2013 (9) TMI 1250 - AT - Income Tax

Summary

Issues involved:
The judgment involves appeals filed by the same assessee for A.Ys. 2005-06 to 2009-10 against a common order dated 12/03/2013 of ld. CIT(A) regarding the applicability of Section 194J of the Income Tax Act.

Details of the Judgment:

1. Background and Unbundling of Rajasthan State Electricity Board:
The assessee-company, engaged in power distribution in Rajasthan, purchases power from Rajasthan Rajya Vidhyut Utpadan Nigam Ltd. (RVPN) and sells it to consumers. On unbundling of the Rajasthan State Electricity Board, various government companies were formed, including RVPN for transmission. The Electricity Act 2003 aimed to regulate the electricity industry and promote competition.

2. Technical Services and Transmission Charges:
The Assessing Officer (A.O.) contended that payments to RVPN for transmission constituted technical services u/s 194J, leading to a demand u/s 201(1) and interest u/s 201(1A). The A.O. argued that RVPN's activities required technical support, falling under technical services. However, the assessee disputed this, stating that the State Load Dispatch Centre's directions were statutory and not for services rendered.

3. Appellate Proceedings and Precedent:
The ld. CIT(A) upheld the A.O.'s decision, leading to further appeal. Both parties reiterated arguments, with the assessee citing a Jaipur Bench decision that transmission charges were not for technical services. The ITAT Jaipur Bench's ruling supported the assessee's stance, emphasizing that the charges were reimbursement of costs, not technical services. Additionally, interest u/s 201(1A) was deemed inapplicable.

4. Final Decision and Outcome:
Respecting the Tribunal's precedent, it was held that Section 194J did not apply to the assessee's transmission charges to RVPN. Consequently, the A.O.'s decision to treat the assessee as in default u/s 201 and impose interest u/s 201(1A) was deemed incorrect. Thus, all appeals of the assessee were allowed, overturning the previous decisions.

Conclusion:
The judgment clarified that payments for transmission charges were not subject to tax deduction u/s 194J, as they were considered reimbursement of costs rather than technical services. The assessee's appeal was successful, highlighting the importance of legal precedent in tax matters.