMPUTED IN THE MANNER SET OUT IN CLAUSE 9 OF THE SAID AGREEMEN T. THIS CLAUSE, IN TURN, REFERS TO FORMULA SET OUT IN A.4 OF ANNEXURE 1 WHICH REFER S TO THE SAME RATIO OF AGREED ANNUAL CHARGES DIVIDED BY 12 AS IS BETWEEN POWER TR ANSMITTED TO EACH BENEFICIARY TO TOTAL SALES FROM THAT PARTICULAR POI NT OF DELIVERY. IN OTHER WORDS, WHILE THE ANNUAL CHARGES ARE FIXED, THESE ARE DIVID ED BETWEEN THE BENEFICIARIES IN THE SAME RATIO AS IS RATIO OF POWER EVACUATED BY A BENEFICIARY TO THE TOTAL SALE OF POWER FROM THAT DELIVERY POINT. IT IS, HOWEVER, NOT IN DISPUTE THAT THE TRANSMISSION LINES ARE IN THE PHYSICAL CONTROL OF P GCIL, THESE ARE MAINTAINED AND OPERATED BY THE PGCIL AND, SO FAR AS THE ASSESS EE IS CONCERNED, ITS INTEREST IN THE TRANSMISSION LINES IS RESTRICTED TO THE FACT THAT ELECTRICAL POWER PURCHASED BY THE ASSESSEE, SIMULTANEOUSLY ALONGWITH ELECTRICA L POWER PURCHASED BY OTHER BULK POWER BENEFICIARIES, IS TRANSMITTED THROUGH TH ESE TRANSMISSION LINES. THE WAY IT WORKS IS LIKE THIS. THE POWER AVAILABLE AT T HE DELIVERY POINTS, COLLECTIVELY FOR ALL THE BULK POWER BENEFICIARIES, IS LOADED FOR TRANSMISSION ON THESE TRANSMISSION LINES OR POWERGRID AND EACH OF THE BEN EFICIARIES IS ALLOWED TO UTILIZE THE POWER TO THE EXTENT ALLOCATED TO HIM. I T IS NOT THE CASE THAT PURCHASES ITA. N0S.3526/DEL /2013, IT A.NO.3527/DEL/2013 ITA.NO .3528/DEL/2013 ITA NO. 3529/DEL/2013 ITA NO . 3530/DEL/2013 7 BY EACH OF THE BULK BENEFICIARY CAN BE PHYSICALLY I DENTIFIED AND THAT PARTICULAR BENEFICIARY IS ONLY ALLOWED TO USE THAT PHYSICALLY IDENTIFIED PORTION OF POWER. STRICTLY SPEAKING, THEREFORE, IT IS NOT THE TRANSMI SSION OF POWER FROM ONE POINT TO ANOTHER BUT AVAILABILITY OF POWER ON THE ENTIRE POW ER GRID OR TRANSMISSION LINES ENABLING THE BENEFICIARY TO UTILIZE THE POWER TO TH E EXTENT OF HIS ALLOCATION. ON THESE FACTS, THE QUESTION THAT REQUIRES OUR ADJUDIC ATION IS WHETHER OR NOT THE PAYMENT FOR TRANSMISSION CHARGES CAN BE TERMED AS ' RENT' FOR THE PURPOSES OF SECTION 194-I OF THE ACT. 12. LET US NOW TAKE A LOOK AT THE STATUTORY PROVISION WITH REGARD TO TAX WITHHOLDING FROM RENT PAYMENTS, WHICH IS SET OUT IN SECTION 194-I OF THE ACT, AND ANALYZE THE SAME. SECTION 194-I PROVIDES AS FOLLOWS: ANY PERSON, NOT BEING AN INDIVIDUAL OR A HINDU UNDI VIDED FAMILY, WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY INCOME BY WAY OF RENT, SHALL, AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME O F PAYMENT THEREOF IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE , WHICHEVER IS EARLIER, DEDUCT INCOME-TAX THEREON AT THE RATE OF - (A) TWO PER CEN T. FOR THE USE OF ANY MACHINERY OR PLANT OR EQUIPMENT; AND (B) TEN PER CENT FOR THE US E OF ANY LAND OR BUILDING (INCLUDING FACTORY BUILDING) OR LAND APPURTENANT TO A BUILDING (INCLUDING FACTORY BUILDING) OR FURNITURE OR FITTINGS: PROVIDED THAT NO DEDUCTION SHALL BE MADE UNDER THIS SECTION WHERE THE AMOUNT OF SUCH INCOME OR, AS THE CASE MAY BE, THE AGGREGATE O F THE AMOUNTS OF SUCH INCOME CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID D URING THE FINANCIAL YEAR BY THE AFORESAID PERSON TO THE ACCOUNT OF, OR TO, THE PAYE E, DOES NOT EXCEED [ONE HUNDRED EIGHTY THOUSAND RUPEES] : PROVIDED FURTHER THAT AN INDIVIDUAL OR A HINDU UNDI VIDED FAMILY, WHOSE TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS OR PRO FESSION CARRIED ON BY HIM EXCEED THE MONETARY LIMITS SPECIFIED UNDER CLAUSE (A) OR C LAUSE (B) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANC IAL YEAR IN WHICH SUCH INCOME BY WAY OF RENT IS CREDITED OR PAID, SHALL BE LIABLE TO DEDUCT INCOME-TAX UNDER THIS SECTION. EXPLANATION : FOR THE PURPOSES OF THIS SECTION, [(I) 'RENT' ME ANS ANY PAYMENT, BY WHATEVER NAME CALLED, UNDER ANY LEASE, SUB-LEASE, T ENANCY OR ANY OTHER AGREEMENT OR ARRANGEMENT FOR THE USE OF (EITHER SEPARATELY OR TO GETHER) ANY, -, ( A ) LAND; OR ( B ) BUILDING (INCLUDING FACTORY BUILDING); OR ( C ) LAND APPURTENANT TO A BUILDING (INCLUDING FACTORY BUILDING); OR ( D ) MACHINERY; OR ( E ) PLANT; OR ( F ) EQUIPMENT; OR ( G ) FURNITURE; OR ITA. N0S.3526/DEL /2013, IT A.NO.3527/DEL/2013 ITA.NO .3528/DEL/2013 ITA NO. 3529/DEL/2013 ITA NO . 3530/DEL/2013 8 ( H ) FITTINGS, WHETHER OR NOT ANY OR ALL OF THE ABOVE ARE OWNED BY THE PAYEE;] ( II ) WHERE ANY INCOME IS CREDITED TO ANY ACCOUNT, WHET HER CALLED 'SUSPENSE ACCOUNT' OR BY ANY OTHER NAME, IN THE BOOKS OF ACCOUNT OF TH E PERSON LIABLE TO PAY SUCH INCOME, SUCH CREDITING SHALL BE DEEMED TO BE CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE AND THE PROVISIONS OF THIS SECTION SHALL APPLY ACCORDINGLY. 13. THE CASE OF THE ASSESSING OFFICER, WHICH HAS BEEN SUSTAINED IN THE FIRST APPEAL, IS THAT SINCE EXPRESSION 'RENT', FOR THE PURPOSE OF SECTION 194 I, INCLUDES 'ANY PAYMENT, BY WHATEVER NAME CALLED, UNDER ANY LEASE, SUB-LEASE, TENANCY OR ANY OTHER AGREEMENT OR ARRANGEMENT' FOR THE USE OF MACHINERY, PLANT OR EQUIPMENT, AND SINCE THE ASSESSEE HAS MADE THE PAYMENTS TOWARDS TRANSMIS SION CHARGES FOR USE OF THE MACHINERY, PLANT AND EQUIPMENT COLLECTIVELY CONSTIT UTING MODE OF TRANSMISSION OF POWER, THE PROVISIONS OF SECTION 194-I COME INTO PL AY ON THE FACTS OF THIS CASE. 14. THE CORE ISSUE THAT WE MUST DEAL WITH IS WHETHER T HE PRESENT ARRANGEMENT UNDER THE BULK POWER TRANSMISSION AGREEMENT CAN BE TERMED CAN BE COVERED BY THE SCOPE OF EXPRESSION ANY OTHER AGREEMENT OR ARRANGEM ENT 'FOR THE USE OF' APPEARING IN EXPLANATION (I) TO SECTION 194-I. 15. EXPLANATION (I) TO SECTION 194-I, AS WE HAVE NOTED ABOVE, DEFIN ES RENT AS ANY PAYMENT, BY WHATEVER NAME CALLED, UNDER ANY LEASE, SUBLEASE, OR TENANCY OR ANY OTHER AGREEMENT OR ARRANGEMENT 'FOR THE USE OF' LAN D, BUILDING, PLANT, MACHINERY OR EQUIPMENT ETC. AS EVIDENT FROM A PLAIN READING OF T HE AGREEMENTS UNDER WHICH IMPUGNED PAYMENTS HAVE BEEN MADE, THE PAYMENTS HAVE BEEN MADE FOR THE SERVICES OF TRANSMISSION OF ELECTRICITY AND NOT THE USE OF T RANSMISSION WIRES PER SE. IT IS A SIGNIFICANT FACT THAT THESE TRANSMISSION LINES ARE NOT ONLY BEING USED FOR TRANSMISSION OF ELECTRICITY TO THE ASSESSEE BUT ALS O FOR TRANSMISSION TO ELECTRICITY TO VARIOUS OTHER ENTITIES. THE TRANSMISSION LINES CONT INUE TO BE NOT ONLY UNDER CONTROL AND POSSESSION OF THE PGCIL IN LEGAL TERMS, BUT, WH AT IS MORE IMPORTANT, THESE TRANSMISSION LINES ARE EFFECTIVELY IN THE CONTROL O F PGCIL, WITHOUT ANY INVOLVEMENT OF THE ASSESSEE IN ACTUAL OPERATIONS OF THE SAME. O N THESE FACTS, IN OUR HUMBLE UNDERSTANDING, THE ASSESSEE HAS MADE THE PAYMENTS F OR TRANSMISSION OF ELECTRICITY IN WHICH TRANSMISSION LINES HAVE BEEN USED RATHER THAN FOR THE USE OF TRANSMISSION LINES PER SE . THE PAYMENTS COULD BE SAID TO HAVE BEEN MADE FOR 'THE USE OF TRANSMISSION LINES' IN A CASE IN WHICH THE OBJECT O F CONSIDERATION FOR WHICH PAYMENTS ARE MADE WAS THE USE OF TRANSMISSION LINES SIMPLICTOR , AND SUCH A USE BY THE ASSESSEE DOES NOT EXTEND BEYOND THE TRANSMISSIO N OF ELECTRICITY THROUGH SUCH LINES IN THE SENSE THAT THE SAME TRANSMISSION LINES CONTINUE TO BE IN THE CONTROL OF PGCIL FOR TRANSMISSION OF ELECTRICITY FOR OTHER ENT ITIES AND FOR ALL PRACTICAL PURPOSES. EVEN AS ELECTRICITY PURCHASED BY THE ASSE SSEE IS TRANSMITTED TO THE ASSESSEE FROM THE NTPC BUSBAR TO ITS LANDING POINTS , THE SAME TRANSMISSION LINES CONTINUE TO BE ENGAGED IN SIMILAR TRANSMISSION OF E LECTRICITY FOR OTHER ENTITIES AND THE ASSESSEE HAS NO SAY IN THE MANNER IN WHICH SUCH TRANSMISSION LINES CAN BE CONTROLLED AND USED BY THE PGCIL. UNDOUBTEDLY, FOR THE PURPOSE OF AN ARRANGEMENT BEING TERMED AS IN THE NATURE OF RENT FOR THE PURPO SE OF SECTION 194-I, THE 'CONTROL' ITA. N0S.3526/DEL /2013, IT A.NO.3527/DEL/2013 ITA.NO .3528/DEL/2013 ITA NO. 3529/DEL/2013 ITA NO . 3530/DEL/2013 9 AND 'POSSESSION', IN LEGAL TERMS, OF AN ASSET MAY N OT NOT NEEDED TO BE WITH THE PERSON BENEFITING FROM THE ASSET IN QUESTION, IT IS A COND ITION PRECEDENT FOR INVOKING SECTION 194 I THAT THE ASSET, FOR THE USE OF WHICH THE PAYMENT IN QUESTION IS MADE, SHOULD HAVE SOME ELEMENT OF ITS CONTROL BY THE ASSE SSEE. HERE IS A CASE IN WHICH THE ASSESSEE HAS NO CONTROL OVER THE OPERATIONS OF THE TRANSMISSION LINES, AND ALL THAT HE GETS FROM THE ARRANGEMENTS IS THAT HE CAN DRAW THE ELECTRICAL POWER PURCHASED FROM PGCIL'S TRANSMISSION LINES IN AN AGREED MANNER. 16. WHILE ON THE ISSUE OF DISTINCTION BETWEEN USE OF A N ASSET AND BENEFIT FROM AN ASSET, WE MAY USEFULLY REFER TO THE FOLLOWING DISTI NCTION BROUGHT OUT BY THE KARNATAKA HIGH COURT BETWEEN LEASING OUT OF EQUIPME NT AND THE USE OF EQUIPMENT BY ITS CUSTOMER. THIS WAS DONE IN THE CASE OF LAKSHMI AUDIO VISUAL INC. V. ASSTT. COMMR. OF COMMERCIAL TAXES [2001] 124 STC 426 (KAR.), WHICH HAS BEEN FOLLOWED BY HON'BLE DELHI HIGH COURT IN THE CASE OF ASIA SATELLITE TELECOMMUNICATIONS CO. LTD. V. DIT [2011] 332 ITR 340 / 197 TAXMAN 263 / 9 TAXMANN.COM 168 , IN THE FOLLOWING TERMS : '9. THUS IF THE TRANSACTION IS ONE OF LEASING/HIRIN G/LETTING SIMPLICITER UNDER WHICH THE POSSESSION OF THE GOODS, I.E., EFFECTIVE AND GENERAL CONTROL OF THE GOODS IS TO B E GIVEN TO THE CUSTOMER AND THE CUSTOMER HAS THE FREE DOM AND CHOICE OF SELECTING THE MANNER, TIME AND NATURE OF USE AND ENJOYMENT, T HOUGH WITHIN THE FRAMEWORK OF THE AGREEMENT, THEN IT WOULD BE A TRANSFER OF TH E RIGHT TO USE THE GOODS AND FALL UNDER THE EXTENDED DEFINITION OF 'SALE'. ON THE OTH ER HAND, IF THE CUSTOMER ENTRUSTS TO THE ASSESSEE THE WORK OF ACHIEVING A CE RTAIN DESIRED RESULT AND THAT INVOLVES THE USE OF GOODS BELONGING TO THE ASSESSEE AND RENDERING OF SEVERAL OTHER SERVICES AND THE GOODS USED BY THE ASSESSEE TO ACHI EVE THE DESIRED RESULT CONTINUE TO BE IN THE EFFECTIVE AND GENERAL CONTROL OF THE A SSESSEE, THEN, THE TRANSACTION WILL NOT BE A TRANSFER OF THE RIGHT TO USE GOODS FALLING WITHIN THE EXTENDED DEFINITION OF 'SALE'. LET ME NOW CLARIFY THE POSITION FURTHER, WI TH AN ILLUSTRATION WHICH IS A VARIATION OF THE ILLUSTRATION USED BY THE ANDHRA PR ADESH HIGH COURT IN THE CASE OF RASHTRIYA ISPAT NIGAM LTD. V. CTO . ( I ) A CUSTOMER ENGAGES A CARRIER (TRANSPORT OPERATOR) TO TRANSPORT ONE CONSIGNMENT (A FULL LORRY LOAD) FROM PLACE A TO B, FOR AN AGREED CONSIDERATION WHICH IS CALLED FREIGHT CHARGES OR LO RRY HIRE. THE CARRIER SENDS ITS LORRY TO THE CUSTOMER'S DEPOT, PICKS UP THE CON SIGNMENT AND PROCEEDS TO THE DESTINATION FOR DELIVERY OF THE CONSIGNMENT. TH E LORRY IS USED EXCLUSIVELY FOR THE CUSTOMER'S CONSIGNMENT FROM THE TIME OF LOA DING, TO THE TIME OF UNLOADING AT DESTINATION. CAN IT BE SAID THAT RIGHT TO USE OF THE LORRY HAS BEEN TRANSFERRED BY THE CARRIER TO THE CUSTOMER ? THE AN SWER IS OBVIOUSLY IN THE NEGATIVE, AS THERE IS NO TRANSFER OF THE 'USE OF TH E LORRY' FOR THE FOLLOWING REASONS : (I) THE LORRY IS NEVER IN THE CONTROL, LE T ALONE EFFECTIVE CONTROL OF THE CUSTOMER; (II) THE CARRIER DECIDES HOW, WHEN AN D WHERE THE LORRY MOVES TO THE DESTINATION, AND CONTINUES TO BE IN EFFECTIV E CONTROL OF THE LORRY; (III) THE CARRIER CAN AT ANY POINT (OF TIME OR PLACE) TRA NSFER THE CONSIGNMENT IN THE LORRY TO ANOTHER LORRY; OR THE CARRIER MAY UNLOAD T HE CONSIGNMENT EN ROUTE IN ITA. N0S.3526/DEL /2013, IT A.NO.3527/DEL/2013 ITA.NO .3528/DEL/2013 ITA NO. 3529/DEL/2013 ITA NO . 3530/DEL/2013 10 ANY OF HIS GODOWNS, TO BE PICKED UP LATER BY SOME O THER LORRY ASSIGNED BY THE CARRIER FOR FURTHER TRANSPORTATION AND DELIVERY AT DESTINATION. ( II ) ON THE OTHER HAND, LET US CONSIDER THE CASE OF A CUSTOMER (SAY A FACTORY) ENTERING INTO A CONTRACT WITH THE TRANSPORT OPERATO R, UNDER WHICH THE TRANSPORT OPERATOR HAS TO PROVIDE A LORRY TO THE CU STOMER, BETWEEN THE HOURS 8 A.M. TO 8 P.M. AT THE CUSTOMER'S FACTORY FOR ITS USE, AT A FIXED HIRE PER DAY OR HIRE PER KM. SUBJECT TO AN ASSURED MINIMUM, FOR A PERIOD OF ONE MONTH OR ONE WEEK OR EVEN ONE DAY; AND UNDER THE CONTRACT, T HE TRANSPORT OPERATOR IS RESPONSIBLE FOR MAKING REPAIRS APART FROM PROVIDING A DRIVER TO DRIVE THE LORRY AND FILLING THE VEHICLE WITH DIESEL FOR RUNNI NG THE LORRY. THE TRANSACTION INVOLVES AN IDENTIFIED VEHICLE BELONGING TO THE TRA NSPORT OPERATOR BEING DELIVERED TO THE CUSTOMER AND THE CUSTOMER IS GIVEN THE EXCLUSIVE AND EFFECTIVE CONTROL OF THE VEHICLE TO BE USED IN ANY MANNER AS IT DEEMS FIT; AND DURING THE PERIOD WHEN THE LORRY IS WITH THE CUSTOM ER, THE TRANSPORT OPERATOR HAS NO CONTROL OVER IT. THE TRANSPORT OPERATOR REND ERS NO OTHER SERVICE TO THE CUSTOMER. .' 17. IT IS THUS CLEAR THAT IN A SITUATION IN WHICH THE PAYMENT IN MADE FOR THE USE OF AN ASSET SIMPLICITER, WHETHER WITH CONTROL AND POSS ESSION IN ITS LEGAL SENSE OR NOT, THE PAYMENT COULD BE SAID TO BE FOR THE USE OF AN ASSET. HOWEVER, IN A SITUATION IN WHICH THE PAYMENT IS MADE ONLY FOR THE PURPOSE A SPECIFIC ACT, I.E. POWER TRANSMISSION IN THIS CASE, AND EVEN IF AN ASS ET IS USED IN THE SAID PROCESS, THE PAYMENT CANNOT BE SAID TO BE FOR THE USE OF AN ASSET. WHEN CONTROL OF THE ASSET (TRANSMISSION LINES IN THE PRESENT CASE) ALWA YS REMAINS WITH THE PGCIL, ANY PAYMENT MADE TO THE PGCIL FOR TRANSMISSION OF P OWER ON THE TRANSMISSION LINES AND INFRASTRUCTURE OWNED CONTROLLED AND IN PH YSICAL POSSESSION OF PGCIL CAN BE SAID TO HAVE BEEN MADE FOR 'THE USE OF ' THE SE TRANSMISSION LINES OR OTHER RELATED INFRASTRUCTURE. VIEWED IN THIS PERSPECTIVE, SECTION 194 I HAS NO APPLICATION SO FAR AS THE IMPUGNED PAYMENTS FOR TRA NSMISSION OF ELECTRICITY IS CONCERNED. FOR THIS SHORT REASON ALONE THE IMPUGNED DEMANDS MUST BE HELD TO UNSUSTAINABLE IN LAW. 9. ON DUE CONSIDERATION THE ORDER OF THE C OORDINATE BENCH IN THE ASSESSEES OWN CASE IN ASSESSMENT YEAR 2005-06, AND 2006-07 AS WELL AS IN THE CASE CHHATTISGARH STATE ELECTRICITY BOARD , WE ARE OF THE VIEW THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS A PPRECIATED THE ITA. N0S.3526/DEL /2013, IT A.NO.3527/DEL/2013 ITA.NO .3528/DEL/2013 ITA NO. 3529/DEL/2013 ITA NO . 3530/DEL/2013 11 CONTROVERSY IN RIGHT PROSPECTIVE AND NO INTERFERENC E IS CALLED FOR. THEREFORE, ITA NO. 3526,3528,3629,3530 ARE DISMISSE D. 10. IN ITA NO. 3527 IN THIS APPEAL REVENUE IS IMPUGNING DELETION OF PENALTY AMOUNTING TO RS. 59271691 IMPOSED U/S 27 0 (1) C OF THE ACT. SECTION 271 (1) (C) PROVIDES ; IF THE ASSESSING OFFICER OR THE COMMISSIONER (APP EAL) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDING UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) XXXXXX (B) XXXXXX (C) HAS CONCEALED THE PARTICULARS OF HIS INCOM E OR FURNISHED IN ACCURATE PARTICULARS OF SUCH INCOME. (D) XXXXXX HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY O F PENALTY -: (I) XXXXXX ; (II) XXXXXX ; (III) IN THE CASE REFERRED TO IN CLAUSE C OR CLAUSE D, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN , BUT SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOU GHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INC OME OR THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME ; THUS BARE PERUSAL OF THE SECTION SUGGESTS THAT I N CASE AN ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHE D INACCURATE PARTICULARS, THEN, HE MAY BE DIRECTED TO PAY BY WAY OF PENALTY AN AMOUNT WHICH IS EQUIVALENT TO THE TAXES SOUGHT TO B E EVADED OR THREE TIMES OF THE SUCH TAXES. IT IS BROUGHT TO OUR NOTIC E THAT ADDITION IN ITA. N0S.3526/DEL /2013, IT A.NO.3527/DEL/2013 ITA.NO .3528/DEL/2013 ITA NO. 3529/DEL/2013 ITA NO . 3530/DEL/2013 12 ASSESSMENT YEAR 2006-07 HAS BEEN DELETED BY THE TRI BUNAL. THEREFORE THERE IS NO LIABILITY UPON THE ASSESSEE TO PAY TAXE S ON THE ADDITIONS MADE THEREFORE, IT CANNOT BE ASKED TO PAY PENALTY E QUIVALENT TO TAXES SOUGHT TO BE EVADED. ONCE THERE ARE NO TAXES SOUGHT TO BE EVADED THEN, THERE CANNOT BE ANY PENALTY U/S 271 (1) C. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY HELD THAT NO PENAL TY IS IMPOSABLE UPON THE ASSESSEE BECAUSE ADDITIONS HAVE ALREADY BE EN DELETED. IN VIEW OF ABOVE DISCUSSION, THERE IS NO MERIT IN THE APPEAL OF REVENUE, IT IS DISMISSED. 10. IN THE RESULT ALL THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 MAY, 2014. SD/- SD/- (S.V.MEHROTRA) (R.P.YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 9 MAY, 2014 B . RUKHAIYAR COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT (ITAT), NEW DELHI