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TMI Blog2012 (7) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... DS out of the amounts paid to the distribution licensee for providing the infrastructure for providing electricity to the Railway traction sub-station of the assessee - AO directed to delete the demand raised under s. 201(1) and interest charged under s. 201(lA) of the Act. - ITA Nos. 1069 to 1075/Chd/2009; - - - Dated:- 30-12-2011 - Sushma Chowla, Mehar Singh, JJ. Tej Mohan Singh, for the Appellant Ajay Sharma, for the Respondent ORDER By the Bench: 1. These seven appeals filed by the assessee are against the order of the CIT(A), dt. 22nd Sept., 2009 relating to asst. yrs. 2000-01 to 2005-06 and 2007-08 against the order passed under s. 201(1) and 201 (1A) of the IT Act, 1961. 2. The assessee has raised common grounds of appeal in all the captioned assessment years. 3. The grounds of appeal raised by the assessee are as under: "1. That the learned CIT(A) has erred in law as well as on facts in upholding the order of the AO passed under s. 201(1), 201(1A) of the Act 1961, which is illegal, arbitrary and unjustified. 2. That the learned CIT(A) has erred in holding that the provisions of s. 194C of the Act are attracted and the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y limitation in as much as the same has been passed after a gap of 8 years from the end of the relevant financial year which is much beyond the reasonable period of 4 years as held by the various Courts and as such the same is illegal, arbitrary, beyond the period of limitation liable to be quashed. 2. That the CIT (A) has erred in law as well as on facts in holding that the assessee has not raised any ground of appeal in Form No. 35 as the space below ground of appeal in the relevant column was left blank and thereby dismissing the appeal though admittedly appeal was accompanied with grounds in the form of letter dt. 17th March, 2009 and as such the observation of the CIT(A) is illegal, misplaced and contrary to the facts on record." 5. All the seven appeals relating to the same assessee were heard together and are being disposed of by this consolidated order for the sake of convenience. 6. A reference is being made to the facts in ITA No. 1069/Chd/2009 for the disposal of the issue raised in the present appeal. 7. The brief facts of the case are that the survey/inspection of TDS record was carried out at the business premises of the Chief Project Manager, Railway ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submitted that there is no contract involved as no contract agreement was executed between Railways and State Electricity Boards/corporate entities. The creation of infrastructure by the SEBs/corporate entities for providing connection to TSSs at specific point is misconstrued as contract work. Further the providing of connection is like any other metered connection in a building or to a factory which does not attract, TDS under s. 201(1) and 201(1A) of IT Act, 1961. The infrastructure thus created by the SEBs/corporate entities is their property' and Railways have no claim over it for other use for Railway purpose." 9. The AO after considering the reply of the assessee found the same not tenable in view of the undermentioned reasons: As per letter dt. 14th July, 2006 written by Executive Engineer, Electric Transmission Division, UPPCL addressed to Dy. Chief Electrical Engineer, Railway Electrification, Ambala Cantt filed by the assessee with the reply dt. 27th Jan., 2009, it was construction work. The extract letter is reproduced as under: The estimated cost for construction of 132 KV bay at Bareilly-II and for construction of 132 KV transmission line was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that after the assessee makes an application to the electricity supplying agency corporation in response to which the electricity supplying agency/corporation sends the estimate of expenses for approval/acceptance to the assessee. One such estimate of expenses is reproduced at pp. 12 and 13 of the appellate order. The CIT(A) further notes that on getting the approval/payment of the estimated expenses, electricity supplying agency/corporation carry out the necessary infrastructure work, either on its own or through subcontracts and subsequently the electricity is supplied. 12. The CIT(A) thus held that the work relating to construction of infrastructure involve civil, electrical and mechanical work in relation to labour work and hence, it was held that the work was carried out by electricity supplying agency/organization by themselves or through subcontracts. The CIT(A) further noted that there are clearly two parties-the assessee and the electricity supplying agency/corporation and there is a clear process of application, offer/estimate and acceptance/deposit of money and in this process the legal documents are also executed in which terms and conditions are included. These d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee that the provisions of s. 194C of the Act were not applicable. The learned Authorised Representative for the assessee pointed out that sub-station/electric lines provided by the State Electricity Board (SBE) were remained the property of the licensee under which the traction stations were the property of the assessee. Referring to the provisions of ss. 12, 42, 43 and 46 of the Electricity Act, it was contended by the learned Authorised Representative for the assessee that the State Electricity Board is duty bound to provide the infrastructure for providing electricity to the consumers and where certain expenses are incurred in lieu of the statutory obligations to provide electricity to the consumers, such reimbursement of expenses cannot be equated with the works contract. The sub-station and electric lines remain the property of the licensee and land is also owned by the said SBEs, the sub-stations are also owned by SBEs only the traction stations are the property of the assessee. It was further pleaded by the learned Authorised Representative for the assessee that the transaction between the parties was because of sale and no works contract and charges paid to SBEs wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TTJ (Hyd) 654: (2007) 13 SOT 347 (Hyd) and Whirlpool of India Ltd. vs. Jt. CIT (2007) 109 TTJ (Del) 994: (2007) 16 SOT 435 (Del). 18. The learned Departmental Representative for the Revenue pointed out that no time-limit was prescribed in the application of provisions of s. 201(1) of the Act and the AO was empowered to reopen the same in order to determine the TDS liability. Without prejudice to the above said plea, the learned Departmental Representative for the Revenue pointed out that anomaly in the accounts was detected by the survey team on 31st Jan., 2008 and the period of four years was to be reckoned therefrom. The learned Departmental Representative for the Revenue pointed out that the Courts had held four years time to be reasonable. Under s. 147/148 of the Act the prescribed period of reopening is six years and this should be period of reckoning. On the merits of the addition, it was pointed out by the learned Departmental Representative for the Revenue that the assessee was the Government Department. In case of civil contractor, for construct bridge and dam, Government Department are giving contracts and TDS is deducted out of full amount paid to the said person. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsee i.e. SEB and consumer i.e. the assessee before us, further issue raised was that the provisions of s. 194C of the Act were not attracted. 21. The learned Authorised Representative for the assessee had made elaborate submissions in this regard and has also furnished on record two paper books. The paper book No. II compiles the correspondence between SEB and office of Railways for sanction of the load. At p. 1 of paper book II the assessee has enclosed an application made by it for sanction of load for Railway traction sub-station, Ambala-Moradabad section. Vide said communication dt. 19th Oct., 1992 the assessee claimed that the project for electrification of Ambala-Moradabad section has been sanctioned for Railway electrification and for carrying out the said activity, it proposed to have four traction sub-stations along with the Railway track. The connected load at each individual sub-station would be 20MVA. A request was made to the Chairman, UPSEB, Shakti Bhawan, Lucknow for sanctioning the load for each traction sub-station. The application reads as under: "No. DUL/RE/UMB/Elect-173 dt.: 19th Oct., 1992 Chairman, UPSEB 14, Ashok Marg Shakti Bhawan Lucknow (U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngineer Electricity Distribution Division-Moradabad's letter No. 1647 dt. 25th June, 1996. The UPSEB authorities have demanded an amount of Rs.1,16,27,300.00 vide his letter cited above. Therefore, the original copy of UPSEB is sent herewith for arranging early payment please. DA/1 As above Sd/- Divl. Elect. Engineer, Moradabad Copy to the Executive Engineer, Electricity Distribution Division-I, UPSEB/Moradabad for information please." 23. Thereafter minutes of meeting held with Railway for giving power supply to Railway traction sub-station in Ambala-Moradabad section is placed at pp. 8 and 9 of the paper book II. The said meeting was held with UPSEB and Railway Electrification, Ministry of Railways. Pursuant to the said meeting, tentative estimated cost of forgiving supply to Railway traction sub-station at various areas on Ambala-Moradabad section was proposed by UPSEB. The said letter is enclosed at p. 10 of the paper book II along with drawing of the proposed infrastructure to be provided at pp. 11 to 16 of the paper book II. It reads as under: "Office of the Executive Engineer Electricity Trans. Division U.P. State Electy. Board 33 KV S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of the traction sub-station at Kanth and Najibabad which is enclosed at p. 18 of the paper book II and reads as under: "Railway Electrification, Ambala Cantt. Office of the Chief Project Manager Rly. Electrification. Ambala Cantt. No. DUL/RE/UMB/173-11 Dt. ast Jan., 2002 Dy. General Manager, Uttar Pradesh Power Corporation Ltd., Moradabad. Sub.: The deposit estimate for 132 KV power supply of Traction Substation at Kanth and Nazibabad. Ref: Your letter No. 6118 ETC(M)/DS-27/Railway Traction dt. 21st Dec., 2001. The estimates for giving power supply to Kanth and Nazibabad Railway Traction Sub-station have been received in this office vide your letter under reference. These estimates have been examined in this office. It has been found that supervision charges @ 25 per cent are on the higher side. The similar type of estimate for 220 KV power supply for Railway Traction Sub-station at Roorkee was submitted by Uttar Pradesh Power Corpn. Ltd., Roorkee and in that estimate the supervision charges were charged @ 15 per cent. It is requested to look into the matter and revise the estimates for Kanth and Nazibabad accordingly. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , dt. 16th Jan., 2002 on the above noted subject. Kindly find enclosed herewith a copy of the following sanctioned/revised estimates for your kind information and necessary action. 1. Estimate for giving power supply to Railway Traction S/S at Najibabad along with associated line amounting to Rs.458.60 lacs. 2. Estimate for giving power supply to Railway Traction S/S at Kanth along with associated line amounting to Rs.273.64 lacs. 3. Estimate for giving power supply to Railway Traction S/S at Nagina along with associated line amounting to Rs.227.40 lacs as desired by Railway General Manager (TD) UPPCL, Lucknow. Encl. As above. (K.K. Garg) Dy. General manager No.................ETC(M).............of date/ Copy to the following for information and necessary action: 1. General Manager (TW), H-2, Shastri Nagar, Meerut. 2. General Manager (TD), 11th Floor, Shakti Bhawan Extn. UPPCL, Lucknow 3. Executive Engineer, Electy. Trans. Division, UPPCL, Bijnore. (K.K. Garg) Dy. General manager" 27. In the said communication is also annexed repeat in which it has been stated that the estimate was for giving 12.5 MVA load at 132 KV voltage to Nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to Railway for track Electrification (Traction Line) in Saharanpur-Moradabad section of Northern Railway at Kanth" 30. The agreement refers to the distribution company as the licensee of the one part and the assessee before us as the consumer of the other part. The parties agreed to certain terms and conditions and as per the preamble, cls. 1 and 2 provide as under: "1. The licensee is, inter alia, engaged in business of supplying electricity and has been granted a license under the Indian Electricity Act, 1910 and. is presently a deemed licensee under s. 14, 1 proviso of the Electricity Act, 2003 (hereinafter referred to as the Act) for distribution and/or retail supply and/or bulk supply of energy to various consumers within its licensed area. 2. The consumer has vide application dt. 3rd Jan., 2002 applied to the licensee for/procuring supply of energy for electrical installation (for a load of '5 MVA KW/BHP/KVA) (hereinafter referred to as "contractual load") at its premises situate Kanth Railway TSS (hereinafter referred to as "the said premises") in, connection with.....................for the purpose Railway Electric Traction." 31. The parties thereafte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es shall be on the consumer. and in the event of any damage caused to the licensee's equipment in the premises of the consumer, the cost thereof shall be met with by the consumer. Under cl. 4 is provided the notices for consumption to be issued by the licensee to the consumer and the payments by the consumer, which reads as under: "4(b). However, the licensee shall not be required to issue any separate notice for payment of monthly electricity consumption bills and such bill shall be deemed to be a "bill cum notice" for payment of the amounts mentioned therein." 34. Clause 6 of the agreement reads as under: "6. If the consumer after execution of declaration/agreement reduces or increases his load or changes the purpose of use or shift his connection, he shall have to execute a fresh declaration/agreement, which will be valid for two year like the agreement/executed at the time of new connection. However any relief/concession provided in the Rate Schedule/any order of Commission Discom as admissible to new concession shall not be admissible on execution of the fresh agreement/declaration due to change in premises/reduction of load as above..." 35. Under cl. 8 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted the duties of distribution licensees and open access. As per the said section it shall be the duty distribution licensee to develop and maintain an efficient co-ordinated and economical distribution system in the area of its supply and to supply electricity in accordance with the provisions of Act. Sec. 43 of the Electricity Act lays down the duty to supply electricity on request and reads as under: "43. Duly to supply on request.-Save as otherwise provided in this Act, every distribution licensee, shall, on an application by the owner or occupier of any premises, give supply of electricity to such premises, within one month after receipt of the application requiring such supply: Provided that where such supply requires extension of distribution mains, or commissioning of new sub-stations, the distribution licensee shall supply the electricity to such premises immediately after such extension or commissioning or within such period as may be specified by the Appropriate Commission: Provided further that in case of a village or hamlet or area wherein no provision for supply of electricity exists, the Appropriate Commission may extend the said period as it may consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... censee along with documents showing payment of necessary charges and other compliances. Under the provisions of s. 43(2) of the Act it is the duty of every distributor licensee to provide electric plant or electric lines for making electric supply to the premises wherever required but such provisions of the service are subject to payment to such prices as may be determined in the case, by the licensee. For failure to supply the electricity within the specified period the licensee shall be liable to penalty of Rs.1,000 each day of default. 40. Under s. 46 of the Electricity Act the distributor licensee is authorized to charge any expenses incurred in providing any electric plant or electric line for the purpose of giving supply to the said person subject to the expenses being reimbursed by such person requiring electric supply. 41. The Indian Electricity Rules, 1956 formulate the draft conditions of supply. As per r. 2 the application of an agreement for supply of electric energy is to be made in the form attached thereto and is to be signed by the owner or occupier of the premises for which supply is required. As per r. 4, upon receipt of the requisition for supply notice f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... switch gears and other electrical equipment belonging to the consumer and connected to the mains of the licensee shall be maintained to the reasonable satisfaction of the licensee. In case of high voltage consumers, suitable protective devices approved by the licensee shall be used so as to afford full protection to the licensee's apparatus placed on the consumer's premises. 43. Considering the provisions of the Electricity Act, it postulates that it is duty of the distribution licensee to develop and maintain an efficient co-ordinate distribution system in its area of supply. The supply of electricity is to be made by such distribution licensee in accordance with the provisions of the Electricity Act. Where any person whose premises are situated within the area of supply of the distribution licensee, and it requires supply of electricity to its premises, is to apply for such supply of electricity and it is the duty of the distribution licensee to provide the electricity to the premises of the consumer who has made an application for such supply of electricity to its premises. Generally, the distribution licensee maintain an efficient, co-ordinated and economical system on its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the property of the assessee before us and the distribution licensee i.e. UPSEB was asked to energize the same by providing the electric supply till the same traction substation and thereafter from the traction sub-station to the Railway lines. The proposal made by the UPSEB was the estimated cost for giving supply to the Railway traction points at Najibabad and Kanth, as is clear from the communication reproduced under para 23 hereinabove. The work of supplying the connection to the Railway traction point was executed by the UPSEB Board in line with its duty to provide electricity to the premises of the consumer i.e. the Railway before us. The amount was also paid for the estimated cost of such infrastructure being provided to the assessee. Merely because the infrastructure has been provided as per the application moved by the assessee in line with the requirement of the assessee does not establish the case of the Department that the same tantamounts to works contact. The assessee is a large consumer of the electric connection and the requirement of the assessee being distinct from an ordinary consumer, the distribution licensee had to provide the infrastructure in line thereof ..... 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