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TMI Blog2017 (8) TMI 1458X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowed is payment of license fee in terms of the Electricity Act, 2003 and the 2005 Rules. On this finding also, we do not think the Revenue has made out a case for interference with the Tribunal’s decision. - Decided against revenue - GA No.3441 of 2016, ITAT No.372 of 2016 - - - Dated:- 16-8-2017 - JUSTICE ANIRUDDHA BOSE AND JUSTICE ARINDAM SINHA For the appellant : Mr. S.B. Saraf, Adv., Mr. P. Dhudheria, Adv. For the respondent : Mr. Nirmal Kumar Poddar, Adv., Mr. Vineet Tibrewal, Adv., Mr. A. Mazumdar, Adv. ORDER The Court:-The appellant before us is the Revenue. In this appeal, it assails a direction of the Income Tax Appellate Tribunal B Bench, Kolkata dated 4th May, 2016 sustaining the assessee s case that there was no requirement for making deduction of tax at source in respect of certain charges paid by it under different heads. The Tribunal confirmed the order of Commissioner of Income Tax [Appeals-I], Kolkata, who had originally determined the issue in favour of the assessee, who is the respondent before us. Both the Tribunal and the Commissioner found that the assessee s claims for certain deduction ought to be sustained. The assessee is West B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Appeal was sustained by the Income Tax Appellate Tribunal B Bench, Kolkata, in its common decision in three appeals instituted by the Revenue, registered as I.T.A.No.1397/Kol/2013, 1398/Kol/2013 and 1428/Kol/2013. The Tribunal s decision was delivered on 4th May, 2016. 3. The Tribunal examined the nature and characteristic of the individual charges and found Revenue s interpretation that these were charges paid for technical service unacceptable. As regards wheeling and transmission charges, the Tribunal found: 5. We find that the payments in respect to item no.1 and item no.4 as mentioned in above para 3 i.e. are the expression transmission charges and/or wheeling charges entail distribution of electricity in the area of corporation and the charges could not be subject matter to the provisions of section 194C or 194J of the Act. This was restricted to the case of the assessee in view of the public function to be undertaken by it, as a result of restructuring of West Bengal State Electricity Distribution Co. Ltd. The wheeling charges represent the charges for permitting use of state transmission utility for permitting use of state transmission utility by the perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the consumer is higher. Similarly, Power factor increases when reactive energy became lesser. Ideal power factor is unity. As per terms and conditions of Tariff order of 2005- 06, Power Factor Surcharge was payable by the High Voltage/Extra High Voltage Industrial consumers, whose monthly average power factor falls below 85%. On the other hand, if the monthly power factor was above 92%, he would get a power factor rebate. If the power factor is between 85% and 92%, there was neither any surcharge nor any rebate. So power factor rebate allowed to any consumer is a part of tariff, and given effect in the energy bill. Power factor rebate is computed as a percentage of energy charge specified in the tariff Order and the monthly power factor of the consumer. The AO was of the view that the payment for power factor rebate and power interruption charges was made by West Bengal State Electricity Board to Power Grid Corporation but this fact is incorrect. The power factor rebate is not paid to anybody. This rebate is granted to the high voltage industrial consumers for their energy consumption bills. Once this is the position, there is no payment made by assessee but this was a rebate a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engal Electricity (Fees for Application for Grant of Licence) Rules, 2005, the Tribunal found such fees were payable under the statute and did not come within the purview of Section 194C of the 1961 Act. 7. The Revenue has suggested the following question, which, according to it involves substantial question of law, for admission of this appeal. Whether on the facts and in the circumstances of the case the Tribunal was justified in law in deleting the disallowances made by the Assessing Officer of ₹ 112,59,33,021/- for the assessment year 2006-07, ₹ 125,93,48,320/- for the assessment year 2007-08 and ₹ 554,96,42,016/- for the assessment year 2008-09 under section 40(a)(ia) of the Act, in respect of various payments made by the assessee, on the ground of non deduction of tax at source as per the provisions of sections 194J/194C of the Act and its purported findings in this regard are arbitrary, unreasonable and perverse? 8. Mr. Saraf, learned Counsel for the Revenue has relied on the reasoning contained in the Advance Ruling given in Ajmer Vidyut Vitran Nigam Ltd. by the Authority for Advance Rulings reported in 353 ITR 640(AAR). He has taken us through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a decision of the Delhi High Court in the case of Commissioner of Income-Tax Vs Bharti Cellular Ltd. [(2009) 319 ITR 139 (Del)]. He has also taken us through following decisions in the cases of, Commissioner of Income-Tax(TDS) Vs. Maharashtra State Electricity Distribution Company Ltd.(supra), Assistant Commissioner of Income-Tax Vs. Gulbarga Electricity Supply Company Ltd. reported in [2016] 387 ITR 484(Kar), Commissioner of Income-Tax Anr. Vs. Gulbarga Electricity Supply Company Ltd. reported in [2016] 386 ITR 622(Kar), Commissioner of Income-Tax Anr. Vs. Hubli Electric Supply Company Ltd. reported in [2016] 386 ITR 271(Kar) and Commissioner of Income-Tax Vs. Delhi Transco Ltd. reported in [2016] 380 ITR 398(Del). In particular, he has drawn our attention to the following passage from the decision of the Karnataka High Court delivered in the case of Hubli Electric Company Ltd.(supra), in which it has been held:- We have carefully perused the contents of the power transmission agreement. There is no mention of any offer with regard to any technical services by the KPTCL. Plain and simple intention of the parties to the agreement as discernible from the power transmission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de us to take a different view. Such reasoning, in our view is flawed. The view of the Tribunal in respect of power factor rebate and power interruption charges are essentially findings on fact, upon appreciation of certain technical aspects. It has been held by the Tribunal that power factor rebate is not paid to anybody. It has also been found by the Tribunal that both these charges are adjusted against electricity consumption bills payable by high voltage industrial consumers. The factual basis of these findings have not been contested by the Revenue. We do not find such finding to be perverse. 10. So far as the unscheduled inter changing charges are concerned, Mr. Poddar s stand is reflected in the following passage containing submission of the assessee before the Commissioner. 48. It may be appreciated from the above factual analysis that the UI Charges is a mutual adjustment of Power Purchase Charges arising on account of deviations in predetermined drawal schedule and the actual drawal of power on any specified date/time. 49. UI Charges do not fall within the purview of fee for technical services as defined in Section 194J read with Explanation 2 to Section 9(1)(vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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