ITO (TDS), UDAIPUR V. M/s. Hindustan Zinc Ltd., UDAIPUR

ITA 490/JODH/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4908 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 08-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGAL
• Assessee Lawyers: K SAMPAT
• Keywords: Non-deduction of tax
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NOS. 488 TO 491/JODH/2010 (A.Y. 2006-07 TO 2009-10) THE I.T.O [TDS] VS M/S HINDUSTAN ZINC LI MITED UDAIPUR YASHAD BHAWAN UDAIPUR PAN NO. JDHH 0087 D [APPELLANT] [RESPONDENT] ASSESSEE BY : SHRI K. SAMPAT DEPARTMENT BY : DR. DEEPAK SEHGAL, CIT-DR DATE OF HEARING : 26/08/2013. DATE OF PRONOUNCEMENT : 30/08/2013. O R D E R PER BENCH :- THIS IS A BUNCH OF FOUR APPEALS FILED BY THE REVEN UE FOR A.YS. 2006-07 TO 2009-10 ARISING OUT OF COMMON ORDER OF L D. CIT(A), UDAIPUR DATED 06/07/2010. IN ALL THE ABOVE FOUR APPEALS, IDENTICAL ISSUES ARE 2 INVOLVED, THEREFORE, FOR THE SAKE OF CONVENIENCE, C ONGRUENCE AND BREVITY, WE ARE PROCEEDING TO DECIDE THEM BY THIS C OMMON ORDER. 2. THE MOST RELEVANT AND COMMON FACTS INVOLVED IN A LL THE ABOVE FOUR APPEALS ARE THAT IN THE CASE OF THIS ASSESSEE , NAMELY, HINDUSTAN ZINC LIMITED, A SPOT VERIFICATION IN RESPECT OF TAX DEDUCTED AT SOURCE [TDS] WAS CONDUCTED ON 6.11.2008 AT THE CAPTIVE POW ER PLANT (CPP) OF THE APPELLANT SITUATED AT CHANDERIYA UNIT. IT WAS N OTICED THAT THE ASSESSEE HAD MADE HUGE PAYMENTS ON ACCOUNT OF TRANS MISSION CHARGES, SLDC CHARGES AND WHEELING CHARGES TO M/S. RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR (HEREINAFTER REFERRED T O AS RRVPNL FOR SHORT) BUT DID NOT DEDUCT TAX AT SOURCE ON SUCH PAY MENTS, WHICH WAS REQUIRED TO BE DEDUCTED AS PER PROVISIONS OF THE AC T. THESE PAYMENTS OF TRANSMISSION CHARGES, SLDC CHARGES AND WHEELING CHARGES TO RRVPNL WERE MADE DURING F.YS. 2005-06, 2006-07, 2007-08 AN D 2008-09. THE DETAILS OF SUCH PAYMENTS OF TRANSMISSION CHARGES, S LDC CHARGES AND WHEELING CHARGES MADE IN THE ABOVE F.YS. ARE AS UND ER:- SI. NO. FINANCIAL YEAR AMOUNT OF TRANSMISSION CHARGES AMOUNT OF SLDC CHARGES AMT. OF WHEELING CHARGES TOTAL AMOU NT (RS.) 1 2005 - 06 5,36,85,654 15,89,382 25,04,541 5,77,79,577 2 2006 - 07 6,15,62,623 7,65,278 38,90,128 6,62,18,029 3 2007 - 08 6,06,73,033 9,15,000 25,75,368 6,41,63,401 4 2008 - 09 3,86,96,920 4,60,000 19,91,699 4,11,48,619 TOTAL 2 1,46, 18,230 37,29,660 1,09,61,736 22,93,09,626 3 IT WAS ALSO NOTICED THAT THE ABOVE PAYMENTS MADE DU RING F.YS. 2005- 06, 2006-07, 2007-08 AND 2008-09 THE TAX HAD NOT BE EN DEDUCTED AT ALL WHEREAS THE ASSESSEE IS LIABLE TO DEDUCT TAX AS REQ UIRED TO BE DEDUCTED AS PER PROVISIONS OF SECTION 194J OF THE ACT. HE FU RTHER OBSERVED THAT THE ASSESSEE ENTERED INTO AN AGREEMENT DATED 11.03. 2005 WITH RRVPNL. IT WAS NOTICED THAT THE ASSESSEE WAS MAKING PAYMENTS OF TRANSMISSION CHARGES, SLDC CHARGES AND WHEELING CHA RGES TO RRVPNL FOR TAKING SERVICES OF THIS COMPANY FOR TRANSMISSIO N OF ELECTRICITY THROUGH THE TRANSMISSION SYSTEM OWNED OR OPERATED B Y RRVPNL AS PER TERMS AND CONDITIONS MENTIONED IN THE AGREEMENT. TH E A.O. OBSERVED THAT SINCE THE SERVICES PROVIDED BY RRVPNL ARE TECH NICAL IN NATURE, TAX SHOULD HAVE BEEN DEDUCTED AS PER PROVISIONS OF SECT ION 194J OF THE ACT, THUS THE APPELLANT HAS FAILED TO DEDUCT THE TA X AT SOURCE ON PAYMENTS OF TRANSMISSION CHARGES, SLDC CHARGES AND WHEELING CHARGES TO RRVPNL MADE DURING F.YS. 2005-06, 2006-07, 2007- 08 AND 2008-09 ENTIRELY AND TOTAL OF SUCH PAYMENTS COME TO RS. 22, 93,09,626/-. THE NON- DEDUCTION OF TAX AT SOURCE RECOVERABLE ON THES E PAYMENTS OF RS. 22,93,09,626/- HAS BEEN WORKED AT RS. 1,75,67,890/- U/S. 201(1) AND INTEREST ON SUCH NON DEDUCTION OF TAX AT SOURCE, RE COVERABLE HAS BEEN WORKED OUT AT RS. 32,82,293/- U/S. 201(1A) OF THE A CT. 4 2.1 THE ASSESSEE BEING A LEADING MANUFACTURER OF ZINC AND LEAD, HAS ESTABLISHED A CPP FOR CONSUMPTION OF POWER AT THE C HANDERIYA UNIT AND DISTRIBUTION OF THE POWER INTER ALIA TO OTHER UNITS . THE POWER FROM THE GENERATION POINT TO THE CONSUMPTION POINT IS TRANSM ITTED THROUGH THE TRANSMISSION NETWORK OF RRVPNL. THE ASSESSEE HAS EN TERED INTO A 'SHORT TERM OPEN ACCESS CONNECTION AGREEMENT' FOR T RANSMISSION AND SUPPLY OF POWER ON 11.03.2005 WITH THE RRVPNL FOR T RANSMISSION OF POWER. 2.2 THE RRVPNL HAS BEEN NOTIFIED BY THE GOVT. OF RAJASTHAN AS THE STATE TRANSMISSION UTILITY WHICH IS A DEEMED TRANSM ISSION LICENSEE UNDER THE FIFTH PROVISO TO SECTION 14 OF THE ELECTR ICITY ACT, 2003 FOR UNDERTAKING TRANSMISSION OF ELECTRICITY THROUGH INT RA-STATE TRANSMISSION SYSTEM. RRVPNL IS HAVING THE TR ANSMISSION SYSTEM FOR TRANSMITTING OF ELECTRICITY. THE ASSESSEE HAS E NTERED INTO AN AGREEMENT FOR TRANSMISSION OF THE POWER GENERATED B Y IT THROUGH TRANSMISSION SYSTEM OF RRVPNL. ALL THE RULES OR REG ULATIONS RELATING TO TRANSMISSION OF POWER ARE FRAMED BY THE RAJASTHAN S TATE ELECTRICITY REGULATORY COMMISSION (A REGULATORY BODY FOR REGULA TING THE POWER SECTOR IN THE STATE OF RAJASTHAN CONSTITUTED UNDER THE ELECTRICITY REGULATORY COMMISSION ACT). THE CHARGES FOR UTILIZI NG THE TRANSMISSION 5 SYSTEM OF RRVPNL ARE ALSO DECIDED BY THE RAJASTHAN STATE ELECTRICITY REGULATORY COMMISSION (RERC). RRVPNL GOVERNS ALL TH E INFRASTRUCTURE OF ELECTRIC TRANSMISSION LINES AND ALL GRID UPTO TH E POWER CAPACITY OF 33KV AND CARRIES OUT THE ACTIVITIES OF CONSTRUCTION AND MAINTENANCE OF EHV LINES AND GRID SUB-STATIONS, STATE LOAN DISPATC H CENTRE (SLDC) OPERATIONS, SHARING OF JOINTLY OWNED POWER PROJECTS AND TRANSMISSION OF BULK SUPPLY OF ELECTRICITY. THE INFRASTRUCTURE/T RANSMISSION SYSTEM OWNED BY RRVPNL IS USED FOR TRANSMITTING OR WHEELIN G THE POWER GENERATED BY THE POWER STATIONS SITUATED IN RAJASTH AN, THEREFORE RRVPNL IS CHARGING UNIFORM WHEELING CHARGES- 10% OF THE ENERGY FED INTO THE GRIDS IRRESPECTIVE OF THE DISTANCE FROM GE NERATING STATION. IT IS SPECIFIED THAT AS PER PARA 10 OF POLICY FOR PROMOTI ON OF ELECTRICITY GENERATION FROM WIND, 2003 RRVPNL/DISCOMS WOULD UND ERTAKE TO TRANSMIT ON THEIR GRID THE POWER GENERATED BY THE E LIGIBLE PRODUCER AND MAKE IT AVAILABLE TO SUCH ELIGIBLE PRODUCER WIT HIN THE STATE. SUCH SALE WOULD ATTRACT UNIFORM WHEELING CHARGE OF 10% O F THE ENERGY FED INTO THE GRID, IRRESPECTIVE OF DISTANCE FROM THE GE NERATING STATION. 2.3. IT IS MENTIONED AT PAGE 3 OF THE AGREEMENT OF THE ASSESSEE WITH RRVPNL FOR TRANSMISSION OF POWER THAT RRVPNL SHALL CHARGE THE TRANSMISSION AND WHEELING CHARGES FOR THE USE OF TH E DISTRIBUTION 6 SYSTEM. TRANSMISSION CHARGES FOR TRANSMISSION SYSTE M AND/OR WHEELING CHARGES FOR A DISTRIBUTION SYSTEM AS THE CASE MAY B E CONSTRUCTED FOR EXCLUSIVE USE OF THE OPEN ACCESS CUSTOMER SHALL BE DETERMINED BY RRVPNL AND AJMER DISCOM AS PER TARIFF NORMS APPROVE D BY THE COMMISSION. FURTHER, IT IS MENTIONED AT PAGE 4 OF T HE AGREEMENT THAT IN ADDITION TO TRANSMISSION AND WHEELING CHARGES AS MENTIONED IN THIS AGREEMENT, THE CUSTOMER SHALL ALSO PAY THE SLDC CHA RGES AS DETERMINED BY THE COMMISSION FROM TIME TO TIME. 2.4 THUS THE A.O. OBSERVED THAT THE ASSESSEE WAS MA KING PAYMENTS OF TRANSMISSION CHARGES, SLDC CHARGES AND WHEELING CHARGES TO RRVPNL FOR TAKING SERVICES OF THIS COMPANY FOR TRANSMISSIO N OF ELECTRICITY THROUGH THE TRANSMISSION SYSTEM OWNED OR OPERATED B Y THE RRVPNL AS PER TERMS AND CONDITIONS MENTIONED IN THE AGREEMENT . THE A.O. HAS TREATED THE SERVICES PROVIDED BY RRVPNL IN THE NATU RE OF TECHNICAL SERVICES AND THEREFORE, WAS OF THE OPINION THAT TDS SHOULD HAVE BEEN DEDUCTED AS PER THE PROVISIONS OF SECTION 194J OF T HE ACT. THE ASSESSEE HAS FAILED TO DEDUCT TDS ON PAYMENTS OF TR ANSMISSION CHARGES SLDC CHARGES AND WHEELING CHARGES MADE DURING THE F .Y. 2005-06 TO 2006-07 AND 2007-08 ENTIRELY WHEREAS TOTAL PAYMENTS COME TO RS. 18,81,61,007/-. THE NON-DEDUCTION OF TAX AT SOURCE RECOVERABLE ON 7 THESE PAYMENTS COME TO RS. 1,36,76,466/- U/S 201(1) AND INTEREST THEREON U/S 201(1A) BEING RS. 30,85,605/- 2.5 REGARDING PAYMENTS OF RS. 4,11,48,619/- MADE DU RING THE PERIOD FROM 1.4.2008 TO 31.10.2008, THE ASSESSEE DEDUCTED TDS AS PER THE PROVISIONS OF SECTION 194C OF THE ACT AS AGAINST TH E TAX WHICH SHOULD HAVE BEEN DEDUCTED IN TERMS OF SECTION 194J. THERE FORE, THE SOLE DEDUCTION OF TAX HAS BEEN WORKED OUT AT RS. 38,91,4 24/- RECOVERABLE U/S 201(1) AND RELATED INTEREST CHARGEABLE U/S 201( 1A) COMES TO RS. 1,96,688/-. 3. AFTER GIVING DETAILS REASONS IN HIS ORDER BY TRE ATING THE ASSESSEE AS ASSESSEE IN DEFAULT, SHOW CAUSE NOTICE WAS ISS UED TO THE ASSESSEE U/S 201(1) R.W.S 201(1A) OF THE ACT ON 26.11.2008. THE ASSESSEE REPLIED TO THIS NOTICE THROUGH TWO LETTERS DATED 22 .12.2008 OF EVEN DATE. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE A.O. HAS FINALLY CONCLUDED THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE EXPLANATION MADE IN THESE TWO LETTERS AS COPY OF RELEVANT RETUR N OF INCOME FILED BY THE DEDUCTEE COMPANY, COPY OF INTIMATION U/S 143(1) , COPY OF ASSESSMENT ORDER, CONFIRMATION PROVIDED BY THE DEDU CTEE, ETC WHICH COULD PROVE THAT THE DEDUCTEE HAD INCLUDED PAYMENTS MADE BY THE 8 ASSESSEE IN ITS INCOME AND PAID DUE TAX THEREON OR NOT TAX LIABILITY EXISTED, HAS REJECTED THE CONTENTIONS OF THE ASSESS EE. ACCORDINGLY, THE ASSESSEE WAS HELD LIABLE AS PER SECTIONS U/S 201(1) AND RELATED INTEREST CHARGEABLE U/S 201(1A) OF THE ACT VIDE ORDER DATED 26.12.2008. 3.1 AGGRIEVED BY THIS ORDER, THE ASSESSEE FILED APP EAL BEFORE THE LD. CIT(A) FOR ALL THE FOUR YEARS AND WAS SUCCESSFUL IN GETTING THE DEMAND CREATED U/S 201(1) OF THE ACT AND RELATED INTEREST CHARGEABLE U/S 201(1A) CANCELLED. NOW THE REVENUE IS AGGRIEVED AN D HAS FILED ITS APPEALS FOR ALL THE YEARS AGAINST THIS COMMON ORDER OF THE LD. CIT(A) DATED 6.7.2010. 4. THE GROUNDS RAISED IN EACH APPEAL ARE MUTATIS MU TANDIS IDENTICAL. IN CASE WE EXTRACT GROUNDS TAKEN IN ITA NO. 488/JU/2010 FOR A.Y. 2006-07, IT WILL GIVE A GLIMPSE AND IDEA OF SI MILAR GROUNDS TAKEN IN OTHER A.YS. THEREFORE, WE EXTRACT GROUNDS IN ITA N O. 488/JU/2010 AS UNDER 1) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD CIT (A) WAS JUSTIFIED IN LAW IN HOLDING THAT THE PAYMENTS MADE BY THE ASSESSEE IN THE FORM OF TRANSM ISSION / WHEELING / SLDC CHARGES WERE NOT LIABLE TO BE TAX DEDUCTIONS AT SOURCE U/S 194J OR 194C OF THE I.T. A CT 1961. 9 2) WHETHER ON THE FACTS OF THE CASE AND CIRCUMSTANC ES OF THE CASE, THE LD CIT(A) WAS JUSTIFIED IN LAW, IN NO T ADJUDICATING THE FINDING OF THE AO THAT, ALTERNATIV ELY, IF SEC 194J IS NOT FOUND TO BE APPLICABLE, THEN THE PR OVISIONS OF SECTION 194C APPLIES, UNDER WHICH THE ASSESSEE W AS ALREADY MAKING DEDUCTIONS ON SUCH PAYMENTS. 3) WHETHER ON THE FACTS OF THE CASE AND CIRCUMSTANC ES OF THE CASE, THE LD CIT(A) WAS JUSTIFIED IN LAW, IN HO LDING THAT, THE ASSESSEE WAS NOT LIABLE TO PAY INTEREST U /S 201(1 A) OF THE INCOME TAX ACT 1961 BECAUSE THERE WAS NO LIABILITY OF PAYMENT OF TAX ON THE INCOME OF THE DE DUCTEE. 4) IT IS PRAYED THAT THE ORDER OF THE ASSESSING OFF ICER AND THE DEMANDS, CREATED CONSEQUENTLY, ARE RESTORED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AS ADVANCED AND HAVE CAREFULLY PERUSED THE ENTIRE MATERIAL ON RECORD INC LUDING THE PAPER BOOK AND WRITTEN SUBMISSIONS FILED BEFORE US. THE REPLY FILED BY THE ASSESSEE TO THE A.O. THROUGH TWO LETTERS IS VERY RE LEVANT AND WE EXTRACT THEM VERBATIM FOR READY REFERENCE: THIS HAS REFERENCE TO YOUR SHOW CAUSE NOTICE NO ITO TDS/UDR/2008-09/1520 DATED 26.11.2008 RECEIVED BY U S ON 03.12.2008 REQUIRING US TO SHOW CAUSE FOR NON DEDUC TION, OF TDS ON TRANSMISSION CHARGES, SLDC CHARGES AND WH EELING 10 CHARGES DURING FT 2005-06, 2006-07 AND 2007-08 AND FURTHER SHOW CAUSE AS TO WHY THE TDS IN FY 2008-09 IS DEDUCTED U/S 194C INSTEAD OF 194]. OUR REPLY IS AS UNDER: FACT OF THE MATTER: HINDUSTAN ZINC LIMNED SIGNED AN AGREEMENT WITH RRVP NL FOR OPEN ACCESS ON 11-3-05. AS PER SAID AGREEMENT C LAUSE 'CHARGES FOR OPEN ACCESS' (STATED AT PAGE 3) WE ARE REQUIRED TO PAY FOLLOWING CHARGES TO RRVPNL/AVVL. (A) TRANSMISSION CHARGES : TRANSMISSION CHARGES ARE FIXED CHARGES (BASED ON OA CONTRACT DEMAND) PARABLE EVERY MONTH TO RRYPNL FOR USE OF THEIR TRANSMISSION LINE/'TRANSMISSION SYSTEM. (B) WHEELING CHARGES CHARGED BY AVVL EVERY MONTH @ RS 0.01 PER UNIT ON A CTUAL WHEELING OF UNITS. THE SAID AMOUNT IS PAID ALONG WI TH MONTHLY POWER BILL TO AVVL. (C) SLDC CHARGES SLDC CHARGES CHARGED BY RRVPNL FOR SCHEDULING AND S YSTEM OPERATING BY SLDS (STATE LOAD DISPATCH CENTER) 11 RRVPNL, WHICH OWNS AND MANAGES THE TRANSMISSION LIN ES OF STATE ELECTRICITY BOARD IN RAJASTHAN STATE, GIVES O PEN ACCESS FOR TRANSMISSION OF POWER GENERATED BY OUR C OMPANY FOR UTILIZATION IN COMPANY'S ANOTHER UNITS SITUATED AT RAMPURA AGUCHA MINES, RAIPURA DANBA MINES AND OTHER LOCATIONS. THESE TRANSMISSION LINES ARE NOT LAID DO WN EXCLUSIVELY FOR OUR COMPANY. THERE IS SUCH CLAUSE I N THE AGREEMENT WHICH PREVENTS THE RRVPNL TO ALLOW ANY OT HER POWER GENERATING ENTITY TO USE THE TRANSMISSION LIN ES. IF ANY OTHER NEIGHBORING ENTITY IN CHANDERIYA WISHES T O USE THE OPEN ACCESS SYSTEM OF RRVPNL TO TRANSFER THE PO WER TO ANOTHER ENTITY IT CAN VERY WELL DO SO. THE CHARGES FOR SUCH UTILIZATION IS GOVERNED BY RAJ ASTHAN STATE ELECTRICITY REGULATORY COMMISSION AND NOT CON TROLLED BY OUR COMPANY IN ANY MANNER. THESE TARIFFS ARE UNI FORM TO EVERYONE USING THEIR INFRASTRUCTURE AND THE COMP ANY DOESN'T HAVE ANY SAY IN THE SAME. PERUSAL OF THE LAST PARA OF PAGE 1 OF THE SAID SHOW CAUSE NOTICE READS AS UNDER: 'FURTHER TDS ON PAYMENTS OF RS 4,11,48,619/- MADE D URING THE PERIOD FROM 01.04.2008 TO 31.10.2008 HAS BEEN M ADE ONLY UNDER SECTION 194C OF THE ACT, INSTEAD OF SECT ION 194J OF THE ACT. THUS THE TDS ON PAYMENT OF RS 4.11,48,6 19/- MADE DURING CURRENT YEAR IS NOT MADE AT APPLICABLE RATE AS PER SECTION 194I OF THE ACT' 12 OUR SUBMISSION IN THIS REGARD IS AS UNDER : THE WORD 'FEE FOR TECHNICAL SERVICE' HAS NOT BEEN D EFINED IN SECTION 194J. EXPLANATION (B) TO THAT SECTION PR OVIDES THAT EXPRESSION SHALL HAVE THE SAME MEANING AS IN EXPLANATION. 2 TO CLAUSE (VII) OF SECTION 9(1) OF T HE ACT WHICH READS AS UNDER: FOR THE PURPOSE OF THIS CLAUSE, FEES FOR TECHNICAL SERVICES MEANS ANY CONSIDERATION (INCLUDING ANY LUMP SUM CONSIDERATION) FOR THE RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICE (INCLUDING THE PRO VISION OF SERVICES OF TECHNICAL OR OTHER PERSONNEL) BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBL Y, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME OF THE RECIPIEN T CHARGEABLE UNDER THE HEAD SALARIES.' AS PER ABOVE, CONSIDERATION PAID TOR RENDERING OF A NY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICE, AS AL SO THE CONSIDERATION PAID FOR THE PROVISION OF SERVICE OF TECHNICAL OR OTHER PERSONNEL, WOULD BE REGARDED AS FEE FOR TE CHNICAL SERVICE. THE TERM 'FEE FOR TECHNICAL SERVICE IS REQ UIRED TO BE UNDERSTOOD IN THE CONTEXT IN WHICH IT IS USED. I T COULD ONLY BE MEANT TO COVER SUCH THINGS TECHNICAL AS ARE CAPABLE OF BEING PROVIDED BY WAY OF SERVICE FOR A FEE. THE POPULAR MEANING ASSOCIATED WITH 'TECHNICAL IS INVOLVING OR CONCERNING APPLIED AND INDUSTRIAL SCIENCES. IN THE MODERN 13 DAY WORLD, ALMOST EVERY FACET OF ONE'S LIFE IS LINK ED TO SCIENCE AND TECHNOLOGY IN AS MUCH AS NUMEROUS THING S USED OR RELIED UPON IN EVERY DAY S LIFE IS THE RESULT OF SCIENTIFIC AND TECHNOLOGICAL DEVELOPMENT. EVERY INSTRUMENT OR GADGET THAT IS USED TO MAKE LIFE EASIER IS THE RESU LT OF SCIENTIFIC INVENTION OR DEVELOPMENT AND INVOLVES TH E USES OF TECHNOLOGY. ON THAT SCORE, EVERY PROVIDER OF INS TRUMENT OR FACILITY, USED BY A PERSON CANNOT BE REGARDED AS PROVIDING TECHNICAL SERVICE. HENCE MERE PAYMENT OF CHARGES FOR USE OF STANDARD FACILITY AVAILABLE TO A LL THOSE WILLING TO PAY FOR IT DOES NOT AMOUNT TO BE A FEE F OR TECHNICAL SERVICES. THE EXPRESSION ''FEES FOR TECHNICAL SERVICES MEANS ANY CONSIDERATION FOR RENDERING OF ANY MANAGERIAL, TECH NICAL OR CONSULTANCY SERVICES. HERE THE WORD 'TECHNICAL' IS PRECEDED BY THE WORD 'MANAGERIAL' AND SUCCEEDED BY THE WORD 'CONSULTANCY. SINCE THE EXPRESSION 'TECHNICAL SERVI CES' IS NOT CLEAR, RULE OF NOSCITUR A SOCIIS IS APPLICABLE WHIC H STATES THAT WHERE TWO OR MORE WORDS WHICH ARE SUSCEPTIBLE OF ANALOGOUS MEANING ARE COUPLED TOGETHER, THAT ARE UNDERSTOOD TO BE USED IN THEIR COGNATE SENSE. THEY TAKE, AS IT WERE, THEIR COLOUR FROM EACH OTHER, THE MEANING OF THE MORE GENERAL BEING RESTRICTED TO A SENSE ANALOGOUS TO THAT OF LESS GENERAL. 14 HENCE THE WORD 'TECHNICAL' WOULD TAKE COLOUR FROM W ORDS 'MANAGERIAL'' AND 'CONSULTANCY'. THE WORD MANAGERIA L MEANS PERTAINING TO, OR CHARACTERISTIC OF MANAGER. THE WORD MANAGER MEANS A PERSON WHOSE OFFICE IS TO MANA GE AN ORGANIZATION, BUSINESS ESTABLISHMENT OR PART OF ONE. IT IS CLEAR THAT MANAGERIAL SERVICE DEFINITELY REQUIRES H UMAN ELEMENT. THE WORD 'CONSULTANCY' MEANS WORK OR POSITION OF CONSULTANT. THE WORD CONSULTANT IS DERIVED FROM WOR D CONSULT WHICH ENTAILS DELIBERATIONS, CONSIDERATION CONFERRING ABOUT OR UPON A MATTER. THE WORD 'CONSUL T' MEANS TO SEEK COUNSEL OR PROFESSIONAL OPINION FROM. IT IS OBVIOUS THE SERVICE OF CONSULTANCY ALSO NECESSARILY ENTAILS HUMAN INTERVENTION. IT IS APPARENT FROM THE ABOVE THAT BOTH MANAGERIAL AND CONSULTANCY INVOLVES HUMAN ELEMENT. CONSEQUENTLY APPLYING THE RULE OF NOSCITUR A SOCIIS, THE WORD TE CHNICAL WOULD ALSO HAVE TO BE CONSTRUED AS INVOLVING A HUMA N ELEMENT. IN OUR CASE, WE ARE USING TRANSMISSION LINES OF RRY PXL, WHICH ARE MERE SOPHISTICATED MACHINES AND EQUIPMENT S AND DOES NOT INVOLVE HUMAN ELEMENT AT ALL. HENCE TH ERE CANNOT BE ANY TECHNICAL SERVICES RENDERED. 15 THE ABOVE INTERPRETATION HAS BEEN SUPPORTED BY HON' BLE HIGH COURT OF DELHI IN CASE OF CIT VS BHARTI CELLUL AR LTD, ESCOTEL MOBILE COMMUNICATIONS LTD AND HUTCHISON ESS AR TELLECOM LTD 220 CTR 258 WHERE IT WAS HELD WHEN WE ARE REQUIRED TO INTERPRET THE EXPRESSION TECHNICAL SERVICE, THE INDIVIDUAL MEANING OF THE WORDS TECHNICAL AND SERVICE HAVE TO SHED AND ONLY T HE MEANING OF WHOLE EXPRESSION TECHNICAL- SERVICES HAS TO BE SEEN. MOREOVER, THE EXPRESSION TECHNICAL SERVICE IS NOT TO BE CONSTRUED IN THE ABSTRACT AND GENERAL SENSE BUT IN THE NARROWER SENSE AS CIRCUMSCRIBED BY THE EXPRESSIONS MANAGERIAL SERVICE AND CONSULTANCY SERVICE AS APPEARING IN EXPLANATION 2 TO SECTION 9(1)(VI) OF THE SAID ACT. CONSIDERED IN THIS LIGHT THE EXPRESSION TECHNICAL SERVICE WOULD HAVE REFERENCE TO ONLY TECHNICAL SERVICE RENDERED BY A HUMAN. IT WOULD NOT INCLUDE ANY SERVICE PROVIDED B Y MACHINES OR ROBOTS. REFERENCE IS INVITED TO LANDMARK DECISION OF MADRAS HIGH COURT IN THE CASE OF SKYCELL COMMUNICATION VS DCIT REPORTED AT 251 ITR 53. IN THIS CASE IT WAS HELD TH AT WHEN A PERSON DECIDES TO SUBSCRIBE TO A CELLULAR TELEPHONE SERVICE IN ORDER TO HAVE A FACILITY OF BEING ABLE TO COMMUN ICATE WITH OTHERS, HE DOES NOT CONTRACT TO RECEIVE TECHNI CAL SERVICE. WHAT HE DOES AGREE IS TO PAY FOR USE OF TH E AIRTIME FOR WHICH HE PAYS THE CHARGE. THE FACT THAT THE TEL EPHONE 16 SERVICE PROVIDER HAS INSTALLED SOPHISTICATED TECHNI CAL EQUIPMENT IN THE EXCHANGE TO ENSURE CONNECTIVITY TO ITS SUBSCRIBER IS NOT CONCERNED WITH THE COMPLEXITY OF THE EQUIPMENT INSTALLED IN THE EXCHANGE, OR THE LOCATIO N OF THE BASE STATION. ALL THAT HE WANTS IS FACILITY OF USIN G THE TELEPHONE WHEN HE WISHES SO AND BEING ABLE TO GET CONNECTED TO THE PERSON AT THE NUMBER TO WHICH HE D ESIRES TO BE CONNECTED. WHAT APPLIES TO CELLULAR MOBILE TELEPHONE IS ALSO APPLICABLE TO FIXED TELEPHONE SER VICE, FOR THE PURPOSE OF SECTION 194J NEITHER SERVICE CAN BE REGARDED AS TECHNICAL SERVICE. FURTHER IT IS ALSO SUBMITTED THAT WHEN A PERSON HIR ES A TAXI TO MOVE FROM ONE PLACE TO ANOTHER, HE USES A PRODUC T OF SCIENCE AND TECHNOLOGY, VIZ. AN AUTOMOBILE. IT CANN OT ON THAT GROUND BE THAT THE TAXI DRIVER WHO CONTROLS, T HE VEHICLE AND MONITORS THE MOVEMENT IS RENDERING A TECHNICAL SERVICE. SIMILARLY THE ELECTRICITY SUPPLI ES TO A CONSUMER CANNOT ON THE GROUND THAT GENERATORS ARE U SED TO GENERATE ELECTRICITY, TRANSMISSION LINES TO CARRY T HE POWER, TRANSFORMERS TO REGULATE THE FLOW OF CURRENT, METER S TO MEASURE THE CONSUMPTION, BE REGARDED AS AMOUNTING T O PROVISIONS OF TECHNICAL SERVICE TO THE CONSUMERS. WE WOULD LIKE TO PLACE HEREUNDER THOUGH AT THE COST OF REPETITION THAT WE ARE MERELY UTILIZING THE SYSTEM FOR TRANSMISSION OF POWER LAID DOWN BY RRPNL IN CONSIDE RATION OF CERTAIN FEE. WE ARE IN NO WAY MAKING PAYMENT FO R 17 GETTING ANY TECHNICAL SERVICE AS NONE EXISTS. IT IS NONE OF OUR BUSINESS TO LOOK AS TO SYSTEM OF TRANSMITTING P OWER AS WE ARE NOT IN THIS BUSINESS. MERE COLLECTION OF CHA RGES FOR STANDARD FACILITY DOES NOT TANTAMOUNT TO TECHNICAL SERVICE AND PROVISIONS OF SECTION 194J OF THE ACT ARE NOT A PPLICABLE AS DULY SUPPORTED BY THE DECISION HELD IN CASE OF S KYCELL COMMUNICATION MENTIONED ABOVE. REPLY 2: IN CONTINUANCE OF OUR LETTER DATED DEC 22, 2008 AND WITHOUT PREJUDICE TO THE REASONS AND JUSTIFICATIONS MENTIONED THEREIN REGARDING NON DEDUCTION/SHORT DEDUCTION OF TDS, WE HEREBY SUBMIT THAT TDS IS A TRANSITORY TAX. IT IS A MODE OF RECOVERY AND COLLEC TION OF TAX UNDER CHAPTER XVII OF THE ACT, THE TAX DEDUCTED AT SOURCE BY PAYER IS ALLOWED CREDIT IN THE HANDS OF T HE PAYEE. IT IS FOR THIS REASON THAT W.E.F 01. 06. 200 3 AN EXPLANATION IS PROVIDED IN SECTION 191 WHICH EXPLAI NS AS UNDER: 'EXPLANATION - FOR THE REMOVAL OF DOUBTS IT IS HERE BY DECLARED THAT ANY PERSON REFERRED TO IN SECTION 200 AND IN THE CASES REFERRED TO IN SECTION 194, THE PRINCIPAL OFFICER AND THE COMPANY TO WHICH HE IS THE PRINCIPAL OFFICE R DOES NOT DEDUCT THE WHOLE OR ANY PART OF THE TAX AND SUC H TAX HAS NOT BEEN PAID BY THE ASSESSEE DIRECT THEN, SUCH PERSON, THE PRINCIPAL OFFICER AND THE COMPANY, SHALL, WITHO UT 18 PREJUDICE TO ANY OTHER CONSEQUENCES WHICH HE OR IT MAY OCCUR, BE DEEMED TO BE AN ASSESSEE IN DEFAULT AS RE FERRED TO IN SUB SECTION (1) OF SECTION 201 IN RESPECT OF SUCH TAX.' FROM THE EXPLANATION IT IS AMPLY CLEAR THAT THE PRI NCIPAL OFFICER IS DEEMED TO BE AN ASSESSEE IN DEFAULT U/S 20 1(1 A) ONLY WHEN HE DOES NOT DEDUCT WHOLE OR ANY PART OF T AX AND SUCH TAX HAS NOT BEEN PAID BY THE ASSESSEE DIRECT. CONVERSELY WHERE RECIPIENT HAS PAID TAX, THE PRINCI PAL OFFICER SHALL NOT BE HELD TO BE ASSESSEE IN DEFAULT FOR NON DEDUCTION OF TAX AT SOURCE. ATTENTION IS DRAWN TO CBD'T CIRCULAR DATED 29.01,19 91 WHEREIN IT IS MENTIONED THAT NO DEMAND SHOULD BE CR EATED U/'S 201(1) IF THE DEDUCTOR HAS SATISFIED THE OFFIC ER IN CHARGE OF TDS THAT TAXES DUE HAS BEEN PAID BY THE DEDUCTEE ASSESSEE. FURTHER ATTENTION IS DRAWN TO FOLLOWING CASE LAWS W HICH SUPPORTS OUR SUBMISSION THAT WHERE TAX HAS ALREADY BEEN PAID BY THE RECIPIENT OF INCOME IT IS NOT JUSTIFIED TO RECOVER THE SAID AMOUNT FROM THE DEDUCTOR. CIT VS RAJASTHAN RAJYA VIDYUT PRASARAN LIMITED 287 ITR 354 (RAJ) HINDUSTAN COCA COLA BEVERAGES (P) LTD VS. CIT 293 ITR 226 (SC) 19 OUR HUMBLE SUBMISSION IS THAT UNLESS IT IS PROVED T HAT THERE IS TAX OUTSTANDING FROM THE DEDUCTEE AND THE AMOUNT HAS NOT BEEN RECOVERED FROM THE DEDUCTEE, THE DEDUC TOR CANNOT BE ASKED TO PAY THE SHORTFALL OF TDS. 6. THE LD. CIT(A), AFTER CONSIDERING THE FACTS OF T HE CASE AND THE SUBMISSIONS OF THE LD. A.R., CANCELLED THE DEMAND C REATED U/S 201(1) AT PARA 2.3 AND ALSO CANCELLED THE INTEREST CHARGED IN ALL THE YEARS UNDER CONSIDERATION. 7. BEFORE US, BOTH THE PARTIES HAVE REITERATED THEI R EARLIER STAND BY PHRASING THE CRUX OF THEIR CONTENTIONS IN HYPERBOLI C AND LOGICAL LANGUAGE. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE CONSIDERED OPINION THAT THE EXPRESSION FEES FOR TECHNICAL SER VICES HAS NOT BEEN DEFINED U/S 194J OF THE ACT. HOWEVER, EXPLANATION [B] APPENDED TO SECTION 194J PROVIDES THAT THIS EXPRESSION SHALL HA VE THE SAME MEANING AS SUPPLIED IN EXPLANATION 2 APPENDED TO CLAUSE (VI I) OF SUB-SECTION (1) OF SECTION 9 OF THE ACT. SECTION 9 DEALS WITH INCO ME DEEMED TO ARRIVE OR ARRIVED IN INDIA. FEES FOR TECHNICAL SERVICES, ACCORDING TO THIS EXPLANATION, MEANS ANY CONSIDERATION INCLUDING ANY LUMPSUM CONSIDERATION FOR RENDERING OF ANY MANAGERIAL, TECH NICAL OR CONSULTANCY 20 SERVICES, INCLUDING THE PROVISION OF SERVICES OF TE CHNICAL OR OTHER PERSONNEL BUT DOES NOT INCLUDE CONSIDERATION FOR AN Y CONSTRUCTION, ASSEMBLE, MINING OR LIKE PROJECT UNDERTAKEN BY RECI PIENT OR CONSIDERATION WHICH WOULD BE INCOME OF THE RECIPIEN T CHARGEABLE UNDER THE HEAD SALARIES. THIS TERM HAS BEEN EXHA USTIVELY EXAMINED BY THE HON'BLE DELHI HIGH COURT WHILE DECIDING THE CASE OF CIT VS. BHARTI CELLULAR LTD. 220 CTR 258 [DEL]. THE HON'BL E DELHI HIGH COURT WAS DEALING WITH THE PROVISION OF SECTION 194 IN T HE SAME CONTEXT. IT HAS BEEN HELD THAT THE WORD TECHNICAL WOULD TAKE ITS COLOUR FROM THE WORDS MANAGERIAL AND CONSULTANCY, BECAUSE OF WHIC H IT IS SANDWICHED. THEY HAVE ALSO SUPPLIED THE DEFINITION S OF THESE TWO TERMS. THEIR LORDSHIPS HAVE FULLY CONCLUDED AS UN DER: WE HAVE ALREADY POINTED OUT THAT THE EXPRESSION 'F EES FOR TECHNICAL SERVICES' AS APPEARING IN SECTION 194J OF THE SAID ACT HAS THE SAME MEANING AS GIVEN TO THE EXPRESSION IN EXPLANATION 2 TO SECTION 9(L)(VII) OF THE SAID ACT. IN THE SAID EXPLANATION THE EXPRESSION 'FEES FOR TECHNICAL SERV ICES ' MEANS ANY CONSIDERATION FOR RENDERING OF ANY 'MANAG ERIAL, TECHNICAL OR CONSULTANCY SERVICES'. THE WORD 'TECHN ICAL' IS PRECEDED BY THE WORD 'MANAGERIAL' AND SUCCEEDED BY THE WORD 'CONSULTANCY'. SINCE THE EXPRESSION 'TECHNICAL SERVICES' IS IN DOUBT AND IS UNCLEAR, THE RULE OF N OSCITUR A SOCIIS IS CLEARLY APPLICABLE. THE SAID RULE IS EXPL AINED IN 21 MAXWELL ON THE INTERPRETATION OF STATUTES (TWELFTH EDITION) IN THE FOLLOWING WORDS: WHERE TWO OR MORE WORDS WHICH ARE SUSCEPTIBLE OF ANALOGOUS MEANING ARE COUPLED TOGETHER, NOSCITUR A SOCIIS, THEY ARE UNDERSTOOD TO BE USED IN THEIR COGNATE SEN SE. THEY TAKE, AS IT WERE, THEIR COLOUR FROM EACH OTHER , THE MEANING OF THE MORE GENERAL BEING RESTRICTED TO A S ENSE ANALOGOUS TO THAT OF THE LESS GENERAL. THIS WOULD MEAN THAT THE WORD 'TECHNICAL,' WOULD TA KE COLOUR FROM THE WORDS 'MANAGERIAL' AND 'CONSULTANCY ' BETWEEN WHICH IT IS SANDWICHED. THE WORD 'MANAGERIA L' HAS BEEN DEFINED IN THE SHORTER OXFORD ENGLISH DICTIONA RY, FIFTH EDITION AS: OF PERTAINING TO, OR CHARACTERISTIC OF A MANAGER OF OR WITHIN AN ORGANIZATION, BUSINESS, ESTABLISHMENT, ET C. THE WORD 'MANAGER' HAS BEEN DEFINED, INTER ALIA, AS ' A PERSON WHOSE OFFICE IT IS TO MANAGE AN ORGANIZATI ON, BUSINESS ESTABLISHMENT, OR PUBLIC INSTITUTION, OR P ART OF ONE; A PERSON WITH THE PRIMARILY EXECUTIVE OR SUPER VISORY FUNCTION WITHIN AN ORGANIZATION ETC; A PERSON CONTR OLLING THE ACTIVITIES OF A PERSON OR TEAM IN SPORTS, 22 IT IS THEREFORE, CLEAR THAT A MANAGERIAL SERVICE WO ULD BE ONE WHICH PERTAINS TO OR HAS THE CHARACTERISTIC OF A MANAGER. IT IS OBVIOUS THAT THE EXPRESSION 'MANAGER ' AND CONSEQUENTLY 'MANAGERIAL SERVICE' HAS A DEFINITE HU MAN ELEMENT ATTACHED TO IT. TO PUT IT BLUNTLY, A MACHIN E CANNOT BE A MANAGER. 14. SIMILARLY, THE WORD, CONSULTANCY' HAS BEEN DEFI NED IN THE SAID DICTIONARY AS 'THE WORK OR POSITION OF A C ONSULTANT; A DEPARTMENT OF CONSULTANTS.' 'CONSULTANT' ITSELF H AS BEEN DEFINED, INTER ALIA, AS 'A PERSON WHO GIVES PROFESS IONAL ADVICE OR SERVICES IN A SPECIALIZED FIELD, 'IT IS O BVIOUS THAT THE WORD, 'CONSULTANT' IS A DERIVATIVE OF THE WORD 'CONSULT' WHICH ENTAILS DELIBERATIONS, CONSIDERATION, CONFERR ING WITH SOMEONE, CONFERRING ABOUT OR UPON A MATTER. CONSULT HAS ALSO BEEN DEFINED IN THE SAID DICTIONARY AS 'ASK AD VICE FOR, SEEK COUNSELOR A PROFESSIONAL OPINION FROM; REFER T O (A SOURCE OF INFORMATION); SEEK PERMISSION OR APPROVAL FROM FOR A PROPOSED ACTION'. IT IS OBVIOUS THAT THE SERV ICE ALSO NECESSARILY ENTAILS HUMAN INTERVENTION. THE CONSULT ANT, WHO PROVIDES THE CONSULTANCY SERVICE, HAS TO BE A H UMAN BEING. A MACHINE CANNOT BE REGARDED AS A CONSULTANT . 15. FROM THE ABOVE DISCUSSION, IT IS APPARENT THAT BOTH THE WORDS 'MANAGERIAL' AND 'CONSULTANCY' INVOLVE A HUMA N ELEMENT. AND, BOTH, MANAGERIAL SERVICE AND CONSULTA NCY SERVICE ARE PROVIDED BY HUMANS. CONSEQUENTLY, APPLY ING THE RULE OF NOSCITUR A SOCIIS, THE WORD 'TECHNICAL' AS 23 APPEARING IN EXPLANATION 2 TO SECTION 9(1)(VII) WOU LD ALSO HAVE TO BE CONSTRUED AS INVOLVING A HUMAN ELEMENT. BUT, THE FACILITY PROVIDED BY MTNL/ OTHER COMPANIES FOR INTERCONNECTION/ PORT ACCESS IS ONE WHICH IS PROVID ED AUTOMATICALLY BY MACHINES. IT IS INDEPENDENTLY PROV IDED BY THE USE OF TECHNOLOGY AND THAT TOO, SOPHISTICATED TECHNOLOGY, BUT THAT DOES NOT MEAN THAT MTNL/ OTHER COMPANIES WHICH PROVIDE SUCH FACILITIES ARE RENDERI NG ANY TECHNICAL SERVICES AS CONTEMPLATED IN EXPLANATION 2 TO SECTION 9 (I) (VII) OF THE SAID ACT. THIS IS SO BEC AUSE THE EXPRESSION 'TECHNICAL SERVICES' TAKES COLOUR FROM T HE EXPRESSIONS 'MANAGERIAL SERVICES ' AND 'CONSULTANCY SERVICES ' WHICH NECESSARILY INVOLVE A HUMAN ELEMENT OR, WHA T IS NOW DAYS FASHIONABLY CALLED, HUMAN INTERFACE. IN TH E FACTS OF THE PRESENT APPEALS, THE SERVICES RENDERED QUA INTERCONNECTION/ PORT ACCESS DO NOT INVOLVE ANY HUM AN INTERFACE AND, THEREFORE, THE SAME CANNOT BE REGARD ED AS 'TECHNICAL SERVICES ' AS CONTEMPLATED UNDER SECTION 194J OF THE SAID ACT. 20. BEFORE CONCLUDING WE WOULD ALSO LIKE TO POINT O UT THAT THE INTERCONNECT/ PORT ACCESS FACILITY IS ONLY A FA CILITY TO USE THE GATEWAY AND THE NETWORK OF MTNL/OTHER COMPANIES. MTNL OR OTHER COMPANIES DO NOT PROVIDE A NY ASSISTANCE OR AID OR HELP TO THE RESPONDENTS/ ASSES SEES IN MANAGING, OPERATING, SETTING UP THEIR INFRASTRUCTUR E AND NETWORKS. NO DOUBT, THE FACILITY OF INTERCONNECTION AND PORT ACCESS PROVIDED BY MTNL/ OTHER COMPANIES IS 24 'TECHNICAL' IN THE SENSE THAT IT INVOLVES SOPHISTIC ATED TECHNOLOGY. THE FACILITY MAY EVEN BE CONSTRUED AS A 'SERVICE' IN THE BROADER SENSE SUCH AS A 'COMMUNICA TION SERVICE'. BUT, WHEN WE ARE REQUIRED TO INTERPRET TH E EXPRESSION 'TECHNICAL SERVICE', THE INDIVIDUAL MEAN ING OF THE WORDS 'TECHNICAL' AND 'SERVICE' HAVE TO BE SHED. AN D, ONLY THE MEANING OF THE WHOLE EXPRESSION 'TECHNICAL SERV ICES' HAS TO BE SEEN. MOREOVER, THE EXPRESSION 'TECHNICAL SERVICES' IS NOT TO BE CONSTRUED IN THE ABSTRACT AN D GENERAL SENSE BUT IN THE NARROWER SENSE AS CIRCUMSCRIBED BY THE EXPRESSIONS 'MANAGERIAL SERVICE' AND 'CONSULTANCY S ERVICE' AS APPEARING IN EXPLANATION 2 TO SECTION 9(1) (VII) OF THE SAID ACT. CONSIDERED IN THIS LIGHT, THE EXPRESSION 'TECH NICAL SERVICE' WOULD, HAVE REFERENCE TO ONLY TECHNICAL SE RVICE RENDERED BY A HUMAN. IT WOULD NOT INCLUDE ANY SERVI CE PROVIDED BY MACHINES OR ROBOTS. ' 9. SIMILAR VIEW HAS BEEN TAKEN IN THE CASE OF SKYCE LL COMMUNICATIONS LTD AND ANR. VS DCIT AND ORS 251 ITR 53 [MAD]. 10. RELIANCE HAS BEEN PLACED ON OTHER DECISIONS INC LUDING THAT OF THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF JAIPUR VIDYUT VITRAN NIGAM LTD. V. DY. CIT [2009] 123 TTJ (JP.) 888 WHEREIN IT HAS BEEN HELD AS UNDER: 25 UNDER THE RAJASTHAN POWER SECTOR REFORMS ACT, 1999 THE ROLE OF RAJASTHAN STATE ELECTRICITY BOARD WAS UNBUNDLED TO REFORM THE FUNCTIONING OF THE BOARD TO INTRODUCE EFFICIENCY IN POWER GENERATION, TRANSMISSION AND DISTRIBUTION. ACCORDINGLY, THE ERSTWHILE RAJASTHAN STATE ELECTRICITY BOARD WAS UNBUNDLED INTO FIVE GOVERNMENT COMPANIES WHICH INCLUDED THE ASSESSEE AS A DISTRIBUTION COMPANY AND ANOTHER COMPANY CALLED RVPN WHICH WAS A TRANSMISSION COMPANY. THE ASSESSING OFFICER NOTED THAT ASSESSEE WAS PURCHASING POWER FROM THE GENERATION COMPANY AND SELLING IT TO CONSUMERS. THE POWER FROM THE GENERATION POINT TO THE CONSUMERS WAS TRANSMITTED THROUGH THE 'TRANSMISSION NETWORK OF RVPN. IT GOVERNED ALL THE INFRASTRUCTURE OF ELEC TRIC TRANSMISSION LINES AND ALL GRIDS UP TO THE POWER CAPACITY OF 33KVA AND CARRIED OUT THE ACTIVITIES OF THE CONSTRUCTION AND MAINTENANCE OF EHV LINES AND GRID SUB-STATIONS. ACCORDINGLY, IN TERMS OF THE MANDATE UNDER THE ELECTRICITY ACT, 2003 RVPN WAS DISCHARGING THE STATUTORY FUNCTIONS OF TRANSMISSION OF ELECTRICITY AND CARRYING OUT SLDC [STATE LOAD DESPATCH CENTRAL] FUNCTION FOR WHICH THEY CHARGED FEES AS DECIDED BY RAJASTHAN ELECTRICITY REGULATORY COMMISSION FROM TIME TO TIME. ACCORDINGLY, RVPN HAD ENTERED INTO 'TRANSMISSION SERVICE AGREEMENT' WITH THE ASSESSEE DISTRIBUTION COMPANY. THE ASSESSING OFFICER HELD THAT THE PAYMENT MADE BY THE 26 ASSESSEE TO RVPN WAS A PAYMENT FOR TECHNICAL SERVIC E LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER SECTION 194J. HELD THAT ALL THE PARTIES INVOLVED WITH GENERATION, TRANSMISSION AND DISTRIBUTION OF ELECTRICITY ARE TO COMPLY WITH THE DIRECTION OF STATE LOAD DISPATCH CENTRE AND THE REGULATORY COMMISSION FOR ACHIEVING THE ECONOMY AND EFFICIENCY IN THE OPERATION OF POWE R SYSTEM AND, THEREFORE, QUESTION OF ANY PERSON RENDERING SERVICE TO ANOTHER DID NOT ARISE. THE OPERATION AND MAINTENANCE OF TRANSMISSION LINES BY RVPN AND THE USER OF THESE LINES BY THE ASSESSEE FO R TRANSMITTING ENERGY DID NOT RESULT INTO ANY TECHNIC AL SERVICE BEING RENDERED TO THE ASSESSEE. THE TECHNIC AL STAFF OF RVPN BY OPERATING AND MAINTAINING ITS GRID STATION AND TRANSMISSION LINES SIMPLY DISCHARGED TH EIR FUNCTION. THEY DID NOT RENDER ANY TECHNICAL SERVICE TO THE ASSESSEE. SECTION 194J WOULD HAVE APPLICATION ONLY WHEN THE TECHNOLOGY OR TECHNICAL KNOWLEDGE OF A PERSON IS MADE AVAILABLE TO OTHERS AND NOT WHERE BY USING TECHNICAL SYSTEMS, SERVICES ARE RENDERED TO OTHERS. RENDERING OF SERVICES BY ALLOWING USE OF TECHNICAL SYSTEM IS DIFFERENT FROM CHARGING FEES FO R RENDERING TECHNICAL SERVICES. THE APPLICABILITY OF SECTION 194J WOULD COME INTO EFFECT ONLY WHEN BY MAKING PAYMENT OF FEE FOR TECHNICAL SERVICES, ASSESSEE ACQUIRES CERTAIN SKILL/KNOWLEDGE/INTELLECT 27 WHICH CAN BE FURTHER USED BY HIM 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 AVAIL OF THE BENEFIT BY USER OF SUCH EQUIPMENT, THE SAME DOES NO T RESULT IN THE PROVISION OF TECHNICAL SERVICE TO THE CUSTOMER FOR A FEE. A TECHNICAL SERVICE IS INVOLVED WHERE 'INFORMATION CONCERNING INDUSTRIAL, COMMERCIAL OR SCIENTIFIC KNOWLEDGE, EXPERIENCE OR SKILL IS MADE AVAILABLE'. IN THE PRESENT CASE NO SCIENTIFIC KNOWLEDGE, EXPERIENC E OR SKILL WAS MADE AVAILABLE/RENDERED BY THE RVPN TO THE ASSESSEE. THE ASSESSEE ITSELF HAD ITS OWN ENGINEERS AND TECHNICIANS WHO CONSISTENTLY MONITORE D AND SUPERVISED THE FLOW OF THE ELECTRICITY TO ITS SYSTEM AND ULTIMATELY SUPPLIED TO ITS CUSTOMER. THE FUNCTION OF STATE LOAD DISPATCH CENTRE AS REGULATOR AND CONTROLLER FOR OPTIMUM SCHEDULING AND DISPATCH OF ELECTRICITY, AND SUPERVISION OVER THE INTRA-STAT E TRANSMISSION SYSTEM WAS STATUTORY FUNCTION WHICH WA S ALSO ENTRUSTED TO RVPN AND, THEREFORE, RVPN BY DISCHARGING SUCH STATUTORY FUNCTION DID NOT PROVIDE ANY TECHNICAL SERVICE. THERE WAS ALSO FORCE IN ALTERNATE ARGUMENT OF THE ASSESSEE THAT THE PAYMENT OF TRANSMISSION/WHEELING/SLDC CHARGES WAS REIMBURSEMENT OF THE COST. THE PROVISIONS OF CHAPTE R 28 XVI1-B WERE NOT APPLICABLE SINCE THERE WAS NO PAYMENT OF INCOME/REVENUE BY THE ASSESSEE. THUS, THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE WAS LIABLE FOR DEDUCTION OF TAX AT SOURCE ON THE PAYMENT OF TRANSMISSION/SLDC CHARGES TO RVPN. 11. THUS IT BECOMES AMPLY CLEAR THAT THE PROVISIONS OF SECTION 194J WOULD HAVE APPLICATION ONLY WHEN THE TECHNOLOGY OR TECHNICAL KNOWLEDGE OF A PERSON IS MADE AVAILABLE TO OTHERS A ND NOT WHERE BY USING TECHNICAL SYSTEMS, SERVICES ARE RENDERED TO O THERS. THE SERVICES PROVIDED THROUGH USE OF TECHNICAL SYSTEM IS NOT EQU IVALENT TO RENDERING OF TECHNICAL SERVICES THROUGH HUMANS. FOR APPLICAT ION OF SECTION 194J PAYMENT FEE FOR TECHNICAL SERVICES WOULD RESULT IN ACQUIRING GOOD RESULT IN ACQUISITION OF CERTAIN RIGHT WHICH CAN BE FURTHER USED FOR ITS OWN BENEFITS/USE/PURPOSE OR RESEARCH. THUS, IT BEC OMES EVIDENT THAT WHERE A FACILITY IS PROVIDED THROUGH MACHINES OR TH ROUGH SOPHISTICATED EQUIPMENTS WHICH ARE MEANT FOR EARNING INCOME BY CU STOMERS TO AVAIL BENEFIT BY THEIR USER. IT WOULD NOT AMOUNT TO PROV IDING OF TECHNICAL SERVICES TO THE CUSTOMERS FOR A FEE. WE ARE IN AGR EEMENT WITH THE LD. CIT(A) WHEN HE MENTIONS IN PARA 2.2.8 THAT THE PRES ENT AGREEMENT OF TRANSMISSION OF SERVICES HAS BEEN INCORRECTLY CONCE IVED BY THE A.O. AND HAS MADE WRONG REASONS TO ARRIVE AT HIS CONCLUSION. THESE REASONS 29 HAVE ALREADY BEEN EXTRACTED IN OUR EARLIER PART OF THE ORDER. THEREFORE, WE NEED NOT REPEAT THEM. 12. WE HAVE GONE THROUGH THE RELEVANT CLAUSES OF TH E AGREEMENT BETWEEN THE ASSESSEE AND THE RRVPNL AND HAVE FOUND THAT THERE IS NO SUCH CLAUSE IN THE AGREEMENT WHICH PREVENTS RRVPNL TO ALLOW ANY OTHER POWER GENERATING COMPANY TO USE TRANSMITTING LINES. RATHER, IT IS NOTICED THAT IF ANY OTHER NEIGHBOURING ENTITY IN CHANDERI WISHED TO USE OPEN ACCESS SYSTEM OF RRVPNL TO TRANSFER THE PO WER TO ANOTHER ENTITY, IT COULD VERY WELL DO SO. CHARGES FOR SUCH UTILIZATION ARE GIVEN BY THE RAJASTHAN REGULATORY BODY AND NOT CONTROLLED BY THE ASSESSEE COMPANY IN ANY MANNER. TARRIFS ARE UNIFORM FOR EVER YONE USING THEIR INFRASTRUCTURE AND THE ASSESSEE COMPANY DOES NOT HA VE ANY SAY IN THAT MATTER. ACCORDINGLY, WE ARE ALSO OF THE OPINION TH AT THE A.O/ITO-TDS WAS NOT JUSTIFIED IN HOLDING THAT THE PAYMENT OF TR ANSMISSION CHARGES, WHEELING CHARGES AND SLDC CHARGES WOULD ATTRACT THE PROVISIONS OF SECTION 194J OF THE ACT. THEREFORE, WE APPROVE THE FINDING OF THE LD. CIT(A) IN HOLDING THAT THE DEMANDS CREATED U/S 201( 1) OF THE ACT IN ALL THESE YEARS AND SO ALSO THE RELATED INTEREST CHARGE D U/S 201(1A) WOULD NOT SURVIVE AND HAVE BEEN CORRECTLY DELETED/CANCELL ED BY HIM. ACCORDINGLY, WE DISMISS ALL THE FOUR APPEALS OF THE REVENUE. 30 13. IN THE RESULT, THE APPEALS OF THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH AUGUST, 2013. VL/ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT BY ORDER 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR