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2018 (3) TMI 1080 - AT - Income TaxTDS u/s 194J - disallowance u/s 40(a)(ia) for non-deduction of tax on payment of transmission and wheeling charges - Held that - Disallowance under Section 40(a)(ia) for non-deduction of tax on payment of transmission charges the same is covered in favour of the assessee by the decision of the Tribunal in assessee s own case 2017 (12) TMI 911 - ITAT DELHI as held AO has completely failed to bring relevant materials, whatsoever, on record to prove the existence of human interface/element in the present case. Thus 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. Hon ble Delhi High Court in case of CIT vs. Delhi Transco Ltd. (2015 (8) TMI 378 - DELHI HIGH COURT) considering the provisions of section 194J of the Act held that wheeling charges paid for transportation of electricity cannot be characterized as fee for technical service - Decided in favour of assessee
Issues Involved:
1. Validity of the CIT(A) order. 2. Disallowance of power purchase cost. 3. Disallowance under Section 40(a)(ia) for non-deduction of tax on transmission charges. 4. Set-off of brought forward business loss and depreciation allowance. 5. Non-allowance of tax credit under Section 115JAA. 6. Charging of interest under Section 234B. Detailed Analysis: 1. Validity of the CIT(A) Order: The appellant argued that the CIT(A) did not pass a speaking order and failed to adjudicate all grounds raised. However, these grounds were not pressed by the appellant during the appeal as they were consequential to other grounds. 2. Disallowance of Power Purchase Cost: The appellant contested the disallowance of ?15,77,68,266/- and ?51,06,07,633/- by the Assessing Officer (AO) as contingent liabilities. The appellant had disputed the rates billed by UPPCL and followed the UPERC determined rates in its books. Since UPERC ruled in favor of the appellant and UPPCL did not appeal, these grounds became academic and infructuous. 3. Disallowance under Section 40(a)(ia) for Non-Deduction of Tax on Transmission Charges: The AO disallowed ?24,70,24,128/- for non-deduction of tax under Section 194J on transmission charges. The appellant argued that this issue was covered in its favor by previous Tribunal decisions and the Delhi High Court ruling in CIT vs. Delhi Transco Ltd., which held that transmission charges are not fees for technical services. The Tribunal agreed, stating no tax was required to be deducted, and thus, the disallowance was incorrect and liable to be deleted. 4. Set-off of Brought Forward Business Loss and Depreciation Allowance: The appellant contended that the CIT(A) erred in not allowing the set-off of brought forward business loss and depreciation allowance. However, this ground was not pressed as it was consequential to the disallowed power purchase cost grounds. 5. Non-Allowance of Tax Credit under Section 115JAA: The appellant argued that the CIT(A) erred in not allowing tax credit under Section 115JAA. This ground was also not pressed as it was consequential to the disallowed power purchase cost grounds. 6. Charging of Interest under Section 234B: The appellant contested the charging of interest of ?8,38,22,076/- under Section 234B. The Tribunal noted that this ground was consequential to the other findings and thus, the interest charge was upheld based on the final outcome of the primary issues. Conclusion: The Tribunal dismissed grounds 1 to 3, 4(a) to 5(b), 7, and 8 as either not pressed or academic. It allowed grounds 6(a) to 6(e) regarding the disallowance under Section 40(a)(ia) for non-deduction of tax on transmission charges, following precedents that such charges do not constitute fees for technical services. The appeal was partly allowed.
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