2017 (11) TMI 1633 - AT - Income Tax

TDS u/s 194J - liability to deduct tax on payment of transmission and wheeling charges - Held that - As decided in assessee in favour of assessee 2017 (12) TMI 911 - ITAT DELHI the expression technical service could have reference to only technical service rendered by a human and that it would not include my service provided by machines or robots. However as against above contention we find that the AO has completely failed to bring relevant materials, whatsoever, on record to prove the existence of human interface/element in the present case. In view of the above, we find that such transmission and wheeling charges paid by the assessee does not come within the purview of fees for technical service as defined under Explanation 2 to sec 9(1)(vii) of the Act and accordingly no tax is required to be deducted by the assessee u/s. 194J therefrom - Decided in favour of assessee.

Summary

Issues:
- Interpretation of Section 194J of the Income-tax Act, 1961 regarding tax deduction on transmission and wheeling charges.

Analysis:
- The case involved a public limited company engaged in electricity distribution. The Assessing Officer (AO) found that the company made payments for transportation and wheeling charges without deducting tax at source under section 194J. The AO held the company as an assessee-in-default and passed an order under section 201(1)/(1A).

- The ld. CIT(A) confirmed the AO's action, leading to the Revenue appealing to the ITAT. The Tribunal noted a similar issue decided in favor of the assessee for the assessment year 2012-13. The Tribunal reviewed the facts and decision of the previous case, where the addition made by the AO was directed to be deleted.

- The Tribunal emphasized that section 194J applies when technical knowledge or services are made available for use by others. In this case, the company's own engineers and technicians monitored and supervised electricity flow, not involving the provision of technical services. The Tribunal cited relevant case law, including the decision of the Hon'ble Delhi High Court, to support its interpretation.

- The Tribunal found that the AO failed to establish the presence of human interface/element in the services provided, which are essential for technical services under section 194J. Consequently, the transmission and wheeling charges paid by the company did not fall under fees for technical services as defined in the Act. The Tribunal upheld the ld. CIT(A)'s decision to delete the tax liability imposed on the company.

- The Tribunal referenced the decision of the Hon'ble Delhi High Court in a similar case involving wheeling charges, which was affirmed by the Hon'ble Supreme Court. The Department's appeal to the Supreme Court was dismissed, reinforcing the Tribunal's decision.

- Ultimately, the Tribunal dismissed the Revenue's appeal, finding no merit in the ground raised and following the precedent set in previous cases. The sole ground raised by the Revenue was dismissed, and the appeal of the Revenue was consequently dismissed.

This detailed analysis highlights the key legal interpretations, precedents, and decisions that led to the dismissal of the Revenue's appeal regarding the tax deduction on transmission and wheeling charges under section 194J of the Income-tax Act, 1961.