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TMI Blog2012 (11) TMI 546X X X X Extracts X X X X X X X X Extracts X X X X ..... y called, human interface. In the facts of the present appeals, the services rendered qua interconnection/port access do not involve any human interface and, therefore, the same cannot be regarded as ‘technical services’ as contemplated under section 194J of the said Act. Respectfully following the decision of the Tribunal in the case of Bangalore Electricity Supply Co. Ltd. Versus Income Tax Officer (TDS), Ward 16(1), Bangalore [2012 (11) TMI 385 - ITAT BANGALORE] the applicability of Sec. 194J would come into effect only when by making payment of fee for technical services, assessee acquired certain skill/knowledge/intellect which can be further used by him for its own purpose/research. Where facility is provided by use of machine/robot or where sophisticated equipments are installed and operated with a view to earn income by allowing the customers to avail of the benefit by user of such equipment, the same does not result in the provision of technical service to the customer for a fee. Therefore, the assessee was not liable to deduct tax at source on payments of transmission charges to KPTCL as the provisions of Sec. 194J are not attracted thereon The order of the CIT(A) s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng/2011. We therefore condone the delay in filing the appeals being ITA Nos.908 to 913/Bang/2012. The appeals in ITA Nos.904 to 906/Bang/2011 project the same grievance which the revenue has projected in ITA Nos.908 to 913/Bang/2012, therefore the appeals in ITA Nos. 904 to 906/Bang/2011 are dismissed as infructuous. 3. The dispute raised in the appeals by the assessee and the revenue are with regard to deduction of tax at source in respect of transmission charges and State Load Dispatching Centre ( SLDC ) charges. 4. The assessee is a limited company registered under the Companies Act, 1956. It is engaged in the business of buying and selling of electricity. The assessee purchases electricity from the generators of electricity like Karnataka Power Corporation Ltd. ( KPCL ), Central Generating Stations like NTPC, NLC Maps and non-conventional electricity generators like Jindal Energy Ltd., Bhagyanagar, Bhourukha etc. and sells the same to different categories of consumers in its jurisdiction. The power from the generation point to the consumers is transmitted through a transmission network of Karnataka Power Transmission Corporation Ltd. ( KPTCL ). 5. There was a survey condu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r argument of the assessee was that u/s. 196 of the Act, there is no obligation to deduct tax at source on payments made to Government and payment to SLDC was payment to Government. On this plea, the ld. CIT(A) held that SLDC cannot be considered as Government and therefore immunity u/s. 196 of the Act was not available. 7. With regard to the transmission charges paid to KPTCL, the ld. CIT(Appeals) held that the same were not in the nature of fees for technical services and accordingly there was no obligation on the part of the assessee to deduct tax at source at the time of making payment of transmission charges to KPTCL. The ld. CIT(A) further held that in cases where the recipient of payment from the assessee have made payment of taxes, then to that extent, the assessee cannot be treated as an assessee in default. He further held that interest u/s. 201(1A) of the Act has to be worked out from the due date of remittance of TDS till the date of return filed by the recipients of the payments from the assessee. In this regard, the ld. CIT(A) relied on the decision of the Hon ble Supreme Court in the case of Hindustan Coca Cola Beverages Pvt. Ltd. v. CIT 293 ITR 226 (SC). 8. Aggr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction shall be made under this section ... (A) . (B) . (2)( ..) (3)( ..) Explanation : For the purposes of this section, . (b) fees for technical services shall have the same meaning as in Expln. 2 to clause (vii) of sub-section (1) of section 9; (c) . The expression fees for technical services has not been defined under section 194J of the Act but Expln. (b) to section 194J of the Act, provides that the said expression shall have the same meaning as in Expln. 2 to clause (vii) of sub-section (1) of section 9. The said section is reproduced herein below for ready reference: 9. Income deemed to accrue or arise in India. (1) The following incomes shall be deemed to accrue or arise in India: (vii) income by way of fees for technical services payable by Explanation 2. For the purposes of this clause, fees for technical services means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsultancy has been defined in the said dictionary as the work or position of a consultant; a Department of consultants . Consultant itself has been defined, inter alia, as a person who gives professional advice or services in a specialized field . It is obvious that the word consultant is a derivative of the word consult which entails deliberations, consideration, conferring with someone, conferring about or upon a matter. Consult has also been defined in the said dictionary as ask advice for, seek counsel or a professional opinion from; refer to (a source of information); seek permission or approval from for a proposed action . It is obvious that the service also necessarily entails human intervention. The consultant, who provides the consultancy service, has to be a human being. A machine cannot be regarded as a consultant. 15. From the above discussion, it is apparent that both the words managerial and consultancy involve a human element. And, both, managerial service and consultancy service, are provided by humans. Consequently, applying the rule of noscitur a sociis, the word technical as appearing in Expln. 2 to section 9(l)(viz) would also have to be const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not defined in section l94J. Explanation (b) in that section provides that expression shall have the same meaning as in Expln. 2 to clause (vii) of sub-s.( of section 9. That Expln. 2 in section 9(l)(vii) reads thus: For the purposes of this clause, fees for technical services means any consideration (including any lump sum consideration) for rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head Salaries . This definition shows that consideration paid for the rendering of any managerial, technical or consultancy service, as also the consideration paid for the provision of services of technical or other personnel, would be regarded as fees paid for technical services . The definition excludes from its ambit consideration paid for construction, assembly, or mining or like project undertaken by the recipient, as also consideration which would constitute income of the recipient chargeable under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which owns the bus service is rendering technical service to the passenger and, therefore, the passenger must deduct tax at source on the payment made to the bus service provider, for having used the bus. The electricity supplied to a consumer cannot, on the ground that generators are used to generate electricity, transmission lines to carry the power, transformers to regulate the flow of current, meters to measure that consumption, be regarded as amounting to provision of technical services to the consumer resulting in the consumer having to deduct tax at source on the payment made for the, power consumed and remit the same to the Revenue. Satellite television has become ubiquitous, and is spreading its area and coverage, and covers millions of homes. When a person receives such transmission of television signals through the cable provided by the cable operator, it cannot be said that the home owner who has such a cable connection is receiving a technical service for which he is required to deduct tax at source on the payments made to the cable operator. Installation and operation of sophisticated equipments with a view to earn income by allowing customers to avail of the benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vix) of the Act were not intended to cover the charges paid by the average householder or consumer for utilizing the products of modern technology, such as, use of the telephone fixed or mobile, the cable TV, the internet, the automobile, the railway, the aeroplane, consumption of electrical energy, etc., such facilities which when used by individuals are not capable of being regarded as technical service cannot become so when used by firms and companies. The facility remains the same whoever the subscriber may be individual, firm or company. 9. Technical service referred in section 9(1)(vii) contemplates rendering of a service to the payer of the fee. Mere collection of a fee for use of a standard facility provided to all those willing to pay for it does not amount to the fee having been received from technical services. Thus Hon ble Court while dealing with the case of transmission of voice has equated the same with the transmission of the electricity and held that the same does not amount to providing the technical service. Para 9.5. In the case of Parasrampuria Synthetics Ltd. (supra) it was held as under: There may be use of services of technically qualified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice has no merit as the technical service is not provided to the personnel of the assessee. We are also unable to pursue (sic) ourself with the contention of the learned Departmental Representative that other persons are making deduction at source on such payment under section 194C/ l94J/194H. The Tribunal then in para 9.10 thereof went on to hold that the assessee M/s. Jaipur Vidyut Vitran Nigam Ltd. was not liable for deduction of tax at source on payment of transmission / SLDC charges to Rajasthan Vidyut Prasaran Nigam Ltd., the transmission company as under : 9.10. We also find force in alternate argument of the learned Authorised Representative that the payment of transmission/wheeling/SLDC charges is reimbursement of the cost. Therefore the provisions of Chapter XVII-B are not applicable since there is no payment of income/revenue by the assessee. We find that the tariff is fixed by an independent regulatory body i.e., Rajasthan Electricity Regulatory Commission. The transmission company is not allowed any return on its capital; the tariff is determined on the principle of no profit no loss. From the tariff order (paper book 90-93) we find that tariff is fixed, by estim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o deduct tax at source from such reimbursement. Under these circumstances, we hold that the lower authorities were not justified in holding that the assessee is liable for deduction of tax at source on the payment of transmission /SLDC charges to RVPN. From the relevant portions of the Tribunal decision in the case of J.V.V.N.L. reproduced (supra), we are of the opinion that it is clear that the facts and issues are identical to the assessee s case and that the decision therein is squarely applicable to the assessee s case. We, therefore, respectfully following the decision of the Jaipur Bench of ITAT in the case of JVVNL (supra), uphold the finding of the learned CIT(A) that the assessee, BESCOM was not liable to deduct tax at source on payments of transmission charges to KPTCL as the provisions of section 194J of the Act are not attracted thereon. 10. With regard to SLDC charges, the Tribunal held as follows:- 8.3 We have heard both parties, perused the material on record and the judicial decisions cited. Admittedly the SLDC is a statutory body constituted by the State Government in pursuance to the mandate to the Electricity Act, 2003 and is an independent body. This ..... X X X X Extracts X X X X X X X X Extracts X X X X
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