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2023 (4) TMI 730 - AT - Income TaxTDS u/s 194J - Addition u/s 40(a)(ia) - assessee uses the transmission line of Orissa Power Transmission Corporation Limited (OPTCL) and Power Grid Corporation of India Limited (PGCIL) - HELD THAT - The claim of the assessee that it is not liable for TDS insofar as it is not a payment by the assessee to OPTCL but it is the assessee only acting as a banker and deposited in ESCROW arrangements and subsequently payments were made to OPTCL. In any case, the decision in the assessee s own case shows that in the immediately preceding the issue has been held in favour of the assessee and the revenue has not been able to show that any appeal has been filed against the said decision. This being so, respectfully following the decision of the Co-ordinate Bench in assessee s own case 2011 (11) TMI 77 - ITAT, CUTTACK we have no reason to interfere with the order of the ld CIT(A) as the ld CIT(A) has judiciously decided the issue following the decision of the Co-ordinate Bench of this Tribunal for the earlier assessment years. Consequently, we uphold the same. Appeal of the revenue stands dismissed.
Issues Involved:
1. Non-deduction of TDS under Section 194J of the Income Tax Act. 2. Applicability of Section 40(a)(ia) due to non-deduction of TDS. 3. Nature of transmission charges as fees for technical services. Detailed Analysis: 1. Non-deduction of TDS under Section 194J of the Income Tax Act: The core issue in the revenue's appeal was the deletion of disallowance made by the Assessing Officer (AO) due to the assessee's non-deduction of TDS under Section 194J on payments made to Orissa Power Transmission Corporation Limited (OPTCL). The AO argued that the transmission of power involves technical services, thus necessitating TDS deduction. The CIT DR supported this by citing the decision of the Authority of Advance Rulings (AAR) in Ajmer Vidyut Vitran Nigam Ltd., which held that transmission involves technical services, and therefore, TDS under Section 194J is applicable. The assessee countered by relying on the Co-ordinate Bench of the Tribunal's decision in its own case for the assessment year 2009-2010, where it was held that the assessee was not required to deduct TDS on transmission charges paid to OPTCL. The Tribunal had observed that the transmission charges were directly billed by OPTCL to the Distribution Companies (DISCOMs) and that the assessee merely acted as a banker due to escrow arrangements. 2. Applicability of Section 40(a)(ia) due to non-deduction of TDS: The AO contended that the non-deduction of TDS on payments to OPTCL attracted the provisions of Section 40(a)(ia), which disallows certain expenses if TDS is not deducted. The CIT DR emphasized that the assessee had deducted TDS on payments to Power Grid Corporation of India Limited (PGCIL) but failed to do so for OPTCL, creating an inconsistency. The assessee argued that the issue was already settled in its favor for the previous assessment year, and the CIT(A) had rightly followed the Tribunal's earlier decision. The Tribunal had noted that the privity of contract for transmission charges was between OPTCL and the DISCOMs, not the assessee, and the assessee merely facilitated the payment through escrow arrangements. 3. Nature of transmission charges as fees for technical services: The revenue's argument hinged on the assertion that transmission charges should be treated as fees for technical services under Section 194J, based on the AAR's ruling in Ajmer Vidyut Vitran Nigam Ltd. However, the Tribunal observed that this ruling had been overruled by the Rajasthan High Court, which held that interconnected charges/port access charges could not be regarded as fees for technical services and were not liable for TDS. The Tribunal reiterated its earlier findings that the assessee was not liable to deduct TDS on transmission charges paid to OPTCL, as the charges were directly billed to the DISCOMs, and the assessee's role was limited to facilitating payment through escrow arrangements. The Tribunal also noted that the AO had failed to appreciate the purpose and procedure of the escrow arrangement, which did not create a liability for the assessee towards OPTCL. Conclusion: The Tribunal upheld the CIT(A)'s order, which had judiciously followed the Tribunal's earlier decision in the assessee's own case for the previous assessment year. The Tribunal found no merit in the revenue's appeal and dismissed it, affirming that the assessee was not required to deduct TDS on transmission charges paid to OPTCL and that the provisions of Section 40(a)(ia) were not applicable in this case. The Tribunal emphasized the principles of consistency and the lack of any new evidence or appeal against the earlier decision.
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