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2017 (12) TMI 911 - AT - Income TaxTDS u/s 194J - non deduction tax on payment of transmission and wheeling charges - Held that - 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. Hence the action of the AO in treating the assessee to be an assessee-in-default u/s. 201(1) of the Act and the order dated 27.3.2014 passed u/s. 201(1)/201(1A) of the I.T. Act were rightly deleted by the Ld. CIT(A) which does not need any interference on our part hence we uphold the action of the Ld. CIT(A) and reject the ground raised by the Revenue.
Issues involved:
- Interpretation of section 194J of the Income Tax Act, 1961 regarding deduction of tax on transmission and wheeling charges paid by the assessee. - Whether the payments made by the assessee qualify as fees for technical or professional services under section 194J. - Validity of the order passed by the Assessing Officer (AO) holding the assessee in default for non-deduction of tax at source. - Appeal against the order of the Ld. CIT(A)-I, Noida allowing the appeal of the assessee. Analysis: 1. Interpretation of section 194J: The case involved a Public Limited Company engaged in electricity distribution. The Assessing Officer (AO) held the assessee in default for not deducting tax at source under section 194J on payments made for transportation and wheeling charges. The Ld. CIT(A)-I, Noida allowed the appeal of the assessee against this order. 2. Qualification of payments as technical services: The AO contended that the payments made by the assessee qualified as fees for technical or professional services under section 194J. However, the Tribunal found that the services rendered did not involve the provision of technical knowledge, experience, or skills by the service provider. It was observed that the assessee's own engineers and technicians managed the electricity flow, which did not amount to providing technical services as per the Act. 3. Validity of AO's order: The AO's order holding the assessee in default and imposing tax liability and interest was challenged by the assessee before the Ld. CIT(A)-I, Noida. The Ld. CIT(A) ruled in favor of the assessee, leading to the Revenue appealing before the Tribunal. 4. Judicial precedents and interpretation: The Ld. Counsel of the assessee cited various judicial decisions supporting the assessee's case, including the judgment of the Hon'ble Delhi High Court in a similar matter. The Tribunal analyzed the legal precedents and found that the transmission and wheeling charges paid by the assessee did not fall under the purview of fees for technical services as defined under the Act. 5. Decision and dismissal of appeal: The Tribunal upheld the order of the Ld. CIT(A) and rejected the grounds raised by the Revenue. The Tribunal's decision was supported by the judgment of the Hon'ble Delhi High Court and the dismissal of the Department's appeal by the Hon'ble Supreme Court. Consequently, the appeal filed by the Department was dismissed by the Tribunal. This detailed analysis of the legal judgment highlights the key issues, arguments presented, judicial interpretations, and the final decision rendered by the Tribunal in this tax matter.
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