ACIT (TDS), Dehradun V. Uttranchal Power Corporation Ltd., Dehradun

ITA 4916/DEL/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1758 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 29-10-2015
• Assessment Year: misc
• Appeal Filed On: 19-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: H NEW DELHI BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDI CIAL MEMBER ITA NOS: 4913-4918/DEL/2013 AYS: - 2007-08 TO 2012-13 ACIT VS. UTTRANCHAL POWER CORPORA TION LTD. 13-A, SUBHASH ROAD URJA BHAWAN DEHRADUN KANWALI ROAD DEHRADU N (PAN MRT UO0222F) (APPELLANT) (RESPONDENT) APPELLANT BY : MS. JYOTI KUMARI, CIT(DR) RESPONDENT BY : SHRI NEERAJ SHARMA, CA SHRI MANPREET BAGGA, CA DATE OF HEARING : 29.10.2015 DATE OF PRONOUNCEMENT : 3 0.11.2015 O R D E R PER SUDHANSHU SRIVASTAVA JUDICIAL MEMBER THESE SIX APPEALS HAVE BEEN PREFERRED BY THE DEPART MENT AGAINST THE ORDERS PASSED BY THE LD. CIT (A) -I DEHRADUN FOR FINANCIAL YEARS 2006-07 TO 2011-12. THE ONLY GROUND OF APPEAL IN ALL THE APPEALS IS AS UNDE R:- I) THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDIN G THAT TDS WAS NOT DEDUCTIBLE ON THE PAYMENTS OF TRANSMISSION & SLDC CHARGES ETC. MADE BY THE UTTRANCHAL POWER CORPORATI ON LIMITED (UPCL) TO POWER TRANSMISSION CORPORATION UTTRAKHAND LIMITED (PTCUL) IGNORING THE FACT THAT P AYMENT FOR SERVICES PROVIDED BY PTCUL TO UPCL WERE IN THE NATURE OF FEE FOR TECHNICAL SERVICES AND WERE LIABLE FOR TDS U/S 194J OF THE I.T. ACT, 1961 ITA NOS. 4913-4918/DEL/2013 ACIT VS. UTTRANCHAL PO WER CORPORATION LTD. 2 20X5 2. SINCE ALL THE SIX APPEALS HAVE ONE COM MON GROUND, WE ARE DISPOSING OF ALL THE SIX APPEALS BY THIS COMMON ORDER. 3. THE BRIEF FACTS OF THE CASE, AS BORNE OUT FROM THE RECORDS, ARE THAT THE ASSESSEE IS A PUBLIC SECTOR UNDERTAKING AND POWER D ISTRIBUTION UTILITY IN THE STATE OF UTTARAKHAND. THE POWER TRANSMISSION CORPORATION OF UTTRAKHAND LTD. (PTCUL) IS THE TRANSMISSION COMPANY WHICH TRANSMITS I.E. WHEELS EL ECTRICITY FROM THE GENERATING COMPANY TO THE DISTRIBUTION COMPANY. THE ASSESSEE I S ALSO STATED TO BE ACTING AS THE STATE LOAD DISPATCH CENTER (SLDC). THE ASSESSEE PAY S TRANSMISSION/WHEELING CHARGES TO PTCUL. A SURVEY U/S 133A OF THE I.T. ACT 1961 WAS CONDUCTED FOR THE ASSESSEE AND IT WAS DISCOVERED THAT THE ASSESEE WAS NOT DEDUCTING TAX AT SOURCE ON THE PAYMENT MADE TO PTCUL. IT WAS ASSESSEES CONTE NTION THAT THE PAYMENT OF TRANSMISSION CHARGES WILL NOT FALL WITHIN THE PURVI EW OF SECTION 194J AS FEE FOR TECHNICAL SERVICES. IT WAS ASSESSEES CONTENTION BE FORE THE AO THAT THE PROCESS WAS HIGHLY EQUIPMENT ORIENTED AND THAT THE PTCUL LOOKED AFTER THE WORK RELATING TO TRANSMISSION BEYOND 33 KV. IT WAS ASSESSEES SUBMIS SION THAT THE PAYMENT OF TRANSMISSION CHARGES WILL NOT COME WITHIN THE PURVI EW OF SECTION 194J AS FEE FOR TECHNICAL SERVICES SINCE OPERATION AND MAINTENANCE OF TRANSMISSION LINES AND USE OF THESE LINES FOR TRANSMITTING POWER DOES NOT RESULT IN ANY TECHNICAL SERVICES BEING RENDERED TO THE ASSESSEE. IT WAS THE ASSESSEES SUB MISSION THAT RENDERING OF SERVICES BY ALLOWING THE USE OF TECHNOLOGY SYSTEM W AS DIFFERENT THAN CHARGING FEES FROM RENDERING TECHNICAL SERVICES. THE ASSESSEE ALS O SUBMITTED THAT AN AMENDMENT WAS MADE IN SECTION 9 (1) (VII) OF THE INCOME TAX A CT, 1961 VIDE FINANCE ACT 2012 SO AS TO COVER PAYMENTS MADE FOR TRANSMISSION AND W HEELING CHARGES UNDER THE ITA NOS. 4913-4918/DEL/2013 ACIT VS. UTTRANCHAL PO WER CORPORATION LTD. 3 20X5 HEAD ROYALTY AND CONSEQUENTLY UNDER THE AMBIT OF PR OVISIONS OF SECTION 194J OF THE INCOME TAX ACT, 1961. SINCE THE SAID AMENDMENT HAS BEEN MADE BY THE FINANCE ACT 2012, IT WAS ASSESSEES SUBMISSION THAT PAYMENTS FO R POWER TRANSMISSION WERE NOT COVERED BY THE PROVISION OF SECTION 194J TILL 2012 AND EVEN THEN POST THE AMENDMENT, WHEELING AND TRANSMISSION CHARGES WOULD FALL UNDER ROYALTY AND NOT UNDER TECHNICAL SERVICES AND AS SUCH THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE TO DEDUCT TAX AT SOURCE. HOWEVER, THE AO W AS OF THE OPINION THAT THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE AT THE TIME OF PAYMENT OF THE TECHNICAL FEES TO PTCUL AND ALSO LIABLE TO PAY INTEREST U/S 2 01 (1A) ON THE AMOUNT OF TAX THAT SHOULD HAVE BEEN DEDUCTED FOR THE DIFFERENT FINANCI AL YEARS. THE SHORTFALL OF TDS AND INTEREST THEREON AS PER THE AO WAS AS UNDER:- S.NO. FINANCIAL YEAR PAYMENT SHORT DEDUCTION INTEREST ON SHORT DEDUCTION 1. 2006-07 42,98,00,000/- 4,29,80,000/- 77,36,400/- 2. 2007-08 42,98,00,000/- 4,29,80,000/- 2,66,47,600 /- 3. 2008-09 134,99,99,996/- 13,49,99,999/- 6,61,49,9 99/- 4. 2009-10 75,81,00,000/- 7,58,10,000/- 2,80,49,700 /- 5. 2010-11 106,50,00,000/- 10,65,00,000/- 2,66,25,0 00/- 6. 2011-12 1,30,50,00,000/- 13,05,00,000/- 16,96,50,000/- 4. IN APPEALS BEFORE THE LD. CIT (A)-1, DEHRADUN THE ASSESSEE REITERATED ITS SUBMISSION THAT IT WAS NOT UNDER A LEGAL OBLIGA TION TO DEDUCT TAX AT SOURCE ON THE PAYMENT OF WHEELING CHARGES AND SINCE TDS WAS NOT D EDUCTIBLE, INTEREST ALSO COULD NOT BE CHARGED. THE LD. CIT (A), WHILE ALLOWING THE ASSESSEES APPEALS, REFERRED TO A ITA NOS. 4913-4918/DEL/2013 ACIT VS. UTTRANCHAL PO WER CORPORATION LTD. 4 20X5 PLETHORA OF DECISIONS ON THE SUBJECT AND HELD THAT TAX WAS NOT DEDUCTIBLE AT SOURCE ON PAYMENT OF TRANSMISSION AND SLDC CHARGES BY ASSE SSEE TO PTCUL AND THE APPEALS OF THE ASSESSEE WERE ALLOWED. 5. NOW IN THESE PRESENT APPEALS BEFORE US, THE DEP ARTMENT IS CONTESTING THE ORDER OF THE LD. CIT (A) AND HAS SUBMITTED THAT THE ORDER OF THE AO SHOULD BE RESTORED. LD. AR ON THE OTHER HAND PLEADED FOR UPHO LDING OF THE ORDER OF THE LD. CIT (A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GO NE THROUGH THE RECORDS. THERE ARE A NUMBER OF DECISIONS WHICH FAVO UR THE STAND OF THE ASSESSEE. REFERENCE MAY BE MADE TO THE DECISION OF THE JAIPUR BENCH IN JAIPUR VITRAN NIGAM LTD. VS. DCIT 123, TTJ 888 (JAIPUR) WHEREIN THE JAI PUR BENCH HAD DISCUSSED THE ISSUE OF DEDUCTIBILITY OF TAX AT SOURCE ON PAYMENT OF WHEELING CHARGES BY THE DISTRIBUTION COMPANY TO THE TRANSMISSION COMPANY AN D HAD HELD THAT IT DID NOT REPRESENT PAYMENT FOR TECHNICAL SERVICES AND THAT T AX WAS NOT REQUIRED TO BE DEDUCTED AT SOURCE. SIMILARLY, IN THE CASE OF BANGA LORE ELECTRICITY SUPPLY COMPANY LTD VS. ITO (TDS) 71 DTR (BANGALORE) (TRIB) 186, TH E DECISION OF THE JAIPUR BENCH WAS FOLLOWED. THE BANGALORE BENCH ALSO CONSIDERED T HE APPLICABILITY OF SECTION 194I OF THE INCOME TAX ACT AND HELD THAT THE TAX WAS NOT DEDUCTIBLE EVEN UNDER THAT SECTION. THE HONBLE DELHI HIGH COURT IN THE CASE O F CIT VS. BHARTI CELLULAR LTD. 319 ITR 139 (DELHI) HAS HELD THAT THE TERM TECHNICAL S ERVICES USED IN SECTION 194J AS WELL IN SECTION 9(I)(VII) OF THE INCOME TAX ACT IMP LIED HUMAN INTERFACE AND WOULD NOT COVER A SITUATION WHERE PAYMENT HAD BEEN RECEIVED S IMPLY FOR PROVIDING FACILITIES OF ITA NOS. 4913-4918/DEL/2013 ACIT VS. UTTRANCHAL PO WER CORPORATION LTD. 5 20X5 TECHNICAL NATURE. SIMILARLY, IN THE CASE OF SKYCELL COMMUNICATIONS LTD. VS. DCIT 251 ITR (MADRAS), THE HONBLE MADRAS HIGH COURT HAS EQU ATED TRANSMISSION OF VOICE WITH TRANSMISSION OF ELECTRICITY AND HAS HELD THAT THE S AME DID NOT AMOUNT TO PROVIDING A TECHNICAL SERVICE. THE LD. AR FOR THE ASSESSEE HAS PLACED RELIANCE ON A RECENT JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT (TDS) VS. M/S. MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COMPANY LTD. IN ITA NO. 336/2013 WHEREIN THROUGH ITS DECISIONS PRONOUNCED ON 8 TH MAY, 2015, THE HONBLE HIGH COURT OF BOMBAY HAS HELD IN PARA 47 OF THE ORDER AS UNDER:- IN OUR VIEW THE TRANSMISSION CHARGES AND / OR WHEE LING CHARGES ARE NOT AMOUNTS PAID UNDER ANY ARRANGEMENT FOR USE OF LAND, BUILDING, PLANT MACHINERY, EQUIPMENT FURNITURE, FITTING ETC. AND, T HEREFORE, NOT RENT. EQUALLY THE AMOUNTS ARE NOT FEES FOR TECHNICAL SERVICES. IN THE FACTS AND CIRCUMSTANCES OF THIS CASE WE ANSWER THE QUESTION I N FAVOUR OF THE ASSESEE AND AGAINST THE REVENUE. THE APPEAL IS DISPOSED OF ACCORDINGLY. THERE WILL BE NO ORDER AS TO COSTS 7. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND AFTER GOING THROUGH THE RECORDS AND RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT (TDS) VS. MAHARASHTRA STAT E ELECTRICITY DISTRIBUTION COMPANY LIMITED (ITA NO. 336/2013) WE HAVE NO HESIT ATION IN HOLDING THAT TAX IS NOT DEDUCTIBLE AT SOURCE ON PAYMENT OF TRANSMISSION AND SLDC CHARGES TO PTCUL. THUS, THE AO WAS NOT CORRECT IN HOLDING THE ASSESSE E TO BE IN DEFAULT FOR NON DEDUCTION OF TAX AT SOURCE ON PAYMENTS MADE TOWARDS WHEELING CHARGES/SLDC. THE DEMAND FOR INTEREST IS EQUALLY NOT JUSTIFIED. HENCE NO INTERFERENCE IS CALLED FOR IN THE ORDERS PASSED BY THE LD. CIT (A) FOR ALL THE SIX YE ARS. ITA NOS. 4913-4918/DEL/2013 ACIT VS. UTTRANCHAL PO WER CORPORATION LTD. 6 20X5 8. IN THE RESULT ALL THE SIX APPEALS OF THE DEPARTMENT ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2015. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - (J.SUDHAKAR REDDY) (SUDHANSHU SRIVASTAV A) ACCOUTANT MEMEBR JUDICIAL MEMBER DATED: THE 30. 11. 2015 VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DY. REGISTRAR SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 26.11.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 27.11. 2015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY THE SECOND MEMBER 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER 7. DATE OF FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER