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TMI Blog2016 (1) TMI 810X X X X Extracts X X X X X X X X Extracts X X X X ..... also a State owned electricity distribution company. The only service which the assessee has availed from the KPTCL is "transmission of power" on payment of charges fixed by KERC. No material is placed by the Revenue before this Court to substantiate its contention that assessee had availed of any technical services. In our considered view, assessee has done nothing more than transmitting certain quantum of power from one place to the other for a price fixed by KERC. Assessee was oblivious to the technical expertise which the KPTCL may possess. There was neither transfer of any technology nor any service attributable to a technical service offered by the KPTCL and accepted by the assessee. Therefore, application of Section 194J of the Act to the facts of this case by the Revenue is misconceived. It is not in dispute that the payee KPTCL has offered the income to tax and paid the same. In the circumstances, there is no loss of Revenue. Although the question of loss of Revenue is not subject matter of these appeals, we have adverted to the same as payment of tax by the payee has the effect of rendering these appeals purely academic. - Decided against revenue. - IT APPEAL NOS. 439 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing common substantial question of law: Whether the Tribunal is justified in holding that Section 194J of the Act is not applicable to the facts and circumstances of this case? 3. Heard Shri Y.V. Raviraj, learned counsel for the appellants/Income Tax Department and Shri Parthasarathi, learned counsel for the respondent/assessee. 4. Learned counsel for the Revenue made following submissions with regard to factual matrices of appeals. (i) Assessee, Hubli Electricity Supply Company Limited (HESCOM) is a State owned Company registered under the Companies Act and engaged in the business of buying and selling electricity. Assessee purchases electricity from State owned generators like Karnataka Power Corporation Limited (KPCL), National Thermal Corporation (NTC) and the like ones as also from private generators like Jindal Energy Limited. Power is transmitted from the generation point to the consumers through the transmission network of the Karnataka Power Transport Corporation Limited (KPTCL) in terms of an agreement dated 08.05.2012 which has a term of 25 years there from. (ii) During the survey conducted by the Revenue in the premises of assessee under Section 133A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dismissal of the appeals by ITAT, Revenue has preferred these appeals raising questions of law mentioned supra. 5. Learned counsel for the Revenue urged the following grounds in support of these appeals. (i) Admittedly, KPTCL is a transmission company and power generated at the generating stations is transmitted through its transmission network; (ii) KPTCL collects transmission charges and SLDC charges for transmission of power. (iii) In terms of Section 39 of the Electricity Act, 2003 it undertakes transmission of electricity through intra-state transmission system and ensures development of efficient, coordinated and economical system for smooth flow of electricity from generating station to the load centres. (iv) State Load Dispatching Centre is also an another arm of KPTCL and collects fixed rate from generating companies called as 'SLDC charges'. SLDC is a statutory body and functions as per Section 32 of the Electricity Act. It is responsible for optimum scheduling and dispatch of electricity. It is required to monitor grid operations, keep accounts of quantity of electricity transmitted through the State Grid, exercise supervision and control over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court in the case of Hindustan Coca Cola Beverages (P.) Ltd. (supra). He further contended that ITAT, rightly following the case of Bangalore Electricity Supply Co. v. ITO (TDS) ITA No. 530 to 535/Bang/2011has dismissed the appeals by the impugned order. Thus, he submitted that the instant appeals do not merit any consideration and accordingly prayed for their dismissal. 7. We have given our careful considerations to the submission made by the learned counsel for the Revenue and the assessee. Revenue is aggrieved by the decision of the ITAT holding that compliance of Sec 194J mandating deduction of tax at source are not attracted to the facts of these cases and the assessee was not liable to deduct tax at source on payment of transmission charges to KPTCL. 'Sec. 194J reads as follows: 194J. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of- (a) fees for professional services, or (b) fees for technical services26, 27 or 28 [(ba) any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, to a dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch other profession as is notified by the Board for the purposes of section 44AA or of this section; (b) fees for technical services shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9; 37 [(ba) royalty shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;] (c) where any sum referred to in sub-section (1) is credited to any account, whether called suspense account or by any other name, in the books of account of the person liable to pay such sum, such crediting shall be deemed to be credit of such sum to the account of the payee and the provisions of this section shall apply accordingly. In the instant cases, the above provision would come into play only when there is payment of fee for availing technical services. Compliance or otherwise of the above provision by the assessee entirely hinges upon the factual matrix with regard to availing of technical services if any from the KPTCL. Thus, in order to answer the question of law raised by the Revenue, it is imperative to examine as to whether assessee had availed any technical services from KPTCL. 8. Irrefutable facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had availed of any technical services. In our considered view, assessee has done nothing more than transmitting certain quantum of power from one place to the other for a price fixed by KERC. Assessee was oblivious to the technical expertise which the KPTCL may possess. There was neither transfer of any technology nor any service attributable to a technical service offered by the KPTCL and accepted by the assessee. Therefore, application of Section 194J of the Act to the facts of this case by the Revenue is misconceived. 13. The above finding is sufficient to answer the common substantial question of law. However, having perused the order passed by the Commissioner (Appeals) by adverting to the judgment of the Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages (P) Ltd. (supra), we deem it necessary to touch upon the subject of payment of tax by the payee. It is not in dispute that the payee KPTCL has offered the income to tax and paid the same. In the circumstances, there is no loss of Revenue. Although the question of loss of Revenue is not subject matter of these appeals, we have adverted to the same as payment of tax by the payee has the effect of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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