ITO, Jaipur V. SR. ACCOUNTS OFFICER(RDPPC), Jaipur

ITA 790/JPR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5449 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 25-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S KOTHARI CIT DHK
• Keywords: Advance ruling
• Section: 194C

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO.790/JP/14 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 THE INCOME TAX OFFICER,TDS - 2, JAIPUR CUKE VS. THE SR. ACCOUNTS OFFICER (RDPPC), JAIPUR VIDYUT VITRAN NIGAM LTD. JANPATH, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (C.A.) JKTLO DH VKSJ LS@ REVENUE BY :S HRI D.S. KOTHARI (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 29.02.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 03/03/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-III, JAIPUR DATED 15.09.2014 WHEREIN THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: (1) WHETHER ON THE FACTS AND IN LAW THE CIT(A) WAS JUST IFIED IN HOLDING THAT THE PAYMENT MADE BY THE ASSESSEE IN FORM OF TRANSMISSIO N WHEELING /SLDC CHARGES WERE NOT LIABLE FOR DEDUCTION OF TAX AT SOU RCE EITHER U/S 194J OR U/S 194C OF THE IT CT, 1961. ITA NO. 790/JP/14 ITO, TDS-2 JAIPUR VS THE SR. ACCOUNTS OFFICER (RDP PC) JAIPUR VIDYUT VITRAN 2 (2) WHETHER ON THE FACTS AND IN LAW THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE WAS NOT LIABLE TO PAY INTEREST U/S 201(1A ) OF THE IT ACT, 1961 BECAUSE THERE WAS NOT TAX LIABILITY ON THE INCOME O F THE DEDUCTEE. 2. AT THE OUTSET, THE LD AR SUBMITTED THAT THE MATTER IS COVERED BY THE HONBLE ITATS DECISION IN ASSESSEES OWN CASE FOR A.YS. 2005-06, 2006-07, 2007- 08, 2008-09& 2009-10 IN ITA NOS. 127 TO 131/JP/2009 DATED 30.4.2009. THE RELEVANT FINDINGS ARE REPRODUCED AS UNDER: 9.9 WE HAVE ALSO CONSIDERED THE OTHER DECISIONS RE LIED BY THE LD. DR WHICH ARE CLEARLY DISTINGUISHABLE ON FACTS. IN CASE OF SINGA PORE AIRLINES LTD. VS. ITO, 7 SOT 84 THE NAVIGATION CHARGES PAID WAS FOR GETTING THE TEC HNICAL SERVICE LIKE WHETHER REPORT, INSTRUCTION OR FLIGHTS TO FLY OVER TECHNICA L TERRITORIES AND SUCH OTHER TECHNICAL SERVICES WHICH ARE NEEDED TO FLY THE AIRC RAFT ON THE INDIAN TERRITORY. BY GIVING THESE INSTRUCTIONS AND TECHNICAL SERVICES TO FLY THE AIRCRAFT THE TECHNICAL KNOWLEDGE OF A PERSON WAS MADE AVAILABLE TO THE ASS ESSEE AND THEREFORE IT WAS HELD TO BE A PAYMENT FOR TECHNICAL SERVICES WHICH I S NOT THE FACTS OF THE PRESENT CASE. THE CASE OF THE CANARA BANK VS. ITO 305 ITR 180 IN RESPECT OF PAYMENT OF MICR CHARGES TO SBI WHICH INVOLVED HUMAN SKILL AND COMPUTERIZED MACHINE AND NOT SIMPLY MAKING AVAILABLE THE TECHNICAL EQUIPMEN T WORKING ON ITS OWN AND THEREFORE HELD TO BE A PAYMENT TOWARDS MANAGERIAL S ERVICES. THE DECISION IN THE CASE OF DR. HUTAREW & PARTNER (I) (P) LTD. VS. ITO (SUPRA) IS WITH REFERENCE TO SECTION 195 AND NOT SECTION 194J. IN THIS CASE AL SO THE NON-RESIDENT TO WHOM PAYMENT WAS MADE WAS NOT MAINTAINING ANY SERVER FOR EVERY BODY THAT ANY ONE CAN FEED THE DATA AND GET THE SOLUTIONS. THE SOLUT IONS WERE PROVIDED ON THE SPECIFIC NEEDS OF THE CUSTOMERS. THE INFORMATION S UPPLIED IS SPECIFIC WHICH HELP THE ASSESSEE IN FINALIZING ITS DESIGN. THE INFORMA TION SUPPLIED TO THE ASSESSEE WAS A TECHNICAL INFORMATION WHICH HAS BEEN USED IN FURT HER GENERATING THE PRODUCT OF THE ASSESSEE. THEREFORE, SUCH SPECIFIC CLIENT BASED INFORMATION, WAS HELD NOT EQUITABLE WITH THE STANDARD SERVICES PROVIDED BY TE LE-COMMUNICATION COMPANY. THUS THESE DECISIONS ARE QUITE DISGUISABLE AND NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. WE THEREFORE HOLD THAT THERE IS N O LIABILITY TO DEDUCT TAX AT SOURCE ON PAYMENT OF TRANSMISSION/WHEELING /SLDC CHARGES U/S 194J OR FOR THAT MATTER U/S 194C. ITA NO. 790/JP/14 ITO, TDS-2 JAIPUR VS THE SR. ACCOUNTS OFFICER (RDP PC) JAIPUR VIDYUT VITRAN 3 9.10 ALSO FIND FORCE IN ALTERNATE ARGUMENT OF THE L D. AR THAT THE PAYMENT OF TRANSMISSION/ WHEELING/SLDC CHARGES IS REIMBURSEMEN T OF THE COST. THEREFORE THE PROVISIONS OF CHAPTER XVII B ARE NOT APPLICABLE SIN CE THERE IS NO PAYMENT OF INCOME/REVENUE BY THE ASSESSEE. WE FIND THAT THE TA RIFF IS FIXED BY AN INDEPENDENT REGULATORY BODY I.E. RAJASTHAN ELECTRICITY REGULATO RY COMMISSION. THE TRANSMISSION COMPANY IS NOT ALLOWED ANY RETURN ON I TS CAPITAL THE TARIFF IS DETERMINED ON THE PRINCIPAL OF NO PROFIT NO LOSS. FROM THE TARIFF ORDER WE FIND THAT TARIFF IS FIXED BY ESTIMATING THE ACTUAL COST OF O PERATION OF RVPN. IN CASE, ON THE BASIS OF SUCH TARIFF, ANY SURPLUS IS LEFT WITH THE RVPN, THEY GIVE CREDIT OF THE SAME TO THE ASSESSEE AS EVIDENT FROM THE EXTRACT OF THE MINUTES OF THE BOARD AND THE COPY OF THE JOURNAL VOUCHER BY WHICH SUCH CREDIT IS GIVEN TO THE ASSESSEE. THUS WHEN NO INCOME IS PAID BY ASSESSEE TO TRANSMISSION COMPANY THE QUESTION OF DEDUCTION OF TAX AT SOURCE DO NOT OTHERWISE ARISE E VEN WHEN UNDER CERTAIN SECTION OF CHAPTER XVII B LIABILITY OF TDS IS ON PAYMENT OF ANY SUM AND UNDER CERTAIN SECTIONS IT IS ON PAYMENT OF INCOME AS ULTIMATELY T HE TAX IS ON THE INCOME AND DEDUCTION OF TAX AT SOURCE IS ONLY ONE OF THE MODE OF COLLECTION AND RECOVERY OF THE TAX. ON ACTUAL REIMBURSEMENT, PROVISION OF DEDUCTI ON OF TAX AT SOURCE WOULD NOT APPLY AS HELD IN CASE OF ITO VS. DR. WILLMAR SCHWAB E INDIA (P) LTD. 95 TTJ 53 (DEL.) HEAD NOTE OF WHICH READS AS UNDER: AS AGREED BY AND BETWEEN THE ASSESSEE COMPANY AND ITCL, A VEHICLE WAS TO BE PROVIDED BY THE ASSESSEE COMPANY TO THE SAID CONSULTANT FOR ATTENDING TO ITS WORK AND THUS, THE ASSESSEE COMPANY WAS TO BEAR THE VEHICLE EXPENSES ACTUALLY INCURRED BY THE SAID PARTY. BILLS FOR SUCH EXPENSE S INCURRED BY THE SAID CONSULTANT WERE SEPARATELY RAISED BY THEM ON THE ASSESSEE COMP ANY IN ADDITION TO BILLS FOR FEES PAYABLE ON ACCOUNT OF TECHNICAL SERVICES AND S INCE THE AMOUNT OF BILLS SO RAISED WAS TOWARDS THE ACTUAL EXPENSES INCURRED BY THEM, THERE WAS NO ELEMENT OF ANY PROFIT INVOLVED IN THE SAID BILLS. IT WAS T HUS A CLEAR CASE OF REIMBURSEMENT OF ACTUAL EXPENSES INCURRED BY THE ASSESSEE AND THE SA ME, THEREFORE, WAS NOT OF THE NATURE OF PAYMENT COVERED BY S. 194J REQUIRING THE ASSESSEE TO DEDUCT TAX AT SOURCE THERE FROM. THE CBDT CIRCULAR NO. 715 DATED 8 TH AUGUST. 1995, RELIED UPON BY THE AO IN SUPPORT OF THIS CASE ON THIS ISSUE WA S APPLICABLE ONLY IN THE CASES ITA NO. 790/JP/14 ITO, TDS-2 JAIPUR VS THE SR. ACCOUNTS OFFICER (RDP PC) JAIPUR VIDYUT VITRAN 4 WHERE BILLS ARE RAISED FOR THE GROSS AMOUNT INCLUSI VE OF PROFESSIONAL FEES AS WELL AS REIMBURSEMENT OF ACTUAL EXPENSES AND THE SAME, THER EFORE, WAS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE WHERE BILLS WERE RAIS ED SEPARATELY BY THE CONSULTANT FOR REIMBURSEMENT OF ACTUAL EXPENSES INCURRED BY TH EM. AS SUCH CONSIDERING ALL THE FACTS OF THE CASE, THE PROVISIONS OF SECTION 19 4J WERE NOT APPLICABLE TO THE REIMBURSEMENT OF ACTUAL EXPENSES AND THE ASSESSEE C OMPANY WAS NOT LIABLE TO DEDUCT TAX AT SOURCE FROM SUCH REIMBURSEMENT. UNDER THESE CIRCUMSTANCES, WE HOLD THAT THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE IS LIABLE FOR DEDUCTIO N OF TAX AT SOURCE ON THE PAYMENT OF TRANSMISSION/SLDC CHARGES TO RVPN . WE THUS SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND ALLOW THE GROUND OF THE ASSESSEE. THE GROUND NO.1 IS THUS ALLOWED. LD AR FURTHER SUBMITTED THAT SUBSEQUENTLY, THE BOMB AY HIGH COURT IN CASE OF MAHARASTHRA STATE ELECTRICITY DISTRIBUTION COMPANY LTD. 119 DTR 278 AND DELHI HIGH COURT IN CASE OF CIT VS. DELHI TRANSCO LTD. 124 DTR 170 HAVE TAKEN A SIMILAR VIEW IN THIS MATTER. 2.1 THE LD DR ARGUED THE MATTER AT LENGTH AND SUPPORTED THE ORDER OF AO. HE ALSO BROUGHT TO THE NOTICE OF BENCH THAT THE AUTHOR ITY FOR ADVANCE RULING IN CASE OF AJMER VIDHYUT NIGAM LTD (AAR NO. 1012 OF 2010) H AS HELD THAT THE TRANSMISSION AND WHEELING CHARGES ARE IN THE NATURE OF FEES FOR TECHNICAL SERVICES LIABLE FOR TDS U/S 194J. 2.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL ON RECORD. IT IS NOTED THAT UNDER SIMILAR FACTS AND CIRCUMSTANCES , THE COORDINATE BENCH IN ASSESSEES OWN CASE (SUPRA) HAS DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE WHICH HAS BEEN FOLLOWED BY LD CIT(A). AS FAR AS D ECISION OF AAR IS CONCERNED, THE SAID DECISION HAS BEEN STAYED BY HONBLE RAJASTHAN HIGH COURT AS OBSERVED FROM THE ORDER OF LD CIT(A) AND IN ANY CASE, THE SAME IS NOT BINDING ON US. RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE BENCH, WE HERE BY SUSTAINED THE ORDER OF LD CIT(A). GROUND NO. 1 OF REVENUE IS THUS DISMISSED. ITA NO. 790/JP/14 ITO, TDS-2 JAIPUR VS THE SR. ACCOUNTS OFFICER (RDP PC) JAIPUR VIDYUT VITRAN 5 3. REGARDING GROUND NO. 2, REVENUE HAS CHALLENGED THE ACTION OF LD CIT(A) IN HOLDING THAT THE ASSESSEE WAS NOT LIABLE TO PAY IN TEREST U/S 201(1A) OF THE IT ACT, 1961 BECAUSE THERE WAS NOT TAX LIABILITY ON THE INC OME OF THE DEDUCTEE. IN THE PRESENT CASE, WHILE DISPOSING OFF GROUND NO. 1, WE HAVE HELD THAT THE APPELLANT DOESNT HAVE A LIABILITY TO DEDUCT TDS U/ S 194J OF THE ACT. GIVEN THAT THERE IS NO LIABILITY TO DEDUCT TDS, THE LIABILITY OF INTEREST U/S 201(IA) DOESNT ARISE AT FIRST PLACE. HENCE, GROUND NO. 2 OF REVENUE IS ALSO DISMISSED. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DI SMISSED. OR DER PRONOUNCED IN THE OPEN COURT ON 03/03/2 016. SD/- SD/- R.P. TOLANI) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 03/ 03 /2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE ITO, TDS-2, JAIPUR 2. THE RESPONDENT- THE SR. ACCOUNTS OFFICER (RDPPC) JAIPUR VIDHYUT VITRAN 3. THE CIT(A) III, JAIPUR 4. THE CIT-III, JAIPUR 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA 790 /JP/14) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR