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TMI Blog2023 (4) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... eal of the revenue stands dismissed. - ITA No. 298/CTK/2016 - - - Dated:- 20-2-2023 - S/Shri George Mathan, Judicial Member And Arun Khodpia, Accountant Member For the Assessee : S/Shri Ved Jain/P.Venugopal Rao, ARs For the Revenue : Shri M.K. Gautam, CIT DR ORDER PER BENCH This is an appeal filed by the revenue against the order of the ld CIT(A)-1, Bhubaneswar, dated 9.5.2016 in Appeal No.0493/14-15 for the assessment year 2010-2011. 2. S/Shri Ved Jain and P.Venugopal Rao, ld ARs appeared for the assessee and Shri M.K.Gautam, ld CIT DR appeared for the revenue. 3. It was submitted by ld CIT DR that the issue in revenue s appeal was against the action of the ld CIT(A) in deleting the disallowance made by the Assessing Officer on account of non-deduction of TDS u/s.194J of the Act and consequently section 40(a)(ia) of the Act. It was the submission that the assessee is a company engaged in the business of purchase and sale of power. It was the submission that the assessee purchases power from the generating companies and sells the same to DISCOMs. It was the submission that for this purpose, the assessee uses the transmission line of Orissa Power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant, it is not possible to accept the argument that for maintaining proper and regular transmission of electrical energy, no rendering of technical services is involved. It is not a mere case of RVPN maintaining its system with the help of its professional and technical personnel. It is also a case of such personnel ensuring regular and consistent transmission of electrical energy at the grid voltage at the distribution point of the applicant. The fact that the contract between the parties is backed by the statutory obligation of either or both of them cannot alter the nature of the services rendered. The argument on behalf of the applicant that in ensuring due and proper transmission of electrical energy from the generation point to the distribution point of the applicant, the services of technical personnel are not needed cannot be accepted. 10. Section 194J of the Act has only indicated that for the purpose of that section, fees for technical services would be as defined in section 9(1)(vii) of the Act. On considering that definition and what is involved in the proper transmission of the electrical energy as involved in this case. I am satisfied that the transmissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal against the appellate order dated 09.5.2010 u/s 250 of the Act passed by the ld. CIT (Appeals)-l, Bhubaneswar for deleting the addition of Rs.385,56,28,748/- made u/s.40(a)(ia) of the Act for non -deduction of TDS on transmission charges on the ground that section 194 J is not applicable thereon. ii) The assessee company is engaged in the business of purchase and sale of power' The ld' CIT(A) has allowed relief to the assessee company on the ground that the Hon'ble cuttack ITAT vide order dated 02.01.2016 in ITA No.149lCTr/Z 13 for AY 2009-10 has held that assessee company was not required to deduct tax at source on payments made to OPTCL on account of transmission charges either u/s. or u/s.194J or u/s.194I of the Act. iii') The power is purchased from the power generating companies and sold to DISCOMs utilizing the transmission networks of OPTCL and PGCIL. During the year under reference, the assessee company has paid wheeling/transmission charges to OPTCL and PGCIL. Strangely the assessee company has paid TDS of Rs.2,28,21,045/- on payments of Rs.115,16,09,352/- made to PGCIL on account of wheeling charges and same was also deposited to the Govt. accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osited in ESCROW account after 01.04.2010. Subsequently payments were made to optcl. viii') The Hon'ble Mumbai Tribunal in the case of Maharashtra state Electricity Distribution co. Ltd. vs. ACIT (16 taxmann.com 46) has held that it was further important to note that after the survey was conducted by the Department at the assessee's premises, it started deducting tax at source on such payments made under BPTA from assessment year 2009-2010 u/s.194-I. A copy of the certificate u/s 197(1) issued to payee for the year financial relevant to assessment year 2010-2011 authorising deduction of tax at source at a lower rate of 5.5%, has also been placed on record. It means that in assessment year 2009-2010, the assessee voluntarily held the opinion that tax at source was required to be deducted at source on wheeling and transmission charges and the same position continued in subsequent year as well. Further the payee applied to the ACIT(TDS) Circle, seeking permission for getting the deduction of tax at source u/s 194-I at a lower rate of 5.5% which has been issued and the assessee has admittedly deducted tax at source on wheeling and transmission charges at a lower rate as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment or facility used by a person may not be regarded as providing technical services. With respect, I am not in a position to agree with the conclusion therein that a transmission of electricity merely involves providing of an instrument or facility by a person receiving consideration for it. In my view it involves the rendering of services which is technical in nature, especially to ensure a proper and uninterrupted supply of electrical energy, at the required quantity and at the required voltage. 12. Thus, I am wholly satisfied that the transmission, and wheeling charges paid by the applicant to RVPN are in the nature of fees for technical services and the applicant is obliged to withhold tax thereon under section 194J of the Act. 6. In reply, ld AR on behalf of the assessee submitted that the issue is squarely covered by the decision of the Co-ordinate Bench of this Tribunal in assessee s own case for the assessment year 2009-2010 in ITA No.149/CTK/2013 dated 7.1.2016, wherein, in paras 15 to 26, it has been held as follows: 15. we have considered rival contentions, carefully gone through the orders of the authorities below and also deliberated on the judicial Pronou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India. With a new Act i.e. The Electricity (Supply)Act, 1948 was enacted for growth of the State Electricity Board. This enactment was made to ensure for expansion of electricity across India not limited to its cities only. Since performance of the State Electricity Boards deteriorated over a period on account of various reasons there raise a need in 1990 for Electricity Regulatory Reform. 7. Orissa is the first state to notify the State Electricity Reform by enacting the Orissa Electricity Reform Act, 1995 to combat tthe problem arising to the Stale Electricity Board where the power production, trading and transmissions and distribution were bifurcated into three different entities. The production of power was given lo Orissa Hydro Power Corporation Ltd, Trading and transmission was given lo the assessee Company. The act of distribution was assigned to four different entities (1) Central Electricity Supply Co. of Orissa, (2) Western Electricity Supply Co., (3) Eastern Electricity Supply Co, and (4) Southern Electricity Supply Co. All these entities are called DISCOMs 8. Consequent to these reforms, the assessee company was incorporated on 20.4.1995 with the object of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that bulk supply agreement stands modified and all the obligation of transmission towards DISCOMs stated therein shall be that of the transferee i.e. OPTCL. As per the notification placed at page 54 of the PB filed b the assessee, the transferee i.e,. OPTCL shall be responsible for all contracts rates, deeds, schemes, arrangements, agreements and other items of whatever nature relating to the transmission undertaking transferred to the transferee i.e. OPTCL to which the transferor i.e. the assessee was a party subsisting or having effect of transfer in the same manner as the transferor was liable immediately before the transfer. Consequent to gazette notification dt.9.2.2005 and coming into existence of OPTCL, an independent company engaged in transmission and wheeling of power, the bulk supply agreement stood automatically modified and the assessee has no role to transmission of power to the distributing companies. This is borne out by the invoices being raised thereafter by the OPTCL directly on the DISCOMs and the copies of such invoices are also placed at pages 96 to 203 of the PB filed by the assessee. 10. A notification dt.6.6.2006 issued by the Orissa Electricity Regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulatory Commission has determined the transmission charges to be paid by DISCOMs to OPTCL. In this view of the matter, it is clear that the distributing companies having participated in tariff determination and on that basis OPTCL was to issue bills on DISCOMs. The bills for sale of power are being raised by the assessee on the DISCOMs whereas the bills for transmission and wheeling charges are being raised by the OPTCL on DISCOMs. The order of the Orissa Electricity Regulatory Commission clarified that distributing companies could argue that the power is being purchased is inclusive of transmission charges. 12, In view of the above stated undisputed facts, the reliance placed by the AO on the bulk supply agreement 1999 is nothing but misplaced as he has failed to take cognizance of the development thereafter particularly the amendments made in the year 2005 by way of gazette notification dt.9.6.2005 wherein a new company was created and the bulk supply agreement stands divided into two parts of purchase and sales is to the assessee and the transmission and wheeling charges is on the account of OPTCL. Consequently, the four DISCOMs are supposed to make separate payment for purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DS officer admits this fact that transmission charges is the liability of DISCOMs and these DISCOMs have been directed to deduct tax @ 1.1%. 19. We had also carefully gone through the orders of the Tribunal in case of Jaipur Vidyut Vitran Nigam Limited. Versus Deputy Commissioner Of lncome -Tax TTJ 123, 888, wherein following was the observations of the bench:- 9.6 An analysis of above cases lays down the proposition that s.194 J would have application only when the technology or technical knowledge of a person is made available to others and not where by using technical systems, services are rendered to others. Rendering of services by allowing use of technical system different than charging fees for rendering technical services. The applicability of s. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /wheeling/SLDC charges is reimbursement of the cost, therefore, the provisions of chapter CVII-B are not applicable since there is no payment of income/revenue by the assessee. 22. similar view has been taken in the cases of M/s. Maharashtra State Electricity Distribution co. Ltd., versus The Additional Commissioner of income Tax, Range 1o(1) 2012 (8) TMI 591 - lTAT, MUMBAI and Hubli Electric supply versus The income Tax officer, TDS, Hubli 2012 (11) TMI 546-ITAT Bangalore. 23. The provisions of section 194J were introduced by the Finance Act, 1995 and till last year the Revenue has not raised any issue regarding non-deduction of tax at source, meaning thereby that Revenue itself was not sure whether TDS is deductible on transmission charges. 24. This disallowance is unsustainable also in view of the amendment made by the Finance Act, 2012 whereby the following proviso has been inserted:- 'Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of chapter XVII- B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (l) of section 201, then, for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vii) ITO vs Dr Jaideep Kumar Sharma ITA Nos.3893, 5696/Del/2011 dated 25.7.2014 (itat Delhi Benches viii) Shri G.Shankar vs Acit ita No.1832/Bang/2013 dated 10.10.2014(itat Bangalore Benches) ix) DCIT vs Jaipur Vidyut Vitran Nigam Ld. ITA No.224/JP/2014 dated 21.11.2014 (itat Jaipur Benches) Recently, the Hon'ble Delhi High court in the case of CIT Vs. Ansal Land Mark Township (P) Ltd., ITA N0.16012015, dated 26-8.2015, held that the amendment made by the Finance Act 2012 is clarificatory in nature' 28. In view of the above discussion, we do not find any merit for disallowance made u/s,40(a)(ia), either with reference to Section 1494-l or Section 194-J of l.T.Act. 7. It was the submission that in assessee s own case for the immediately assessment year, the issue having been held in favour of the assessee, the same is liable to be followed in view of the principles of consistency. 8. We have considered the rival submissions. At the outset, coming to the decision in the case of Maharashtra State Electricity Distribution Co Ltd(supra) relied upon by ld CIT DR clearly shows that it is a case of stay petition. For the purpose of staying of demand, the Co-o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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