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TMI Blog2016 (9) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... on Stations like NTPC, NLC, MAPS and non-conventional electricity generators like Jindal Energy Limited, Bhourukha, etc and sell the same to different categories of consumers in its jurisdiction. The power from the generation point to the customers is transmitted through the transmission network of Karnataka Power Transmission Corporation Limited. 3. For the Assessment year 2009-10, the assessee filed its returns of income on 30.09.2009 declaring loss of Rs. 179,46,45,174/-. The return of income was processed under the provisions of Section 143(3) of the Income Tax Act, 1961 ('Act' for short) and the case was taken up for scrutiny. After considering the entire material on record, the ITO (TDS), Gulbarga, conducted a survey as contemplated under the provisions of Section 133A of the 'Act', found that there were instances where assessee had made payment of transmission charges to KPTCL and State Load Dispatching Centre ('SLDC' for short), an arm of KPTCL, without deducting tax at source thereon. The authorities of the Revenue were of the view that payment for using the transmission lines for transmission of power generated by KPTCL was a payment for "technical services" rendered and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee preferred an appeal before the CIT (Appeals), Hubli. The CIT (Appeals), who after considering the entire material on record, relied upon the decision of the co-ordinate Bench of the Tribunal in assessee's own case in ITA Nos.874 to 879/Bang/2011 dated 31.08.2012 for assessment year 2006-07 to 2011-12 and allowed the appeal by an order dated 28.02.2013. 9. Aggrieved by the said order of the CIT (Appeals) dated 28.02.2013, the Revenue filed second appeal before the Tribunal in ITA No.703/Bang/2013 urging various grounds. The Tribunal, after hearing both the parties and after considering the provisions of Section 40(a)(ia), 194 C and 194J and after following the decision of the co-ordinate bench of the Tribunal in identical circumstances in the case of Bangalore Electricity Supply Company vs. ITO (TDS) in ITA No.530 to 535/Bang/2011 and other cases, proceeded to dismiss the Revenue's appeal, upholding the order passed by the CIT (Appeals) insofar as it related to the transmission charges to SLDC charges. 10. Hence the present Income Tax Appeal is filed by the Revenue under Section 260 A of the Act. 11. This Court, while admitting the Appeal by an order dated 17.08.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the present case and the assessee was not liable to deduct tax at source on payment of transmission charges to KPTCL and also SLDC charges paid by the assessee. The provisions of Section 194J reads as under: "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 services [or] [(ba) any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, to a director of a company, or] [(c) royalty, or (d) any sum referred to in clause (va) of section 28,] shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to [ten] per cent of such sum as income-tax on income comprised therein: Provided that no deduction shall be made under this section- (A) from any sums as aforesaid credited or paid before the 1st day of July, 1995; or (B) where the amount of such sum or, as the case may be, the aggregate of the amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the coordinate bench of this Court while considering the said provisions in identical circumstances in the case of The Commissioner of Income Tax, TDS, HMT Bhavan, Bellary Road, Bangalore and another vs. Hubli Electric Supply Company Limited in its judgment dated 15.12.2015 made in ITA No.437/2012 and connected matters, has held as under:- "8. Irrefutable facts in these cases are KPTCL and assessee have entered into a power transmission agreement dated 08.05.2012. Under the said agreement, KPTCL has agreed with the assessee to provide its transmission network for the purpose of carrying electricity to its users. For the said purpose, KPTCL has covenanted with assessee to fulfill the obligations contained in Article 2 of the agreement and to perform other obligations. Assessee has agreed to pay transmission charges on a monthly basis in terms of Article 8 of the agreement. Both parties have agreed to comply with the provisions of the State Grid Code and Regulations and Rules issued by KERC from time to time. 9. SLDC is required to maintain records of quantity of energy flowing through the State Grid and issue State Energy Account under KERC (Terms and Conditions of Tariff) Regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id judgment on identical circumstances, has held as under: "6. The learned counsel appearing for the assessee at the outset pointed out that the identical substantial questions of law raised in the case of The Commissioner of Income Tax and another vs. Hubli Electric Supply Company Ltd., (ITA No.437/2012 and connected matters dated 15.12.2015), this Court has answered the same against the revenue. Placing reliance on this judgment, the assessee seeks to answer the substantial questions of law raised in these appeals against the revenue. 7. However, the learned counsel for the appellants-revenue though admits that the identical substantial questions of law raised in similar circumstances in the case of Hubli Electric Supply Company Ltd., (supra) is covered against the revenue, he makes an attempt to raise a new ground that the transaction of transmission of electrical energy from the generation point to the consumers through a transmission network of KPTCL, if not to be treated as technical services, attracting the provisions of Section 194-J of the Act, it would be brought under the provisions of Section 194-I of the Act as rent and contends that the appeals are required to be al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income Tax vs Delhi Transco Ltd reported in (2016)380 ITR 398 (Delhi) has held as under: "Held, dismissing the appeals, that PGCIL was operating and maintaining its own system using the services of engineers and qualified technicians. PGCIL was in that process not providing technical services to others, including the assessee. A comparison could be made with the system of distribution of some other commodity like water. It might require the operation and maintenance of water pumping station and the maintenance of a network of pipes. However, what was conveyed through the pipes and the equipment to the ultimate consumer was water. The equipment and pipes have no doubt to be maintained by technical staff but that did not mean that a person to whom the water was distributed through using the pipes and equipment was availing of any technical service as such. Although the wheeling charges may be fixed by the Commission, that by itself was not a determinative factor. Once it was accepted that all that PGCIL did was to transmit the electricity to the assessee through the network without any human intervention, it could not be characterized as a provision of technical services ..... 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