ITO, UDAIPUR V. M/s. RSWM Ltd., BANSWARA

ITA 36/JODH/2010

• Counselvise Citation: 3623314 RSA 2010
• Duration Of Justice: 3 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-11-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 19-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Advance ruling
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO.35 & 36/JODH/2010 (A.YS. 2008-09 & 2009-10) ITO(TDS), VS. M/S. RSWM LTD., UDAIPUR. KHARIGRAM GULABPURA, UNIT POWER PLANT DIVISION, VILLAGE MORDI, DISTRICT BANSWARA. TAN NO. JDHP03967F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MUKESH SONI DEPARTMENT BY : SHRI N.A. JOSHI- D.R. DATE OF HEARING : 12/11/2013. DATE OF PRONOUNCEMENT : 13/11/2013. O R D E R PER N.K.SAINI, A.M THESE TWO APPEALS BY THE DEPARTMENT ARE DIRECTED A GAINST THE COMMON ORDER DATED 06/10/2009 OF LD. CIT (A), UDAIP UR. SINCE THE ISSUE INVOLVED IN THESE APPEALS, IS COMMON AND WERE HEARD TOGETHER, THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR T HE SAKE OF CONVENIENCE. 2 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN I.T.A.NO . 35/JODH/2010 FOR THE A.Y. 2008-09:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A), UDAIPUR HAS ERRED IN DELETING THE DEMAND OF RS. 13,14,730/- U/S 201(1) AND RS. 98,445/- U/S 201(1A) HOLDING THA T THE PAYMENTS MADE BY THE ASSESSEE IN RESPECT OF TRANSMISSION CHA NGES AND SLDC CHARGES WERE NOT COVERED UNDER THE PROVISION OF SEC TION 194J OF THE INCOME-TAX ACT, 1961 BUT IS COVERED BY SECTION 194C OF THE SAME ACT. 2. I CRAVE THE INDULGENCE TO AMEND/ALTER, ADD OR DE LETE ANY OF THE GROUND OF APPEAL MENTIONED HEREIN ABOVE. 3. IN I.T.A.NO. 36/JODH/2010 ALSO SIMILAR ISSUE IS RA ISED BY THE DEPARTMENT. THE ONLY DIFFERENCE IS IN THE FIGURES INVOLVED. THE COMMON ISSUE IN THESE APPEALS RELATES TO THE DELETION OF D EMAND RAISED BY THE ASSESSING OFFICER UNDER SECTION 201(1) AND 201(1A) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS ACT, IN SHORT) BY HOL DING THAT PAYMENTS MADE BY THE ASSESSEE IN RESPECT OF TRANSMISSION CHA RGES AND SLDC CHARGES WERE NOT COVERED UNDER THE PROVISIONS OF SECTION 19 4J BUT COVERED UNDER SECTION 194C OF THE ACT. 4. FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSEE WAS ENGAGED IN THE MANUFACTURING OF YARN & FABRICS AND GENERATION OF POWER. THE ASSESSEE ALSO ESTABLISHED TWO THERMAL CAPTIVE P OWER PLANT OF 23 MW EACH FOR CONSUMPTION AND DISTRIBUTION AT ITS OTHER MANUFACTURING UNIT. THE POWER FROM THE GENERATION POINT TO THE CONSUMPT ION POINT WAS 3 TRANSMITTED THROUGH THE TRANSMISSION NETWORK OF RAJ ASTHAN RAJYA VIDHYUT VITARAN NIGAM LTD. (RRVPNL), WHO HAD CHARGED THE TR ANSMISSION CHARGES/ WHEELING CHARGES AND SLDC CHARGES FOR USE OF TRANSM ISSION SYSTEM. THE ASSESSING OFFICER RAISED THE DEMAND BY OBSERVING TH AT THE TAX WAS DEDUCTED AT SOURCE UNDER SECTION 194C OF THE ACT AS AGAINST 194J OF THE ACT. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A), WHO DELETED THE DEMANDS RAISED BY THE ASSES SING OFFICER AND HELD THAT THE PROVISIONS OF CHAPTER XVII B WERE NOT APPL ICABLE IN THIS CASE BY FOLLOWING THE DECISION OF THE ITAT, A BENCH, JAIP UR IN I.T.A.NO. 127 TO 131/JP/ 2009 IN THE CASE OF PRINCIPAL OFFICER, JAIPUR VIDUT VITRAN NIGAM LTD. JAIPUR VS. ITO TDS-2, JAIPUR DATED 30/04/2009. NOW THE DEPARTMENT IS IN APPEAL. 6. LEARNED CIT D.R. SUBMITTED THAT THE VIEW TAKEN BY THE ASSESSING OFFICER WAS SIMILAR TO THE VIEW TAKEN BY THE AUTHORITY FOR ADVANCE RULINGS (IT), NEW DELHI IN THE CASE OF AJMER VIDYUT VITRAN NIGAM LTD., AJMER, THEREFORE, LEARNED CIT(A) WAS NOT JUSTIFIED IN DEL ETING THE DEMAND RAISED BY THE ASSESSING OFFICER. 4 7. IN HIS RIVAL SUBMISSIONS, LEARNED COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THE ORDER PASSED BY THE AUTHORITY FOR ADVANCE RULINGS (SUPRA)) HAS BEEN STAYED BY THE HON'BLE JURISDICTIONAL HIGH COUR T VIDE ORDER DATED 14/03/2013 (COPY OF THE SAID ORDER WAS FURNISHED, W HICH IS PLACED ON RECORD). IT WAS FURTHER STATED THAT THE ISSUE UNDE R CONSIDERATION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE VIDE DEC ISION OF ITAT, JAIPUR A BENCH, JAIPUR IN THE CASE OF JAIPUR VIDYUT VITRAN NIGAM LTD. VS. DCIT (2009) 123 TTJ (JP) 888 (COPY OF THE SAID ORDER WAS FURNISHED, WHICH IS PLACED ON RECORD). 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IT IS NOTICED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS HAS BE EN ADJUDICATED BY THE COORDINATE BENCH OF THE ITAT JAIPUR IN THE CASE OF JAIPUR VIDYUT VITRAN NIGAM LTD. VS. DCIT (SUPRA), WHEREIN IT HAS BEEN HE LD AS UNDER:- AS PER CL. 3 OF THE AGREEMENT ASSESSEE IS ALLOWED THE USER OF THE TRANSMISSION SYSTEM. CLAUSE 5 PROVIDES FOR OPEN ACC ESS TRANSMISSION CAPACITY WHEREBY ANY OTHER CUSTOMER IS ALSO ALLOWED TO USE THE TRANSMISSION LINES FOR LONG-TERM OPEN ACCESS AND SH ORT-TERM OPEN ACCESS. CLAUSE 8 PROVIDES FOR COMPLIANCE OF GRID C ODE AS APPROVED BY THE COMMISSION BOTH BY RVPN AND ASSESSEE AND FURTHE R PROVIDES THAT ALL THE PARTIES SHALL COMPLY WITH THE DIRECTION OF SLDC FOR ENSURING INTEGRATED GRID OPERATION FOR ACHIEVING THE MAXIMUM ECONOMY AND EFFICIENCY IN THE OPERATION OF POWER SYSTEM IN THE STATE. AS PER CLS. 10 AND 12 THE TARIFF FOR TRANSMISSION AND WHEELING AND SLDC CHARGES IS TO BE AS APPROVED BY THE REGULATORY COMMISSION. FROM A LL THESE CLAUSES IT 5 IS CLEAR THAT ALL THE PARTIES INVOLVED WITH GENERAT ION, TRANSMISSION AND DISTRIBUTION OF ELECTRICITY ARE TO COMPLY WITH THE DIRECTION OF SLDC AND THE REGULATORY COMMISSION FOR ACHIEVING THE ECONOMY AND EFFICIENCY IN THE OPERATION OF POWER SYSTEM AND THEREFORE QUESTIO N OF ANY PERSON RENDERING SERVICE TO ANOTHER DOES NOT ARISE. THE OP ERATION AND MAINTENANCE OF TRANSMISSION LINES BY RVPNL AND THE USER OF THESE LINES BY ASSESSEE FOR TRANSMITTING ENERGY DOES NOT RESULT INTO ANY TECHNICAL SERVICE BEING RENDERED TO-THE ASSESSEE. THE TECHNIC AL STAFF OF RVPN BY OPERATING AND MAINTAINING ITS GRID STATION AND TRAN SMISSION LINES SIMPLY DISCHARGE THEIR FUNCTION. THEY DO NOT RENDE R ANY TECHNICAL SERVICE TO THE ASSESSEE. SEC. 1941 WOULD HAVE APPLI CATION ONLY WHEN THE TECHNOLOGY OR TECHNICAL KNOWLEDGE OF A PERSON I S MADE AVAILABLE TO OTHERS AND NOT WHERE BY USING TECHNICAL SYSTEMS, SE RVICES ARE RENDERED TO OTHERS. RENDERING OF SERVICES BY ALLOWING USE OF TECHNICAL SYSTEM IS DIFFERENT THAN CHARGING FEES FOR RENDERING TECHNICA L SERVICES. THE APPLICABILITY OF S. 194J WOULD COME INTO EFFECT ONL Y WHEN BY MAKING PAYMENT OF FEE FOR TECHNICAL SERVICES, ASSESSEE ACQ UIRED CERTAIN SKILL/ KNOWLEDGE/INTELLECT WHICH CAN BE FURTHER USED BY HI M FOR ITS OWN PURPOSE/RESEARCH. WHERE FACILITY IS PROVIDED BY USE OF MACHINE/ROBOT OR WHERE SOPHISTICATED EQUIPMENTS ARE INSTALLED AND OPERATED WITH A VIEW TO EARN INCOME BY ALLOWING THE CUSTOMERS TO AV AIL OF THE BENEFIT BY USER OF SUCH EQUIPMENT, THE SAME DOES NOT RESULT IN THE PROVISION OF TECHNICAL SERVICE TO THE CUSTOMER FOR A FEE. THE AR GUMENTS OF THE- DEPARTMENTAL REPRESENTATIVE THAT HUMAN ELEMENT IS I NVOLVED IN PROVIDING SUCH SERVICE MAKING THE PAYMENT OF WHEELI NG/SLDC CHARGES LIABLE FOR DEDUCTION OF TAX AT SOURCE AS TECHNICAL SERVICE HAS NO MERIT AS THE TECHNICAL SERVICE-IS NOT PROVIDED TO THE PERSON NEL OF THE ASSESSEE. THE CONTENTION OF THE DEPARTMENTAL REPRESENTATIVE T HAT OTHER PERSONS ARE MAKING DEDUCTION AT SOURCE ON SUCH PAYMENT UNDE R S. 194C/194J/194H CANNOT BE ACCEPTED. AS PER THE PAPER S FILED BY THE DEPARTMENT ONLY SOME REPORT/LETTERS HAS BEEN ISSUED BY THE TDS OFFICER REQUIRING THE DEDUCTION OF TAX AT SOURCE ON SUCH PAYMENT. THE FACT THAT H LTD. IS DEDUCTING TAX AT SOURCE UNDER S . 194C IN RESPECT OF PAYMENT OF TRANSMISSION CHARGES TO RVPN CANNOT LAY DOWN THE LAW. THE GIT(A) HAS GIVEN A FINDING THAT THESE PAYMENTS ARE NOT COVERED UNDER S. 194C AGAINST WHICH NO-APPEAL IS FILED BY T HE DEPARTMENT. NO SCIENTIFIC KNOWLEDGE, EXPERIENCE OR SKILL IS MADE A VAILABLE/RENDERED BY RVPN TO THE ASSESSEE. THE ASSESSEE ITSELF HAS ITS O WN ENGINEERS AND 6 TECHNICIANS WHO CONSISTENTLY MONITOR AND SUPERVISE THE FLOW OF THE ELECTRICITY TO ITS SYSTEM AND ULTIMATE SUPPLY TO IT S CUSTOMER. THE FUNCTION OF SLDC AS REGULATOR AND CONTROLLER FOR OP TIMUM SCHEDULING AND DISPATCH OF ELECTRICITY, AND SUPERVISION OVER T HE INTRA-STATE TRANSMISSION SYSTEM IS STATUTORY FUNCTION WHICH IS ALSO ENTRUSTED TO RVPN AND THEREFORE, RVPN BY DISCHARGING SUCH STATUT ORY FUNCTION DOES NOT PROVIDE ANY TECHNICAL SERVICE. THEREFORE THERE IS NO LIABILITY TO DEDUCT TAX AT SOURCE ON PAYMENT OF TRANSMISSION/WHE ELING/SLDC CHARGES UNDER S. 194J OR FOR THAT MATTER UNDER S. 1 94C. 9. SO, BY RESPECTFULLY FOLLOWING THE AFORESAID REFERRE D TO ORDER OF THE ITAT, A BENCH, JAIPUR, WE DO NOT SEE ANY VALID GR OUND TO INTERFERE WITH THE FINDINGS GIVEN BY THE LEARNED CIT(A). ACCORDI NGLY, WE DO NOT SEE ANY MERIT IN THESE APPEALS OF THE DEPARTMENT. 10. IN THE RESULT, APPEALS ARE DISMISSED. (ORDER PRONOUNCED IN THE COURT ON 13 TH NOVEMBER, 2013). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 13 TH NOVEMBER , 2013. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.