Income Tax Appellate Tribunal - Chandigarh
The Chief Project Manager, Panchkula vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCH 'A' CHANDIGARH
BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER
AND Ms. SUSHMA CHOWLA, JUDICIAL MEMBER
ITA No.471 to 473/CHD/2013
A Y.: 2008-09 to 2010-11
T h e In c o m e T a x O f f i c e r ( T D S ) , Vs T h e C h i e f P r o j e c t M a n a ge r ,
A a ya k a r B h a w a n , Railway Electrification,
Sector 2, In d i a n R a i l w a ys .
Panchkula. Ambala Cantt.
P A N : R T K C - 0 2 00 2A
(Appellant) ( R e s p o n d e nt )
Appellant by : S h r i A k h i l e s h G u pt a
R e s p o n d e n t b y : S h r i D a yg e e s h K u m a r B h a t t i
Date of Hearing : 0 6 . 1 1 . 2 0 13
Date of Pronouncement : 2 2 .1 1 . 2 0 13
O R D E R
PE R S U S H M A C H O W L A , J M T h e b u n c h o f a p p ea l s b y t h e r e v e n u e a r e d i r e c t e d a ga i n s t t h e c o n s o l i d at e d o r d e r o f t h e C IT ( A p p e a l s ) d a t e d 2 8 . 0 2. 2 0 1 3 r e l a t i n g t o a s s e s s m e n t ye a r s 2 0 0 8 - 0 9 t o 2 0 1 0 - 1 1 a g a i n s t t h e c o n s o l i d a t e d o r d e r passed under section 201(1) & 201(1A) of the Income-tax Act, 1961 ( 'the Act' for short).
2. T h e r e v e n u e h a s r a i s e d t h e f o l l o w i n g gr o u n d s o f a p p e a l :
1. On the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) Rohtak has erred in law in deleting the demand raised u/s 201(1) & 201(1 A) of the Income tax Act, 1961 amounting to Rs. 10,46,360/- for the F.Y. 2007-08 and amounting to Rs. 52,19,780/- and for the F.Y. 2009-10 and amounting to Rs. 66,870/- for the F.Y. 2008-09 of the Income Tax Act 1961.
2. The Ld. Commissioner of Income Tax (Appeals) Rohtak has erred in law in deleting the demand by following the order of Hon'ble IT AT in the case of Chief Project Manager, Railway Electrification, Indian Railway, Ambala 2 Cantt in ITA Nos. 1069 to 1075/Chandi/2009/ dated 30.12.2012 for the F.Y. 2008-09, 2009-10 and 2010-11. The assessee was not liable to deduct TDS out of the amounts paid to the distribution license for providing the infrastructure for providing electricity to the railway transaction sub-station of the assessee.
3. That Section 194C is applicable to all payments which are made by any person for carrying out any work in pursuance of a contract and Central Govt. State Govt. and local authority are also covered u/s 194C for deducting tax if they are responsible for making any payments for carrying out any work in pursuance of a contract. The scope of TDS u/s 194C has been explained by CBDT in circular No. 86 dated 29.05.1972 (copy enclosed Annexure- A-IV) as per which TDS is required to be made from income comprised in payments made by Central Govt. or any State Govt.. local authorities, companies etc to contractors engaged for carrying out any work or for supplying labour for carrying out such work. Hon'ble Supreme Court has held in the case of Associated Cement Company Ltd. Vs. CIT, 201 ITR 435 (SC) that in section 194C any work means "any and not only a work contract". Hon'ble Supreme Court has held that the "work" any and not only a work contract" envisaged in section 194C (1) has a vide import and covers any work which the organizations specified in the said provisions can get done through a contractor under a contract. Therefore, there is no doubt that the assessee is covered u/s 194C for making TDS on the payments made by it for any work contract.
4 That the payments made by the assessee to electricity supplying agencies/corporation for certain of infrastructure for supply of electricity are covered under "work contract" and therefore, the assessee is liable to make TDS on such payments.
3. A l l t h e t h r e e a p p e a l s r e l a t i n g t o t h e s am e a s s e s s e e o n i d en t i c a l issue were heard t o ge t h e r and are being disposed of by this c o n s o l i d at e d o r d e r fo r t h e s a k e o f c o n v en i e n c e .
4. T h e l d . A R f o r t h e a s s e s s e e a t t h e o u t s e t p o i n t e d o u t t h at t h e i s s u e i n t h e p r e s e nt a p p e a l i s s q u a r e l y c o v e r e d b y t h e o r d e r o f t h e Tr i b u n a l i n a s s e s s ee 's o w n c a s e r e l a t i n g t o a s s e s s m e n t ye a r 2 0 0 0 - 01 t o 2 0 0 5 - 06 a n d 2 0 07 - 0 8 .
5. The ld. DR for the revenue placed reliance on the order of the A s s e s s i n g O ff i c e r.
6. We h a v e h e a r d t h e r i v a l c o n t e n t i o n s a n d p e r u s e d t h e r e c o r d .
The issue arising in the present appeal is in relation to the demand r a i s e d u n d e r s e c t i o n 2 0 1 ( 1 ) a n d i n t e r e s t c h a rge d u n d e r s e c t i o n 3 2 0 1 ( 1 A ) o f t h e A c t f o r n on - d e d u c t i on o f t ax a t s o u r c e o u t o f t he p a ym e n t s m a d e t o t h e v a r i o u s St a t e E l e c t r i c i t y B o a r d s f o r t h e c o n s t r u c t i on o f t r a n s m i s s i o n l i n e s f o r p r o v i di n g p o w e r t o r a i l w a y transmission sub-stations. A s p e r t he A s s e s s i n g O ff i c e r, t h e s a i d p a ym e n t s w e r e s u b j e c t t o d e d u c t i on of t a x a t s o u r c e u nd e r s e c t i o n 1 9 4 C o f t h e A c t a nd i n t h e a b s e n c e o f t h e a s s e s s e e h a vi ng d e d u c t e d t a x a t s o u r c e , d e m an d w a s r a i s e d u n d e r s e c t i o n 2 0 1 ( 1 ) o f t h e A c t a n d i n t e r e s t w a s c h a rge d u n d e r s e c t i o n 2 0 1( 1 A ) o f t h e A c t .
7. T h e C IT ( A p p e a l s ) , p l a c i n g r e l i a n c e o n t h e o r d e r o f t h e Tr i b u n a l i n a s s e s s e e 's o w n c a s e i n ITA N o s . 1 0 6 9 t o 1 0 7 5 / C h d/ 2 00 9 r e l a t i n g t o a s s e s s m e n t ye a r s 2 0 0 0 - 0 1 t o 20 0 5- 0 6 a n d 2 0 0 7 - 08 , o r d e r d a t e d 3 0 . 1 2 . 2 0 11 d e l e t e d t h e d e m a n d r a i s e d b y t h e A s s e s s i n g O ff i c e r u n d e r s e c t i o n 2 01 ( 1 ) o f t he A c t a n d a l s o t h e i n t e r e s t c h a rge d u n d e r s e c t i o n 201(1A) of the Act.
8. We f i n d t h a t t h e i s s u e h a s b e e n d e l i b e r a t e d u p o n b y t h e Tr i b u n a l v i d e o r d e r d a t e d 3 0 . 1 2 .2 0 11 w h e r e i n v i d e p a r a s 2 0 t o 4 2, i t h a s b e e n o b s e r v e d as u n d e r :
" 2 0 . We have heard the rival contentions and perused the record. The assessee is a unit under the head quarters of Central government organization of Railway Electrification (CORE) and the same is working under the ministry of Railways, Railway Board for carrying out electrification project over Indian Railways. The assessee had made application to various electricity boards for supplying electricity connection by setting up infrastructure to railway traction sub-station. The issue arising in the present appeal is the payment made by the assessee to the said SEBs and whether the same are in the nature of works contract, making the assessee to be liable to deduct tax at source under the provisions of section 194C of the Act. The alternate contention with regard to the assessee is that the payments made are for getting the infrastructure established for supplying electricity to various traction sub-station and the charges raised by SEB to its consumers for the additional services provided to it and such charges being portion of the cost paid to the consumer were not in the nature of works contract. In the absence of any agreement between the licensee i.e. SEB and consumer i.e. the 4 assessee before us, further issue raised was that the provisions of section 194C of the Act were not attracted.
21. The learned A.R. for the assessee had made elaborate submissions in this regard and has also furnished on record two Paper Book. The Paper Book No.II compiles the correspondence between SEB and office of railways for sanction of the load. At page-1 of Paper Book-II the assessee has enclosed an application made by it for sanction of load for railway traction sub-station, Ambala-Moradabad section. Vide said communication dated 19.10.1992 the assessee claimed that the project for electrification of Ambala-Moradabad section has been sanctioned for railway electrification and for carrying out the said activity, it proposed to have four traction sub-stations along with the railway track. The connected load at each individual sub-station would be 20MVA. A request was made to the Chairman, UPSEB, Shakti Bhawan, Lucknow for sanctioning the load for each traction sub- station. The application reads as under :
"No. DUL/RE/UMB/Elect-173 dated: 19.10.92 Chairman UPSEB 14, Ashok Marg Shakti Bhawan Lucknow (UP Sub:- Sanction of load for Railway Traction Sub-station - Ambala-
Moradabad section.
The project for electrification of Ambala Moradabad section has been sanctioned for Railway electrification and for carrying out this activity, Railway proposes to have four traction sub-stations along with the Railway track. The detail is given as under:
SN Rly. Traction sub-stn. Location as per Rly communication post no. running alongwith track.
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1. Saharanpur : 1590 KM
2. Laksar : 1535 KM
3. Bundki : 1480 KM
4. Kanth : 1425 KM The connected load at each individual sub-station will be of 20 MVA. Kindly sanction the load for each traction sub-station.
We have approached separately to CE (Transmission)/ CE (Commercial) for framing the estimate for these locations. The work is to start immediately. We request for an urgent action.
Sd/-
(B.C. Aggarwal) Chief Electrical Engineer Rly. Electrification Ambala Cantt 5 Copy to:
1. Chief Engineer (Transmission) U.P.S.E.B. 14, Ashok Marg Shakti Bhawan, Lucknow.
2. Chief Engineer (Commercial) UPSEB, Shakti Bhawan, Lucknow.
3. Chief Engineer (Transmission Unit) UPSEB Mission Compound, S-A, Meerut.
Northern Railway Divisional Railway Manager's Office
22. Another application of supply for traction sub-station at Kanth alongwith site plan for traction sub-station and minutes of meeting were sent to the Executive Engineer, UPSEB, Kanth. As per the communication placed at page 2 of the Paper Book-II, the assessee at pages 3 and 4 has enclosed application form of electricity connection for industrial use, prescribed by UPSEB and filled in by the assessee. The assessee at page 5 has enclosed the communication to UPSEB of forwarding individual applications on the Ambala- Moradabad section to three different places. At page 6 is enclosed provisional estimate proposed by UPSEB at s.116,27,300/-. At page 7 of the Paper Book is enclosed internal communication between the Divisional Railway manager office and assessee for the payment raised by UPSEB. The contents of the said letter are as under : Moradabad, Dated 9-7-1996 No.60_Elect/RE/MB/93 The Chief Project Manager, Railway Electrification, Ambala Cantt.
Sub.: 15 MVA load for Traction Sub-station Kanth.
Ref.: Executive Engineer Electricity Distribution Division- Moradabad's letter No. 1647 dated 25.06.96.
The UPSEB authorities have demanded an amount of Rs. 1,16,27,300.00 vide his letter cited above. Therefore, the original copy of UPSEB is sent herewith for arranging early payment please.
DA/1 As above Sd/-
Divl. Elect. Engineer, Moradabad Copy to the Executive Engineer, Electricity Distribution Division- I, U.P.S.E.B./Moradabad for information please.
23. Thereafter minutes of meeting held with railway for giving power supply to railway traction sub-station in Ambala-6
Moradabad section is placed at pages 8 and 9 of the Paper Book- II. The said meeting was held with UPSEB and Railway Electrification, Ministry of Railways. Pursuant to the said meeting, tentative estimated cost of forgiving supply to railway traction sub-station at various areas on Ambala-Moradabad section was proposed by UPSEB. The said letter is enclosed at page 10 of the Paper Book-II alongwith drawing of the proposed infrastructure to be provided at pages 11 to 16 of the Paper Book- II. It reads as under :
Office of the Executive Engineer Electricity Trans. Division U.P. State Electy. Board 33 KV Sub-Station No. 6, Roorkee.
No. 1856/ETDR/S-22 CKV dated: 27/5/1996 Subject: Tentative Estimated Cost for giving supply to Railway
Traction point at Roorkee, Najibabad and Kanth, Northern Railway Stations.
The Chief Project Manager, Railway Electrification, Ambala Cantt.
Dear Sir, In reference to your letter No. DUL/RE/UMB/EL/TSS/173 dated 17.05.1996, I am enclosing herewith the tentative estimated cost for giving supply for Railway Traction Sub-Stations at Roorkee, Majibabad and Kanth for different proposals as per following details:
1. Giving 220KV 2Ø Double Circuit Supply at 3452.72 Lacs.
Roorkee, Najibabad and Kanth.
2. Giving 132KV 2Ø Double Circuit Supply at 3679.23 Lacs.
Roorkee, Najibabad and Kanth.
3. Giving 220KV 2Ø Single Circuit Supply at 2662.07 Lacs.
Roorkee, Najibabad and Kanth.
4. Giving 132KV 2Ø Single Circuit Supply at 3065.19 Lacs.
Roorkee, Najibabad and Kanth.
5. Giving 220KV 2Ø Single Circuit Supply at 3097.84 Lacs.
Roorkee and Double Circuit supply at Najibabad and Kanth.
6. Giving 132KV 2Ø Single Circuit Supply at 3615.15 Lacs.
Roorkee and Double Circuit supply at Najibabad and Kanth.
The estimates, lengths of 220KV/132KV lines have been taken as under:7
i. 132KV Roorkee Sub-Station to Railway Traction point at Roorkee 4 KM.
ii. 220KV Sub-Station Nehtaur to Railway Traction point at Kanth 45 KM.
iii. 220KV Sub-Station Nehtaur to Railway Traction point at Najibabad 35 KM.
The above cost is based on the rates as on 1.1.96. It will take about 2 years to complete the work from the date of deposit of estimated cost and therefore the above cost may very.
You may kindly get the proposal examined that proposal suites you the best and inform to this office. The detailed estimate for the proposal finally decided by you shall be prepared and submitted after your decision in the matter.
(S.K. KANSAL) EXECUTIVE ENGINEER
24. Another communication was received from UPSEB in respect of estimates of giving power supply to Kanth railway station and Najibabad railway station. The said communication was in respect of the power supply arrangement required by railways for its traction sub-station at Kanth and Najibabad. The final estimation was provided by letter dated 1.1.2002 in respect of the traction sub- station at Kanth and Najibabad which is enclosed at page 18 of the Paper Book-II and reads as under :
Railway Electrification Ambala Cantt.
Office of the Chief Project Manager Rly. Electrification.
Ambala Cantt.
No.DUL/RE/UMB/173-II Date: 01.01.2002
Dy. General Manager,
Uttar Pradesh Power Corporation Ltd.,
Moradabad.
Sub.: The deposit estimate for 132 KV Power Supply of Traction Sub Station at Kanth & Nazibabad.
Ref.: Your letter No. 6118 ETC(M)/DS-27/Railway Traction dated 21.12.2001.
The estimates for giving power supply to Kanth and Nazibabad Railway Traction Sub station have been received in this office vide your letter under reference. These estimates have been examined in this office. It has been found tht supervision charges @25% are on the higher side. The similar type of estimate for 220 KV power supply for railway traction substation at Roorkee was submitted by Uttar Pradesh Power Corpn. Ltd., Roorkee and in that estimate the 8 supervision charges were charged @ 15%. It is requested to look into the matter and revise the estimates for Kanth & Nazibabad accordingly.
Further, as discussed we the various meetings it is to inform you that PSEB charging railway's supervision charges @ 12.5% in their various estimates submitted to Railway for similar type of works. A letter of PSEB in this regard is enclosed for your reference. It is requested that UPPCL may follow the same practice as the PSEB for the similar type of works.
(MUKESH) For Chief Project Manager, Rly Electrification, Ambala Cantt.
25. At pages 19 to 21 of the Paper Book-II is the sanction of load of 5KV to the assessee. AT page 22 is enclosed letter asking the assessee to deposit Rs.336.77 lacs in respect of the power supply arrangement required by railways for traction sub-station at Kanth. The said communication is placed at page 22 of the Paper Book-II and reads as under :
Office of the Executive Engineer Electricity Transmission Division Bijnor No. 24-ETDBJ/Rly.Traction dated 4/01/2002 Subject: Power supply arrangement required by Railways for traction sub-station at Kanth.
Chief Project Manager, Railway Electrification, Ambala Cantt.
Kindly refer to letter No.6118-ETC(M)/DS-27/Rly. Traction dated 21.12.2001 from Deputy General Manager, Electy. Transm. Circle, Moradabad Addressed to you and copy endorsed to the undersigned vide which a copy of estimate was sent to you.
In this regard you are requested to kindly deposit a sum of Rs. 336.77 lacs by A/C payee draft in the name of Executive Engineer, Electy. Transmission Division, Bijnor drawn at Bijnor.
(YOGESHWAR
SHARMA)
EXECUTIVE
ENGINEER
No. -ETDBJ/of date.
Copy forwarded to the Deputy General Manager, Electy. Trans. Circle, UPPCL, Majola-Moradabad for his kind information.9
(YOGESHWAR SHARMA) EXECUTIVE ENGINEER
26. At page 23 of the Paper Book-II is enclosed revised estimate for traction sub-station at Kanth and Najibabad communicated by UPSEB to the assessee before us, which reads as under :
Office of the Dy. General Manager Electricity Transmission Circle U.P. Power Corporation Limited Moradabad No. 793-ETC(M)/DS-27/Railway Traction dated 18/02/2002 Subject: Revised estimates of Power Supply arrangement required by Railways for traction Sub-station at Najibabad and Kanth alongwith associated lines..
Chief Project Manager, Railway Electrification, Ambala Cantt., Ambala.
Kindly refer to letter No.DUL/RE/UMB/173-Pt-II dated 16.1.2002 on the above noted subject.
Kindly find enclosed herewith a copy of the following sanctioned/revised estimates for your kind information and necessary action.
1. Estimate for giving power supply to Railway Traction S/S at Najibabad alongwith associated line amounting to Rs. 458.60 lacs.
2. Estimate for giving power supply to Railway Traction S/S at Kanth alongwith associated line amounting to Rs. 273.64 lacs.
3. Estimate for giving power supply to Railway Traction S/S at Nagina alongwith associated line amounting to Rs. 227.40 lacs as desired by Railway G.M.(TD) UPPCL, Lucknow.
Encl. As Above.
(K.K.
GARG)
DY. GENERAL
MANAGER
No. ETC(M) of date/
Copy to the following for informationand necessary action:-
1. General Manager (TW), H-2, Shastri Nagar, Meerut.10
2. General Manager (TD), 11 t h Floor, Shakti Bhawan Extn. UPPCL, Lucknow
3. Executive Engineer, Electy. Trans. Division, UPPCL, Bijnore.
(K.K. GARG) DY. GENERAL MANAGER
27. In the said communication is also annexed report in which it has been stated that the estimate was for giving 12.5 MVA load at 132KV voltage to Northern railway at Najibabad railway station for traction purposes. The estimate also covered construction of 35 km. 132KV 2 place S.C. Line on D.C. tower from 220KV S/S, Nehtaur to Najibabad railway station and construction of 1 No. 132KV bay at 220KV S/S, Nehtaur. The aforesaid estimate was subject to revision after the act routs survey and profioing of the 132KV line. The said report is placed at pages 25 to 29 of the Paper Book-II. Similar report in respect of traction sub-station at Kanth is enclosed at pages 32 to 37 of the Paper Book-II. At page 38 is enclosed a communication of CORE approving the payment to UPSEB in respect of traction sub-station at Najibabad and Kanth stations, which reads as under :
MINISTRY OF RAILWAYS Central Organisation Railway Electrification Allahabad Office of the Chief Electrical Engineer, (Head Quarters Office) Core/Allahabad.
Ref. No. No. ELCORE/PS/03/Pt.II/02/2002 dated: 25.2.2002 Chief Project Manager Rly. Electrification Ambala.
Sub.: Payment for providing 132KV Power Supply for traction sub-station at Najibabad and Kanth.
Ref.: Your letter No. DUL/RE/UMB/Elect./Pt.II, dated 19.2.2002.
You have submitted the revised estimates for providing power supply at 132KV to Najibabad Traction Sub-Station amounting to Rs. 458.60 lacs and Rs. 273.64 lacs for Kanth Traction Sub-Station, vide your letter under reference.
GM/CORE has approved the payment to UPPCL as under:-
i) For Najibabad TSS Rs. 458.60 lacs
ii) For Kanth/TSS Rs. 273.64 lacs
Total Rs. 732.24 lacs
11
Please make the arrangements for above payments to UPPCL and photocopy of the receipt of payment should be submitted to this office.
(Gurdev Singh) For Chief Electrical Engineer CORE/Allahabad
28. Thereafter payment was made as per the letter of the assessee placed at pages 39 and 40 of the Paper Book-II. Pursuant to the above said payment, the load was released as per the communication placed at pages 41 and 42 of the Paper Book-II. At pages 43 is enclosed release of payment for 5MVA load for railway traction sub-station at Kanth.
29. At pages 44 of the Paper Book-II is placed agreement for supply of Power to Railway for track electrification between distribution company and railways i.e. the consumer. Preamble of the said agreement executed on 12.7.2010 reads as under :
Agreement for Supply of Power to Railway for track Electrification (Traction Line) in Saharanpur-Moradabad section of Northern Railway at Kanth
30. The agreement refers to the distribution company as the licensee of the one part and the assessee before us as the consumer of the other part. The parties agreed to certain terms and conditions and as per the preamble, clauses-1 & 2 provide as under :
1. The licensee is, inter-alia, engaged in business of supplying electricity and has been granted a license under the Indian Electricity! Act -1910 and. is presently a deemed licensee under sec-lion 14, 1 proviso of the 'Electricity Act - 2003 (herein after referred to as the Act) for distribution and/or retail supply and/or bulk supply of energy to various consumers within its licensed area.
2 The consumer has vide application dated 03.01.02 applied to the licensee for/procuring supply of energy for electrical installation (for a load of 5MVA K W/BHP/KVA) [herein after referred to as "contractual load"] at its premises situate Kanth Railway TSS (hereinafter referred to as "the said premises"] in, connection with ..................... for the purpose Railway Electric Traction.
31. The parties thereafter agreed to certain terms and as per clause-1 the agreement shall be effective for minimum period of two years from the date of commencement of supply by the licensee to the consumer. The duty of the consumer is to pay to the licensee all charges as provided for in the tariff schedule in force of U.P. Electricity Regulatory Commission including any other additional charges payable by the consumer. In addition, the consumer is to pay other statutory levies.
32. As per clause 3 (I) the consumer i.e. the assessee before us agrees to abide by all terms and conditions of the Electricity Supply Code 2005. The said clause reads as under :
123. THE C O N S U M ER H E RE BY U N D E RT AK ES , RE P R. ES EN T S , AS S U R ES , W A RR AN T S AG RE E S AN D C O N V EN AN T S W IT H T H E L IC E N S E E AS FO L L O W S :
I C o n s u m e r s h a l l a b i d e a n d b e b o u n d e d b y a l l t h e t er m s a n d c o n d i t i o n s o f t h e E l e c t r i c i t y S u p p l y C o d e -2 0 0 5 , (h e r e i n a f t e r r e f e r r e d t o a s ; t h e "Code") approved by the Commission, and the amendments / revisions t h e r e t o , a n d t h e p r o v i s i o n s o f t h e Ac t t o ge t he r wi t h t he r ul e s f r am e d un de r t he ; A c t a nd . In di a n E l e c t r i c i t y R ul e s 1956 i nc l udi n g a ny m o di f i c at i o ns t he r e of i n s o f ar as t he y a r e a ppl i c a bl e t o t he Co ns u m e r .
Clause 3(IV) reads as under :
IV Consumer shall ensure that the meter, meter boards, service mains, MCB/CB, load limited etc are under no circumstance handled or removed by any one other than an authorized employee/representative of the Licensee. T he s e al s , w hi c h ar e f i x e d on t he m e t e r s / m e t e r i n g e q ui p m e nt , l oa d l i m i t e r s an d t he l i c e ns e e ' s a pp ar at us m us t o n n o ac c o unt be t e m pe r e d, d am a ge d o r b r ok e n . T he : r e s po ns i bi l i t y f or s af e c u s t o dy of L i c e ns e e 's e q ui p m e nt an d s e at s an d m e t e r / m e t e r i ng e qui pm e nt wi t hi n t he C on s u m e r ' s pr e m i s e s s h a l l be on t he C on s u m e r . In t he e v e nt of any d a m a ge c a us e d t o t he L i c e ns e e 's e qui pm e nt i n t he C o ns u m e r 's pr e m i s e s by r e as on of any ac t , ne gl e c t or de f aul t by t he C o ns um e r or i t s r e pr e s e nt at i v e , t he c os t s t he r e of a s c l ai m e d by t he L i c e ns e e s h al l be p a y abl e by t he Co ns um e r .
33. As per clause 3(IV), the consumer is to ensure that the meter boards, services mains, MCB, CB, load limit etc. are under no circumstances handled or removed by any other than an authorized employee/representative of the licensees. Under the said clause it is also provided that the responsibility for safe custody of licensee's equipment and seals and meter/metering equipment within the consumer's premises shall be on the consumer. And in the event of any damage caused to the licensee's equipment in the premises of the consumer, the cost thereof shall be met with by the consumer. Under clause 4 is provided the notices for consumption to be issued by the licensee to the consumer and the payments by the consumer, which reads as under :
4(b) However, the Licensee shall not be required to issue any separate notice for payment of monthly electricity consumption bills and such Bill shall be deemed to be a "Bill cum Notice" for payment of the amounts mentioned therein.
34. Clause 6 of the agreement reads as under :
6 If th e consumer afte r execution of dec lara tion /ag reement reduce s or incre ase s his load o r c harges the purpose o f use or sh ift h is c onnec tion , he shall hav e to e xec ute a fre sh dec lara tio n/agre ement, wh ich will b e valid for two year like the agre ement/exe cuted at th e time of new connection. However any re lief/con cession prov ided in the Rate Schedule/an y order o f Commission Disc om as admissib le to new concession sha ll not be admissib le on execu tion of the fre sh agreement/dec la ration due to change in premises/Reduc tion of load as above..
35. Under clause 8 of the agreement it is provided that the agreement shall be governed by the Electricity Act 2003 alongwith its amendment which provides as under :
13PROVIDED that 'if the question dispute or difference relates to or concerns any dues chargeable to the consumer in terms of this agreement no reference to the arbitration shall at the instance of the consumer; be made til l the consumer has deposited with the Licensee the amount of dues in dispute, in case/ Bank -Draft. This Agreement shall be governed by the El ectricity Act 2003 with all its arrangements, carious other laws of India for the time being in force, but not limited to carious regulation of UPERC, as applicable to the state of U.P. and shall be subject to the jurisdiction of the Court subordinate of High Court of Judicat ure of Allahabad.
36. As per clause 10 it is accepted that the consumer had deposited system loading charges, fixed charges and meter security totaling Rs.124.75 lacs vide separate receipts.
37. The Indian Electricity Act 2003 is a Statute passed by the Parliament. Under the said Act, a statutory obligation is laid down towards the consumer for supply of electricity by the licensee appointed for transmitting and supplying electricity. As per section 12 of the Electricity Act, 2003 no person shall transmit the electricity or distribute the electricity or undertake trading in electricity unless he is authorized to do so by a licence issued under section 14 or is exempt under section 13. Under section 13 the appropriate commission in accordance with the national policy formulated and in the public interest, direct that the provisions of section 12 shall not apply to any local panchayat, user's association, co-operative societies, non-governmental organizations or franchisees. Under section 14 of the Electricity Act, the appropriate commission may grant licence to any person to transmit electricity as a transmission licensee, or to distribute electricity as a distributor licensee, or to undertake trading in electricity as a electricity trader, in any area as may be specified in the licence. The said licence is to be granted on an application made by such person under section 15 of the Electricity Act. Such persons are called the licensees who transmit electricity, distribute electricity or trade electricity. Part VI of the Electricity Act lays down provisions with respect to distribution licensees. Under section 42 are enlisted the duties of distribution licensees and open access. As per the said section it shall be the duty distribution licensee to develop and maintain an efficient coordinated and economical distribution system in the area of its supply and to supply electricity in accordance with the provisions of Act. Section 43 of the Electricity Act lays down the duty to supply electricity on request and reads as under :
43. Duty to supply on request:- Save as otherwise provided in this Act, every distribution] licensee, shall, on an application by the owner or occupier of any premises, give supply of electricity to such premises, within one month after receipt of the application requiring such supply:
Provided that where such supply requires extension of distribution mains, or commissioning of new sub-stations, the distribution licensee shall supply the electricity to such premises immediately after such extension or commissioning or within such period as may be specified by the Appropriate Commission:14
Provided further that in case of a village or hamlet or area wherein no provision for supply of electricity exists, the Appropriate Commission may extend the said period as it may consider necessary for electrification of such village or hamlet or area.
[Explanation.--For the purposes of this sub-section, "application" means the application complete in all respects in the appropriate form, as required by the distribution licensee, along with documents snowing payment of necessary charges and other compliances:] (2) It shall be the duty of every distribution licensee to provide, if required, electric plant or electric line for giving electric supply to the premises specified in sub-section (1):
Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of electricity for any premises having a separate supply unless he has agreed with the licensee to pay to him such price as determined by the Appropriate Commission.
(3) If a distribution licensee fails to supply the electricity within the period specified in sub-section (1), he shall be liable to a penalty which may extend to one thousand rupees for each day of default.
38. Section 46 of the Electricity Act reads as under :
46. Power to recover expenditure.--The State Commission may, by regulations, authorise a distribution licensee to charge from a person requiring a supply of electricity in pursuance of section 43 any expenses reasonably incurred in providing any electric line or electrical plant used for the purpose of giving that supply.
39. Under the provisions of section 43 of the Electricity Act any person who is owner or occupier of any premises is empowered to make an application to the distributor licensee to give supply of electricity to such premises. It is the duty of the distributor licensee to provide such supply of electricity within one month after receipt of the application requiring such supply. As per the proviso to section 43 of the Electricity Act, in case where the supply to be provided to the consumer requires extension of distribution mains or commissioning of new sub-station, the distribution licensee shall supply the electricity to such premises immediately after such extension or commissioning or within such period as may be specified and after commissioning of new station, the electricity is to be supplied after such extension or commission. The explanation under section 43(1) lays down that the application referred under the sub- section is to be completed in all respects in the appropriate form as required by the distributing licensee alongwith documents showing 15 payment of necessary charges and other compliances. Under the provisions of section 43(2) of the Act it is the duty of every distributor licensee to provide electric plant or electric lines for making electric supply to the premises wherever required but such provisions of the service are subject to payment to such prices as may be determined in the case, by the licensee. For failure to supply the electricity within the specified period the licensee shall be liable to penalty of Rs.1000/- each day of default.
40. Under section 46 of the Electricity Act the distributor licensee is authorized to charge any expenses incurred in providing any electric plant or electric line for the purpose of giving supply to the said person subject to the expenses being reimbursed by such person requiring electric supply.
41. The Indian Electricity Rules 1956 formulate the draft conditions of supply. As per Rule 2 the application of an agreement for supply of electric energy is to be made in the form attached thereto and is to be signed by the owner or occupier of the premises for which supply is required. As per Rule 4, upon receipt of the requisition for supply notice for fixing the point of entry of supply mains and the position of the mains, cut-outs or circuit breakers of the meters is to be given. It is stipulated that the licensee shall inspect the premises for the said purpose. Under Rule 5, once the position for the service being provided has been agreed upon, the licensee shall thereafter submit to the applicant quotation of the estimate of carrying out such work. On acceptance of the quotation, the applicant has to deposit the estimated amount of services to be provided and once the said amount so deposited, orders are to be issued for executing the work. It is stipulated under Rule 5 that the service line notwithstanding the fact that portion of the cost has been paid by the consumer, shall remain the property of the lincesee by whom it is to be maintained. Rule 5 reads as under :
5. Quotations, etc., for laying--Service lines.--(a) The position for the service having been agreed upon as provided for in condition No,. 4 above, the licensee shall thereafter submit to the applicant a quotation of the estimate _of the cost of carrying out the work. The quotation having been accepted, the applicant shall be required to deposit the amount of the estimate with the licensee before the service is laid. The deposit having been duly paid, orders shall be issued for the work to be put in hand and the amount so deposited shall be subsequently adjusted, if necessary, or compilation of the figures of the actual cost of the service line. Other conditions being equal, service lines shall as far as possible be laid in the order of the dates or receipt of the deposit money.
NOTE.--The service line, notwithstanding that a portion of the cost has been paid for by the consumer, shall remain the property of the licensee by whom it is to be maintained.
42. As per Rule 6, the licensee shall lay 30 meters of service line from his nearest distribution main outside the limits of the property, free of charge and any length in excess of 30 meters and whole of the service line within the limit of property, shall be paid by the applicant. Rule 6 further provides that the cost would be 16 exclusive of the proportionate cost of first pole and fittings beyond 30 meters. As per Rule 7, the meter boards, main cut-outs etc. are be handled or removed by only the employees of the licensee and licensee's apparatus must not be broken. All transformers, switch gears and other electrical equipment belonging to the consumer and connected to the mains of the licensee shall be maintained to the reasonable satisfaction of the licensee. In case of high voltage consumers, suitable protective devices approved by the licensee shall be used so as to afford full protection to the licensee's apparatus placed on the consumer's premises.
9. T h e Tr i b u n a l v i d e pa r a s 4 3 t o 4 6 h e l d as u n d e r :
" 4 3 .C o n s i d e r i n g h e p r o v i s i o n s o f t h e E l e c t r i c i t y A c t , i t postulates that it is duty of the distribution licensee to develop and maintain an efficient coordinate distribution system in its area of supply. The supply of electricity is to be made by such distribution licensee in accordance with the provisions of the Electricity Act. Where any person whose premises are situated within the area of supply of the distribution licensee, and it requires supply of electricity to its premises, is to apply for such supply of electricity and it is the duty of the distribution licensee to provide the electricity to the premises of the consumer who has made an application for such supply of electricity to its premises. Generally, the distribution licensee maintain an efficient, coordinated and economical system on its network in the area of its supply However, in some areas, there is a requirement for extension of distribution mains or commissioning of new sub-station, it is the duty of the distribution licensee to develop such infrastructure and thereafter provide electricity to the premises. Reference is made to the provisions of section 43 of the Electricity Act in this regard. The said section further provides the manner of making an application for providing electricity complete with payment of necessary charges. Under Section 46 of the Electricity Act it is provided that the distribution licensee is authorized to charge from a person requiring supply of electricity, in pursuant to section 43 of the Act, such charges which may be incurred in providing any electric line or electric plant, used for the purpose of giving supply. The process of giving supply to such premises which are not connected to the supply lines of the distribution licensee, but are within the area of operation of such distribution licensee, is as per Rule 27 of the Indian Electricity Rules. On the reeipt of notice from the intended consumer for the requisite supply to its premises, the representatives of the licensee are to inspect the premises and fix the point of entry of supply mains and also the position of the mains, cut-outs, meters, supply lines, etc. Thereafter, quotation have to be given to the applicant of the estimated cost of carrying out the work. After the money is deposited by the consumer, the work shall be carried out for initiating the process of providing the infrastructure for the supply of electricity. Such process of 17 providing electricity to the premises of the consumer, though is carried out at the request of the consumer but is in fact is the duty of the distribution licensee to provide the basic amenity of electricity to the premises of the assessee.
44. In the facts of the present case and as brought by us in the paras hereinabove, wherein the communication between the assessee and UPSEB, i.e. one of the distribution licensee has been referred to, clearly established the case of the assessee that it has not awarded any works contract to the SEBs. The complete exercise in the case has been carried out for the purpose of sanction of load for railway traction sub- station to be operated on Ambala-Moradabad Section. The traction sub-station at different points i.e. Kanth and Najibabad are the property of the assessee before us and the distribution licensee i.e. UPSEB was asked to energize the same by providing the electric supply till the same traction sub-station and thereafter from the traction sub-station to the railway lines. The proposal made by the UPSEB was the estimated cost for giving supply to the railway traction points at Najibabad and Kanth, as is clear from the communication reproduced under para 23 hereinabove. The work of supplying the connection to the railway traction point was executed by the UPSEB Board in line with its duty to provide electricity to the premises of the consumer i.e. the raiway before us. The amount was also paid for the estimated cost of such infrastructure being provided to the assessee. Merely because the infrastructure has been provided as per the application moved by the assessee in line with the requirement of the assessee does not establish the case of the department that the same tantamounts to works contact. The assessee is a large consumer of the electric connection and the requirement of the assessee being distinct from an ordinary consumer, the distribution licensee had to provide the infrastructure in line thereof. Such provision of infrastructure by the distribution licensee was in discharge of its duty of providing electricity to the premises of the consumer. The sub-station and the electric lines established by the distribution licensee remained its property and even the infrastructure is provided not on the land of the assessee but on the land of the distribution licensee. In the total infrastructure only the traction sub-station are the property of the assessee. The cost of the infrastructure has been borne by the assessee as there were no existing sub-station of the distribution licensee in the said area. The expenditure thereof has been incurred by the assessee for provision of the electricity connection in line with the provisions of the Electricity Act. There is no oral or written agreement between the assessee and the distribution licensee for the said purpose except the application made by the assessee, the estimate thereof by the distribution licensee and the payment of the estimated charges. We find no merit in the observations of the CIT (Appeals) in this regard that the above said represents a contract between the parties. In the entirety of the facts and circumstances of the case we hold that the assessee was not liable to deduct TDS out of the amounts paid to the distribution licensee for providing the 18 infrastructure for providing electricity to the railway traction sub-station of the assessee. Accordingly, we direct the Assessing Officer to delete the demand raised u/s 201(1) and interest charged u/s 201(1A) of the Act.
45. The Ld. AR for the assessee had made elaborate submissions in respect of the status of the distribution licensee and the assessee which are not being deliberated upon in view of our decision in paras hereinabove. The ground Nos.1 to 6 are partly allowed.
46. Further the assessee had raised additional grounds of appeal. The additional ground of appeal raised by the assessee is in connection with the limitation of passing the present order by the Assessing Officer. The discrepancies were noted by the Assessing Officer after survey at the premises of the assessee on 31.1.2008 and the Order passed by the Assessing Officer dated 12.2.2009 is within reasonable time and cannot be said to be passed beyond the period of limitation. The additional ground No.1 raised by the assessee is thus dismissed.
10. The issue raised in the present set of appeals is identical to the i s s u e b e f o r e t h e Tr i b u n a l i n e a r l i e r ye a r s a n d f o l l o w i ng t h e s a m e p a r i t y o f r e a s o n i n g, w e u p h ol d t h e o r d er o f C IT ( A p p e a l s ) i n d e l e t i n g t h e d e m a n d r a i s e d u n d e r s e c t i o n 2 01 ( 1 ) o f t h e A c t a n d i n t e r e s t c h a rg e d u n d e r s e c t i o n 2 0 1 ( 1 A ) o f t h e A c t .
11 . In t h e r e s u l t , a p p e a l s o f t h e r e v e n u e a r e d i s m i s s e d .
O r d e r p r o n o u n c e d i n t h e o p e n C o u r t o n 2 2 n d N ov e m b e r , 2 0 13 .
Sd/- Sd/-
( T.R . S O O D ) ( S U S H M A C HO W LA )
A C C O U N TA N T M EM B E R J U D IC IA L M E M B E R
Dated: 22nd November, 2013
'Poonam'
Copy to:
The Appellant, The Respondent, The CIT(A), The CIT,DR Assistant Registrar ITAT,CHD.