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TMI Blog2019 (4) TMI 768X X X X Extracts X X X X X X X X Extracts X X X X ..... face/element in the present case. The Tribunal deleted the disallowance made by the Assessing Officer u/s 40(a) (ia) for non deduction of tax at source on transmission charges. Besides that no tax is required to be deducted at source from the amount of ₹ 6,55,09,814 out of the total expenditure on transmission and wheeling charges of ₹ 18,41,83,032 incurred by the assessee during the year under consideration, being reimbursement of cost.The Ld. DR could not controvert this factual aspect. It is just and proper not to withheld tax from transmission charges - Decided in favour of assessee. - I.T.A. No. 3481/DEL/2016 - - - Dated:- 10-4-2019 - Shri G. D. Agrawal, Vice President And Ms Suchitra Kamble, Judicial Member For the Appellant : Ms. Sushmita Basu, CA For the Respondent : Sh. S. S. Rana, CIT DR ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the assessee against the order dated 31/3/2016 passed by CIT(A)-1, Noida, for Assessment Year 2011-12. 2. The assessee is a company engaged in the business of distribution of power in the Greater Noida area. On 29.09.2011, the assessee filed its income declaring NIL income after set off o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gher rate. The assessee disputed the rate before the appropriate forum formed for this purpose. For income tax purpose, following mercantile system of accounting, the assessee claimed power purchase cost at the rates billed by UPPCL. However, in its books of accounts the assessee debited the power purchase cost at the rate provisionally determined by Uttar Pradesh Electricity Regulatory Commission (UPERC) which was lower than the invoice amount. The Assessing Officer allowed the power purchase cost at the rates at which power purchase was debited in the profit and loss account and not the invoiced amount as claimed by the assessee. The assessee contested the action of the Assessing Officer and hence these grounds of appeal. ii) As stated above, the assessee challenged the rates at which UPPCL raised the invoices and the matter travelled before the UPERC for determination of the final rate. iii) UPERC decided the rate issue in favour of the assessee and UPPCL did not file any appeal against the same, the issue has attained finality. Therefore, the present grounds 3(a) to 4(b) claiming billed amount have become academic and infructuous for the year. iv) It ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT(A) failed to appreciate that out of the said amount of ₹ 18,41,83,032, the sum of ₹ 9,70,000 and ₹ 61,86,000 respectively are paid on account of application fees and operating charges which in any event, cannot be covered within the purview of section 194J of the Act. 7(d) Without prejudice to the above, the learned CIT (Appeals) failed to appreciate that out of the said amount of ₹ 18,41,83,032 the appellant, in any event, is not liable to deduct tax on an aggregate amount of ₹ 6,55,09,814 which represents reimbursement of expenses. 8. That on the facts and in the circumstances of the case and in law, the Learned CIT(Appeals) without application of mind erred in confirming the action of Assessing Officer in quantifying book profit u/s 115JB of the Act to be ₹ 27,34,44,869 instead of ₹ 27,33,44,869. 9. That on the facts and in the circumstances of the case, the Learned CIT(Appeals) erred in confirming the action of Assessing Officer in charging interest u/s. 234B and u/s. 234D of the Act at ₹ 3,35,89,080 and ₹ 4,623 respectively. 5. With regard to ground Nos.5, 5(a) and 5(b), it is stated by the Ld. AR t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act: Provided that nothing contained in this section shall empower the Assessing Officer either to reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154, for any assessment year beginning on or before the 1st day of April, 2001. From sub-section (2) above, it is evident that the Assessing Officer shall determine the amount of expenditure incurred for earning of exempt income in accordance with such method as may be prescribed if he is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to exempt income. Admittedly, the method of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical services. In the present case no scientific knowledge, experience or skill is made available/rendered by the PGCIL to the assessee. From the records, we have seen that the assessee itself has its own engineers and technicians who consistently monitor and supervise the flow of the electricity to its system and ultimately supplies to its customers which according to Ld. CIT(A) are the designated function of power grid which do not amount to providing technical services within the meaning ofexpln.2 to section g(i)(vii) of the Act. Moreover, we also in complete agreement with the judgment of Hon'ble Delhi High Court in the case of CIT vs. Bharati Cellular Limited [175 Taxmann 573 (Del)] affirmed by the Hon ble Supreme Court in 193 Taxman 97(SC) wherein, it has been held that technical services which are relevant for the purpose of section 194J would be those technical services which involve human interface/element. In other words, the expression 'technical service' could have reference to only technical service rendered by a human and that it would not include my service provided by machines or robots. However as against above contention we find that the AO has complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of the assessee Thus, Ground No. 6 (a) to 6 (e) are allowed. The issue is squarely covered in favour of the assessee by the decision of the Tribunal in assessee s own case for the Assessment Year 2012-13 on identical facts. The Tribunal deleted the disallowance made by the Assessing Officer u/s 40(a) (ia) of the Act for non deduction of tax at source on transmission charges. Besides that no tax is required to be deducted at source from the amount of ₹ 6,55,09,814 out of the total expenditure on transmission and wheeling charges of ₹ 18,41,83,032 incurred by the assessee during the year under consideration, being reimbursement of cost.The Ld. DR could not controvert this factual aspect. It is just and proper not to withheld tax from transmission charges and accordingly the disallowance made by the Assessing Officer on account of non-deduction of tax from such payment is proper and is liable to be deleted. Therefore, Ground No. 7(a) to 7(d) are allowed. 11. As regards Ground No. 8, there is a wrong quantification of book profit u/s 115JB to the extent of excess of ₹ 1 lakh by the Assessing Officer. Therefore, we remand back this issue to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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