M/s. Madhya Pradesh Madhya Kshetra Vidyut Vitran Co. Ltd., Bhopal V. THE ACIT 2(1), Bhopal

MA 71/IND/2016

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 5101 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 03-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAVED KHAN
• Keywords: Rectification of order; Period of limitation; Non-deduction of tax
• Section: 201(1); 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., .., % BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER MADHYA PRADESH MADHYA KSHETRA VIDYUT VITRAN C0MPANY LIMITED, BHOPAL. .. ./ PAN: AADCM-6799SG VS. ASSISTANT COMMISSIONER OF INCOME TAX, BHOPAL / APPLICANT / RESPONDENT / APPLICANT BY SHRI MANOJ MUNSHI, C.A. / RESPONDENT BY SHRI JAVED KHAN, SR. DR DATE OF HEARING 09.12.2016 DATE OF PRONOUNCEMENT 15.12.2016 M.A.NOS. 67 TO 71/IND/2016 (ARISING OUT OF .. ./ I.T.A. NOS.436/IND/2013, 533/IND/2014, 463 & 464/IND/2014 & 652/IND/2014 #% % / A.YS. : 2007-08 TO 2010-11 M.A.NOS. 67 TO 71/IND/2016 A.YS.2006-07 TO 2010-11 M.P.MADHYA KSHETRA VIDYUT VITARAN CO.LTD.,BHOPAL. PAGE 2 OF 14 / O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR. BY THESE APPLICATIONS FILED U/S 254(2) OF THE INCOM E-TAX ACT, 1961, FOR RECTIFICATION IN THE ORDER DATED 09. 02.2016 PASSED IN I.T.A.NOS. 436/IND/2013, 533/IND/2014, 463/IND/2014, 464/IND/2014 AND 652/IND/2014 FOR ASSESSMENT YEARS 2006-07 TO 2010-11. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PUBLIC SECTOR UNDERTAKING OF MADHYA P RADESH GOVERNMENT. THE ASSESSEE IS ENGAGED IN DISTRIBUTION OF ELECTRICITY/POWER TO THE CONSUMERS BY PURCHASING TH E SAME FROM ELECTRICITY/POWER GENERATION COMPANY I.E. M/S. MADHYA PRADESH POWER GENERATING COMPANY LIMITED WHICH IS TRANSMITTED BY MADHYA PRADESH POWER TRANSMISSION COM PANY (TRANSCO) UNDER A TRANSMISSION SERVICE AGREEMENT. T HE ASSESSEE FOR TRANSMISSION OF POWER/ELECTRICITY FROM THE GRID OF POWER GENERATING COMPANY TO THE DISTRIBUTION GRID, PAYS WHEELING CHARGES AND STATE LOAD DESPATCH CENTRE (SLD C) CHARGES AS PER ELECTRICITY ACT, 2003. THE AO HAS CO NSIDERED M.A.NOS. 67 TO 71/IND/2016 A.YS.2006-07 TO 2010-11 M.P.MADHYA KSHETRA VIDYUT VITARAN CO.LTD.,BHOPAL. PAGE 3 OF 14 THESE PAYMENTS AS WHEELING AND SLDC CHARGES AS PAYME NT OF FEES FOR TECHNICAL SERVICES AND AS THE ASSESSEE HAS FAILED TO DEDUCT TDS ON THESE PAYMENTS U/S 194J, THE AO MADE DISALLOWANCE OF EXPENDITURE U/S 40(A)(IA) OF THE ACT . CONSEQUENTLY, THE AO HAS ALSO CHARGED INTEREST U/S 201(1) AND LIABILITY FOR PAYMENT OF INTEREST U/S 201(1A) O F THE ACT. THESE APPEALS OF THE ASSESSEE FOR ASSESSMENT YEAR 2 006-07 TO 2010-11 AND APPEAL BY REVENUE FOR ASSESSMENT YEARS 2011-12 AND 2012-13 WERE DECIDED BY A COMMON ORDER BY THIS TRIBUNAL DATED 09.02.2016, WHEREBY THE ISSUE REGARDI NG TAX LIABILITY ON THE AFORESAID EXPENSES WAS RESTORED TO THE FILE OF THE AO FOLLOWING THE TRIBUNAL ORDER IN THE CASE OF T HE ASSESSEE IN I.T.A.NOS. 653 TO 655/IND/2014. THE ISSUE UNDER CONSIDERATION WAS RESTORED WITH A DIRECTION TO THE A O TO ADJUDICATE THE ISSUE OF LIABILITY OF THE ASSESSEE O F INTEREST U/S 201(1A) AND 194J FOLLOWING THE DECISION OF HON'BLE S UPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PRIVATE LIMITED VS. CIT, 293 ITR 226 ( S.C.), WHEREIN IT WAS HELD THAT WHEN THE PAYEE HAD PAID FULL TAX, THEN THE ASSESSEE CANNOT BE M.A.NOS. 67 TO 71/IND/2016 A.YS.2006-07 TO 2010-11 M.P.MADHYA KSHETRA VIDYUT VITARAN CO.LTD.,BHOPAL. PAGE 4 OF 14 TREATED AS AN ASSESSEE IN DEFAULT FOR TDS U/S 201(1 ) OF THE ACT. IN THE SAID APPEAL, THE ASSESSEE HAS ALSO CITED AS MANY AS TWELVE ORDERS OF I.T.A.T. BENCHES, WHEREIN THE PAYMEN T OF WHEELING CHARGES BY ELECTRICITY DISTRIBUTION COMPANY TO ELECTRICITY TRANSMISSION COMPANY HAVE BEEN HELD AS PERMISSIBLE WITHOUT TDS. BY WAY OF THESE APPLICATIONS U/S 254(2), THE LD. AUTHORIZED REPRESENTATIVE OF THE AS SESSEE SUBMITTED AS UNDER :- 1. THAT, THE PRESENT APPLICATION IS BEING PRESENTE D FOR RECTIFICATION OF MISTAKE OF LAW AS CONTEMPLATED UNDER CBDT CIRCULAR NO. 68 (F.NO.245/17/71-A & PAC) DATED 17.11.1971 AND CATENA OF JUDGMENTS OF HIGH COURTS AND TRIBUNAL THAT A MISTAKE ARISING AS A RESULT OF A SUBSEQUENT INTERPRETATION OF LAW BY THE SUPREME COURT WOULD CONSTITUTE A MISTAKE APPARENT FROM THE RECORDS AND THE SAME IS RECTIFIABLE U/S 254(2) OF THE ACT PROVIDED APPLICAT ION FOR RECTIFICATION HAS BEEN MADE WITHIN THE PERIOD O F STATUTORY LIMITATION. IN THE PRESENT CASE SUPREME M.A.NOS. 67 TO 71/IND/2016 A.YS.2006-07 TO 2010-11 M.P.MADHYA KSHETRA VIDYUT VITARAN CO.LTD.,BHOPAL. PAGE 5 OF 14 COURT HAS CONFIRMED THE JUDGMENT OF DELHI HIGH COURT HOLDING THAT PROVISIONS OF TDS ARE NOT APPLICABLE ON PAYMENT OF WHEELING OR TRANSMISSION CHARGES AND THE PRESENT APPLICATION FOR RECTIFICATI ON IS WITHIN STATUTORY PERIOD OF LIMITATION. A COPY OF JUDGMENT OF SUPREME COURT IN SLP NO. 853/2016 VIDE ORDER DATED 22.01.2016 IS ANNEXED HEREWITH AND MARKED AS ANNEXURE-A/1. 2. THE APPLICANT IS AN ELECTRICITY DISTRIBUTION COMPANY, WHICH PURCHASES THE POWER/ELECTRICITY FROM THE POWER GENERATING COMPANY WHICH IS TRANSMITTED FROM THE GENERATING STATION TO THE DISTRIBUTION GRID OF THE APPLICANT COMPANY BY POWER TRANSMISSION COMPANY ON PAYMENT TRANSMISSION/ WHEELING CHARGES. 3. THAT, THE ASSESSING OFFICER HAS ASSESSED THE LIABILITY OF PAYMENT OF TDS FROM THE PAYMENT OF WHEELING OR TRANSMISSION CHARGE UNDER SECTION 201 (1) AND LIABILITY FOR PAYMENT OF INTEREST UNDER SEC TION M.A.NOS. 67 TO 71/IND/2016 A.YS.2006-07 TO 2010-11 M.P.MADHYA KSHETRA VIDYUT VITARAN CO.LTD.,BHOPAL. PAGE 6 OF 14 201 (1A) OF THE INCOME TAX ACT AND HAD ISSUED THE DEMAND NOTICE U/S 156 OF I.T. ACT. 4. THAT, THE ASSESSING OFFICER HAS HELD THE ASSES SE IN DEFAULT DUE TO NON-DEDUCTION OF TAX AT SOURCE FR OM THE PAYMENT OF TRANSMISSION CHARGES/WHEELING CHARGES TO POWER TRANSMISSION COMPANY (TRANSCO) UNDER SECTION 194-J FOR PAYMENT FOR FEES FOR PROFESSIONAL & TECHNICAL SERVICES. ON APPEAL THE LD . CIT (APPEALS) CONFIRMED THE ORDER AND DEMAND AGAINST WHICH THE APPLICANT HAD PREFERRED THE AFORESAID APPEALS BEFORE THIS HON'BLE TRIBUNAL. 5. THAT, DURING THE COURSE OF HEARING THE COUNSEL FOR THE APPLICANT HAD RELIED UPON MANY JUDGMENTS OF VARIOUS ITAT'S OF THE COUNTRY AND ALSO THIS HON'BLE TRIBUNAL IN THE SIMILAR MATTER. THE APPELLANT HAD ALSO RELIED UPON THE JUDGMENTS OF BOMBAY HIGH COURT AND DELHI HIGH COURT ON THE IDENTICAL ISSUE O F TDS FROM THE PAYMENT OF WHEELING/TRANSMISSION CHARGES PAID BY ELECTRICITY DISTRIBUTION COMPANY TO M.A.NOS. 67 TO 71/IND/2016 A.YS.2006-07 TO 2010-11 M.P.MADHYA KSHETRA VIDYUT VITARAN CO.LTD.,BHOPAL. PAGE 7 OF 14 POWER TRANSMISSION COMPANY. THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF THE COMMISSIONER OF INCOME TAX (TDS) VS. MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COMPANY LIMITED (2015) 375 ITR 23 (BOM) DECIDED ON 08.05.2015 IS ANNEXED HEREWITH AND MARKED AS ANNEXURE-A/2 AND THE JUDGMENT OF DELHI HIGH COURT COMMISSIONER OF INCOME TAX-II AND ORS. VS. DELHI TRANSCO LTD. MANU/DE/2199/2015 DECIDED ON 06.08.2015 IS ANNEXED HEREWITH AND MARKED AS ANNEXURE-A13. 6. IT IS CATEGORICALLY SUBMITTED THAT THE APPELLANT HAD SUBMITTED THESE JUDGMENTS OF HIGH COURTS AT THE TIME OF HEARING ON 20/10/2015 AND THE CASE WAS ADJOURNED AS LD. DR WANTED TO GO THROUGH THE ORDERS OF HIGH COURT AND THEREAFTER DURING THE HEARING ON 20.01.2016 THE LD. DR HAS CONCEDED THAT THE PRESENT CASE IS SQUARELY COVERED BY THE AFORESA ID JUDGMENT OF BOMBAY AND DELHI HIGH COURTS. M.A.NOS. 67 TO 71/IND/2016 A.YS.2006-07 TO 2010-11 M.P.MADHYA KSHETRA VIDYUT VITARAN CO.LTD.,BHOPAL. PAGE 8 OF 14 7. THAT, WHEN THE PRESENT ORDER WAS PASSED BY THIS HON'BLE TRIBUNAL ON 09.02.2016 IT APPEARS THAT SUBMISSION MADE BY APPELLANT ALONG WITH COPY OF JUDGMENT OF DELHI AND BOMBAY HIGH COURTS WITH THE SYNOPSIS AND THE CONCESSION GIVEN BY THE LD. DR ABOUT APPLICABILITY OF JUDGMENT OF BOMBAY AND DELHI HIGH COURT ON THE FACTS OF THE CASE, HOWEVER IT APPEARS THAT THE SAME HAS LIKELY SKIPPED THE ATTENTION AND THE ORDER HAS BEEN PASSED WITHOUT CONSIDERING THE AFORESAID JUDGMENTS OF HIGH COURTS. 8. IT IS FURTHER SUBMITTED THAT THE ORDER OF DEL HI HIGH COURT HOLDING THAT PROVISIONS OF TDS ARE NOT APPLICABLE FROM PAYMENT OF WHEELING/TRANSMISSION CHARGES HAS BEEN AFFIRMED BY THE HON'BLE SUPREME COURT IN SLP NO. 853/2016 VIDE ORDER DATED 22.01.2016. 3. WE HAVE CONSIDERED THE FACTS AND FIND THAT THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CAS E OF CIT- TDS VS. M/S. DELHI TRANSCO LIMITED, IN I.T.A.NO. 32 3 DATED M.A.NOS. 67 TO 71/IND/2016 A.YS.2006-07 TO 2010-11 M.P.MADHYA KSHETRA VIDYUT VITARAN CO.LTD.,BHOPAL. PAGE 9 OF 14 06.08.2015 HAS BEEN APPROVED BY THE HON'BLE SUPREM E COURT IN SLP 853/2016 AND 7898/2016 DATED 22.01.2016, WHER EIN IT WAS HELD THAT THE EXPENDITURE OF WHEELING CHARGES WERE NOT CONSIDERED AS FEE FOR TECHNICAL SERVICES. THEREFORE , THERE WAS NO LIABILITY TO DEDUCT TDS THEREON. SIMILARLY, THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT (TDS) VS. MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COMPANY LIMITED, (2015) 375 ITR 23 (BOM) DATED 08.05.2015 HOLDING TH AT PAYMENT OF WHEELING AND TRANSMISSION CHARGES DOES NO T AMOUNT TO FEE FOR TECHNICAL SERVICES. HENCE, NO LIA BILITY OF JTDS HAS ARISEN ON ACCOUNT OF TDS ON SUCH PAYMENTS. WE FIND THAT THE C.B.D.T. IN CIRCULAR NO. 68 DATED 17 .11.1971 HAS HELD THAT A MISTAKE ARISEN AS A RESULT OF SUBSE QUENT INTERPRETATION OF LAW BY THE HON'BLE SUPREME COURT WOULD CONSTITUTE A MISTAKE APPARENT FROM THE RECORD AND T HE SAME IS RECTIFIABLE U/S 254(2) OF THE INCOME-TAX ACT, 1961, PROVIDED APPLICATION FOR RECTIFICATION HAS BEEN MADE WITHIN A PERIOD OF STATUTORY LIMITATION. THE LD. AUTHORIZED REPRESENTA TIVE OF THE ASSESSEE ALSO CITED A DECISION OF I.T.A.T., BOMBAY BENCH IN THE M.A.NOS. 67 TO 71/IND/2016 A.YS.2006-07 TO 2010-11 M.P.MADHYA KSHETRA VIDYUT VITARAN CO.LTD.,BHOPAL. PAGE 10 OF 14 CASE OF AMERICAN EXPRESS BANK LIMITED VS. DY. CIT, IN I.T.A.NO. 7027 AND 7382/BOM/1990 DATED 02.07.1997, WHEREIN I.T.A.T. CONSIDERED THE SAID BOARDS CIRCULA R VIDE PARA 26 AS UNDER :- 26. (I) OUR AFORESAID VIEW IS SUPPORTED BY YET ANOTHER PROPOSITION RELATING TO THE EFFECT OF THE D ECISION OF THE SUPREME COURT. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF K. S. GOPALASWAMI IYER V. SALES TAX APPELLATE TRIBUNAL [1965] 16 STC 854 HAS HELD THAT A DECISION OF THE SUPREME COURT TO THE EFFECT THAT A PARTICULAR LEVY WAS WRONG OR NOT IN ACCORDANCE WITH LAW MEANS THAT THE LEVY WAS AT NO TIME GOOD AND THE LAW THEREABOUT WAS A DEAD LAW. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF R. KUPPUSWAMY MUDALIAR & SONS V. BOARD OF REVENUE [1980] 45 STC 152 HAS FURTHER HELD THAT THIS IS SO BECAUSE THE LAW SO DEC LARED HAS EFFECT NOT ONLY FROM THE DATE OF DECISION BUT A LSO FROM THE INCEPTION OF THE STATUTORY PROVISIONS AND THIS POSITION HAS BEEN RECOGNISED BY THE CBDT IN CIRCULA R M.A.NOS. 67 TO 71/IND/2016 A.YS.2006-07 TO 2010-11 M.P.MADHYA KSHETRA VIDYUT VITARAN CO.LTD.,BHOPAL. PAGE 11 OF 14 NO. 68, DATED 17-11-1971 THE RELEVANT PART OF WHICH IS EXTRACTED AS UNDER:- 'THE BOARD ARE ADVISED THAT A MISTAKE ARISING AS A RESULT OF SUBSEQUENT INTERPRETATION OF LAW BY THE SUPREME COURT WOULD CONSTITUTE 'A MISTAKE APPARENT FROM THE RECORD' AND RECTIFICATORY ACTION UNDER SECTION 35/154 OF THE INCOME-TAX ACT, 1922/1961 WOULD BE IN ORDER. IT HAS, THEREFORE, BEEN DECIDED THAT WHERE AN ASSESSEE MOVES AN APPLICATION UNDER SECTION 154 POINTING OUT THAT IN THE LIGHT OF A LATER DECISION OF THE SUPREME COURT PRONOUNCING THE CORRECT LEGAL POSITION, A MISTAKE HAS OCCURRED IN ANY OF THE COMPLETED ASSESSMENTS IN HIS CASE, THE APPLICATION SHALL BE ACTED UPON, PROVIDED THE SAME HAS BEEN FILED WITHIN TIME AND IS M.A.NOS. 67 TO 71/IND/2016 A.YS.2006-07 TO 2010-11 M.P.MADHYA KSHETRA VIDYUT VITARAN CO.LTD.,BHOPAL. PAGE 12 OF 14 OTHERWISE IN ORDER. WHERE ANY SUCH APPLICATIONS HAVE ALREADY BEEN REJECTED AND THE ASSESSEE FILES FRESH APPLICATION WITHIN THE STATUTORY TIME-LIMIT, THE SAME MAY ALSO BE TREATED ON PAR WITH THE APPLICATIONS WHICH MAY EITHER BE PENDING OR RECEIVED AFTER THE ISSUE OF THIS CIRCULAR.' 'THE BOARD DESIRE THAT ANY APPEALS OR REFERENCES PENDING ON THE POINT AT ISSUE MAY PLEASE BE WITHDRAWN.' (II) THE HON'BLE SUPREME COURT IN ANOTHER LATEST DECISION IN THE CASE OF POOTHUNDU PLANTATION (P.) LTD. V. AGRL. ITO [1996] MANU/SC/1564/1996 : 221 ITR 557 HAS HELD THAT IF THE SUPREME COURT HAS CONSTRUED THE MEANING OF A SECTION THEN ANY DIRECTION TO THE CONTRARY GIVEN BY ANY AUTHORITY MUST BE HELD TO BE ERRONEOUS AND AS SUCH ERROR MUST M.A.NOS. 67 TO 71/IND/2016 A.YS.2006-07 TO 2010-11 M.P.MADHYA KSHETRA VIDYUT VITARAN CO.LTD.,BHOPAL. PAGE 13 OF 14 BE TREATED AS AN ERROR APPARENT ON THE RECORDS. 4. IN THE LIGHT OF THE ABOVE, WE FIND THAT THE PAYMENT MADE BY THE ASSESSEE ON ACCOUNT OF WHEELING AND TRANSMISSION (SLDC) CHARGES ARE NOT IN THE NATURE O F FEE FOR TECHNICAL SERVICES. HENCE, THERE IS NO REQUIREMENT TO DEDUCT TDS U/S 194J PAYMENT THEREON AND CONSEQUENTLY NO LI ABILITY ON ACCOUNT OF CHARGING OF INTEREST U/S 201(1) AND 2 01(1A) WOULD ARISE. SINCE HON'BLE SUPREME COURT HAS DECIDE D THE ISSUE UNDER CONSIDERATION IN FAVOUR OF THE ASSESSEE . THEREFORE, NOT CONSIDERING THE DECISION OF HIGH COU RT AND SUBSEQUENT DECISION OF HON'BLE SUPREME COURT, CONST ITUTE THE MISTAKE APPARENT FROM RECORD IN RESPECT OF THE AFOR ESAID APPEALS, HENCE, THESE ARE MODIFIED TO THIS EXTENT A ND THE ISSUE OF NON-DEDUCTION OF TDS ARE TREATED AS ALLOWED. THE ORDER IS MODIFIED TO THAT EXTENT AND OTHER FINDINGS OF THE A FORESAID APPEALS DECIDED IN THE ORDER SHALL REMAIN UNCHANGED . M.A.NOS. 67 TO 71/IND/2016 A.YS.2006-07 TO 2010-11 M.P.MADHYA KSHETRA VIDYUT VITARAN CO.LTD.,BHOPAL. PAGE 14 OF 14 5. IN THE RESULT, THE MISC. APPLICATIONS ARE ALLOWED A S ABOVE. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON THE 15 TH DECEMBER, 2016. SD/- (..) (D.T.GARASIA) JUDICIAL MEMBER SD/- (..) (O.P.MEENA) ACCOUNTANT MEMBER * / DATED : 15 TH DECEMBER, 2016. CPU*