Income Tax Appellate Tribunal - Bangalore
M/S Gescom , Gulbarga vs Department Of Income Tax on 22 August, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
"A" BENCH : BANGALORE
BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER
AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER
ITA Nos.839 to 844/Bang/2011
Assessment years : 2006-07 to 2011-12
Gulbarga Electricity Supply Vs. The Income Tax Officer,
Company Ltd., TDS Ward,
Corporate Office, Gulbarga.
Main Road,
Gulbarga - 585 102.
PAN : AABCG88895R
APPELLANT RESPONDENT
ITA Nos.874 to 879/Bang/2011
Assessment years : 2006-07 to 2011-12
The Income Tax Officer, TDS Vs. Gulbarga Electricity Supply
Ward, Gulbarga. Company Ltd.,
Corporate Office,
Main Road,
Gulbarga - 585 102.
PAN : AABCG88895R
APPELLANT RESPONDENT
Assessee by : Shri Ramesh Kamalapukar, FCA
Revenue by : Shri S.K. Ambastha, CIT-I(DR)
Date of hearing : 22.08.2012
Date of Pronouncement : 31.08.2012
ITA Nos.839 to 844/Bang/11
and 874 to 879/Bang/11
Page 2 of 18
ORDER
Per N.V. Vasudevan, Judicial Member
The appeals ITA Nos. 839 to 844/Bang/2011 are by the assessee while appeals ITA No.874 to 879/Bang/2011 are by the Revenue. All these appeals are directed against common order dated 29.07.2011 of the CIT(Appeals), Navanagar, Hubli relating to assessment years 2006-07 to 2011-12.
2. The dispute raised in the appeals by the assessee and the revenue are with regard to deduction of tax at source in respect of transmission charges, State Load Dispatching Centre ("SLDC") charges (under Section 194 J of the Income Tax Act, 1961 ("the Act").
3. The assessee is a limited company registered under the Companies Act, 1956. It is engaged in the business of buying and selling of electricity. The assessee purchases electricity from the generators of electricity like Karnataka Power Corporation Ltd. ("KPTCL"), Central Generating Stations like NTPC, NLC Maps and non-conventional electricity generators like Jindal Energy Ltd., Bhagyanagar, Bhourukha etc. and sells the same to different categories of consumers in its jurisdiction. The power from the generation point to the consumers is transmitted through a transmission network of Karnataka Power Transmission Corporation Ltd. ("KPTCL").
ITA Nos.839 to 844/Bang/11 and 874 to 879/Bang/11 Page 3 of 18
4. There was a survey conducted u/s. 133A of the Act on 09-02-09 in the business premises of the assessee. In the course of survey, the revenue came across instances where payments were made to KPTCL for transmission charges. KPTCL develops and maintains transmission lines for smooth flow of electricity from a generating station to the load centres both with the State and intra-state. The revenue was of the view that the payment for using the transmission lines for transmission of power owned by KPTCL was a payment for technical services rendered and the assessee was obliged to deduct tax at source while making such payment u/s. 194J of the Act. Similarly, in respect of the SLDC charges paid to State Load Dispatching Centre (SLDC) which is an arm of KPTCL, the revenue was of the opinion that tax at source ought to have been deducted u/s. 194J of the Act. The functions of SLDC are prescribed under Section 32 of the Electricity Act, 2003, according to which it was responsible for optimum scheduling and dispatch of electricity within a State in accordance with the contracts entered into with the licensees or the generating companies operating in that State, for monitoring grid operations, for keeping accounts of the quantity of electricity transmitted through the State grid, exercising supervision and control over the intra-state transmissions systems; and for carrying out real time operations for grid control and dispatch of electricity within the State. To secure and economics of operations of the state grid in accordance with the Grid Standards and the State Grid Code. The Assessing Officer accordingly held that the assessee was an assessee in default u/s. 201(1) of the Act and also levied interest ITA Nos.839 to 844/Bang/11 and 874 to 879/Bang/11 Page 4 of 18 on taxes u/s. 201(1A) of the Act in respect of Transmission charges and SLDC Charges paid as aforesaid.
5. On appeal filed by the assessee, the ld. CIT(Appeals) was of the view that SLDC charges and transmission charges were distinct and different from each other. In respect of SLDC charges, the ld. CIT(A) held that SLDC was not an arm or wing of KPTCL and was an independent statutory body under the Electricity Act, 2003. He further held that SLDC performed the functions which were managerial and technical in nature and rendered only by humans. He therefore held that SLDC charges are fees for technical services. The further argument of the assessee was that u/s. 196 of the Act, there is no obligation to deduct tax at source on payments made to Government and payment to SLDC was payment to Government. On this plea, the ld. CIT(A) held that SLDC cannot be considered as Government and therefore immunity u/s. 196 of the Act was not available.
6. With regard to the transmission charges paid to KPTCL, the ld. CIT(Appeals) held that the same were not in the nature of fees for technical services and accordingly there was no obligation on the part of the assessee to deduct tax at source at the time of making payment of transmission charges to KPTCL. The ld. CIT(A) further held that in cases where the recipient of payment from the assessee have made payment of taxes, then to that extent, the assessee cannot be treated as an assessee in default. He further held that interest u/s. 201(1A) of the Act has to be worked out from the due date of remittance of TDS till the date of return filed by the recipients of the payments from the assessee. In this regard, the ld. CIT(A) relied on the decision of the Hon'ble Supreme Court in the ITA Nos.839 to 844/Bang/11 and 874 to 879/Bang/11 Page 5 of 18 case of Hindustan Coca Cola Beverages Pvt. Ltd. v. CIT 293 ITR 226 (SC).
7. Aggrieved by the relief allowed by the CIT(Appeals), the revenue has preferred the aforesaid appeals for the AYs 2007-08 to 2009-10; aggrieved by the action of the CIT(A) in confirming the action of the AO with regard to payment of SLDC charges, the assessee has preferred the aforesaid appeals before the Tribunal.
8. At the time of hearing of these appeals, the parties agreed that the question as to whether tax had to be deducted at source on payment of transmission charges and SLDC charges has been considered by this Tribunal in the case of Bangalore Electricity Supply Company v. ITO (TDS), Ward 16(1), Bangalore in ITA No.530 to 535/Bang/2011, 546 to 548/Bang/2010, 541 to 545/Bang/2010 and 256 to 260/Bang/2011, wherein the Tribunal has held as follows:-
" 5. We have carefully heard both parties, perused the material on record and the judicial decisions cited and relied upon. The two decisions relied on by the learned Departmental Representative are clearly distinguishable on facts as lucidly brought out by the learned Authorised Representative in para 4.3 of this order. The decision of Jaipur Vidyut Vitran Nigam Ltd. (supra) has been perused and we find that the facts of the case and issues are identical to that of the assessee's case and is squarely covered by it. The Hon'ble Tribunal in the case of JVVNL has very succinctly dealt with the issues and the relevant case laws which bring out the meaning of the expression "fee for technical services' as used in section 194J r.w. Explanation 2 to section 9(1)(vii) of the Act. We find it necessary to extract relevant portions of the judgement thereof.
"Para 9.2 : In above connection it is relevant to extract the relevant provisions of section 194J which are as follows :
ITA Nos.839 to 844/Bang/11 and 874 to 879/Bang/11 Page 6 of 18 " 194J. Fees for professional or technical services --- (1) Any person, not being an individual or an HUF, 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
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) .......
(B) .......
(2)( .....) (3)(.....) Explanation : For the purposes of this section, ....
(b) "fees for technical services" shall have the same meaning as in Expln. 2 to clause (vii) of sub-section (1) of section 9;"
(c) .......
The expression "fees for technical services" has not been defined under section 194J of the Act but Expln. (b) to section 194J of the Act, provides that the said expression shall have the same meaning as in Expln. 2 to clause (vii) of sub-section (1) of section 9. The said section is reproduced herein below for ready reference:
"9. Income deemed to accrue or arise in India. -
(1) The following incomes shall be deemed to accrue or arise in India:
(vii) income by way of fees for technical services payable by-
Explanation 2. For the purposes of this clause, "fees for technical services" means any consideration (including any lump sum ITA Nos.839 to 844/Bang/11 and 874 to 879/Bang/11 Page 7 of 18 consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head Salaries.
Para 9.3. The expression "fees for technical service" as used in section 194J of the Act has been exhaustively examined by the Hon'ble Delhi High Court in the case of Bharti Cellular Ltd. ( supra) and the observations are reproduced as under:
"13. We have already pointed out that the expression 'fees for technical services' as appearing in section 194J of the said Act has the same meaning as given to the expression in Expln. 2 to section 9(( viz) of the said Act. In the said Explanation the expression 'fees for technical services' means any consideration for rendering of any 'managerial, technical or consultancy services'. The word 'technical' is preceded by the word 'managerial' and succeeded by the word consultancy'. Since the expression 'technical services' is in doubt and is unclear, the rule of noscitur a sociis is clearly applicable. The said rule is explained in Maxwell on The Interpretation of Statutes (Twelfth Edition) in the following words: Where two or more words which are susceptible of analogous meaning are coupled together, noscitur a sociis, they are understood to be used in their cognate sense. They take, as it were, their colour from each other, the meaning of the more general being restricted to a sense analogous to that of the less general. This would mean that the word 'technical' would take colour from the words 'managerial' and 'consultancy' between which it is sandwiched. The word 'managerial' has been defined in the Shorter Oxford English Dictionary, Fifth Edition as: Of pertaining to, or characteristic of a manager of or within an organization, business, establishment, etc. The word 'manager' has been defined, inter alia, as: A person whose office it is to manage an organization, business establishment, or public institution, or part of one; a person with the primarily executive or supervisory function within an organization etc.; a person controlling the activities of a person or team in sports, entertainment, etc. It is therefore, clear that a managerial service would be one which pertains to or has ITA Nos.839 to 844/Bang/11 and 874 to 879/Bang/11 Page 8 of 18 the characteristic of a manager. It is obvious that the expression 'manager' and consequently 'managerial service' has a definite human element attached to it. To put it bluntly, a machine cannot be a manager.
14. Similarly, the word 'consultancy' has been defined in the said dictionary as 'the work or position of a consultant; a Department of consultants'. 'Consultant' itself has been defined, inter alia, as 'a person who gives professional advice or services in a specialized field'. It is obvious that the word 'consultant' is a derivative of the word 'consult' which entails deliberations, consideration, conferring with someone, conferring about or upon a matter. Consult has also been defined in the said dictionary as 'ask advice for, seek counsel or a professional opinion from; refer to (a source of information); seek permission or approval from for a proposed action'. It is obvious that the service also necessarily entails human intervention. The consultant, who provides the consultancy service, has to be a human being. A machine cannot be regarded as a consultant.
15. From the above discussion, it is apparent that both the words 'managerial' and 'consultancy' involve a human element. And, both, managerial service and consultancy service, are provided by humans. Consequently, applying the rule of noscitur a sociis, the word 'technical' as appearing in Expln. 2 to section 9(1)(vii) would also have to be construed as involving a human element. But, the facility provided by MTNL/other companies for interconnection/port access is one which is provided automatically by machines. It is independently provided by the use of technology and that too, sophisticated technology, but that does not mean that MTNL/other companies which provide such facilities are rendering any technical services as contemplated in Expln. 2 to section 9(1 )(vii) of the said Act. This is so because the expression 'technical services' takes colour from the expressions 'managerial services' and 'consultancy services' which necessarily involve a human element or, what is now a days fashionably called, human interface. In the facts of the present appeals, the services rendered qua interconnection/port access do not involve any human interface and, therefore, the same cannot be regarded as 'technical services' as contemplated under section 194J of the said Act.
ITA Nos.839 to 844/Bang/11 and 874 to 879/Bang/11 Page 9 of 18
20. Before concluding we would also like to point out that the interconnection/port access facility is only a facility to use the gateway and the network of MTNL/other companies. MTNL or other companies do not provide any assistance or aid or help to the respondents/assessee in managing, operating, setting up their infrastructure and networks. No doubt, the facility of interconnection and port access provided by MTNL/other companies is 'technical' in the sense that it involves sophisticated technology. The facility may even be construed as a 'service' in the broader sense such as a 'communication service'. But when we are required to interpret the expression 'technical service', the individual meaning of the words 'technical' and 'service' have to be shed. And, only one meaning of the whole expression 'technical services' has to be seen. Moreover, the expression 'technical service' is not to be construed in the abstract and general sense but in the narrower sense as circumscribed by the expressions 'managerial service' and 'consultancy service' as appearing in Expln. 2 to section 9(1)(vii) of the said Act. Considered in this light, the expression 'technical service' could have reference to only technical service rendered by a human. It would not include any service provided by machines or robots."
Para 9.4. The Hon'ble Madras High Court in the case of Skycell Communications Ltd (supra), has held as under:
"4. 'Fees for technical services' is not defined in section l94J. Explanation (b) in that section provides that expression shall have the same meaning as in Expln. 2 to clause (vii) of sub-s.( of section 9. That Expln. 2 in section 9(l)(vii) reads thus:
'For the purposes of this clause, 'fees for technical services' means any consideration (including any lump sum consideration) for rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head 'Salaries'.' This definition shows that consideration paid for the rendering of any managerial, technical or consultancy ITA Nos.839 to 844/Bang/11 and 874 to 879/Bang/11 Page 10 of 18 service, as also the consideration paid for the provision of services of technical or other personnel, would be regarded as fees paid for 'technical services'. The definition excludes from its ambit consideration paid for construction, assembly, or mining or like project undertaken by the recipient, as also consideration which would constitute income of the recipient chargeable under the head 'Salaries'. Thus while stating that 'technical service' would include managerial and consultancy service, the legislature has not set out with precision as to what would constitute technical' service to render it 'technical service'. The meaning of the word 'technical' as given in the New Oxford Dictionary is adjective 1 of or relating to a particular subject, art or craft or its techniques; technical terms (especially of a book or article) requiring special knowledge to be understood; a technical report, 2 of involving or concerned with applied and industrial sciences: an important technical achievement, 3. resulting from mechanical failure: a technical fault, 4. according to a strict application or interpretation of the law or the rules: the arrest was a technical violation of the treaty.
Having regard to the fact that the term is required to be understood in the context in which it is used, 'fee for technical services' could only be meant to cover such things technical as are capable of being provided by way of service for a fee. The popular meaning associated with 'technical' is 'involving or concerning applied and industrial science'.
5. In the modern day world, almost every facet of one's life is linked to science and technology inasmuch as numerous things used or relied upon in everyday life is the result of scientific and technological development. Every instrument or gadget that is used to make life easier is the result of scientific invention or development and involves the use of technology. On that score, every provider of every instrument or facility used by a person cannot be regarded as providing technical service. When a person hires a taxi to move from one place to another, he uses a product of science and technology, viz., an automobile. It cannot on that ground be said that the taxi driver who controls the vehicle, arid monitors its movement is rendering a technical service to the person who uses the automobile. Similarly, when a person travels by train or, in ITA Nos.839 to 844/Bang/11 and 874 to 879/Bang/11 Page 11 of 18 an aeroplane, it cannot be said that the railways or airlines is rendering a technical service to the passenger and, therefore, the passenger is under an obligation to deduct tax at source on the payments made to the railway or the airline for having used it for travelling from one destination to another. When a person travels by bus, it cannot be said that the undertaking which owns the bus service is rendering technical service to the passenger and, therefore, the passenger must deduct tax at source on the payment made to the bus service provider, for having used the bus. The electricity supplied to a consumer cannot, on the ground that generators are used to generate electricity, transmission lines to carry the power, transformers to regulate the flow of current, meters to measure that consumption, be regarded as amounting to provision of technical services to the consumer resulting in the consumer having to deduct tax at source on the payment made for the, power consumed and remit the same to the Revenue. Satellite television has become ubiquitous, and is spreading its area and coverage, and covers millions of homes. When a person receives such transmission of television signals through the cable provided by the cable operator, it cannot be said that the home owner who has such a cable connection is receiving a technical service for which he is required to deduct tax at source on the payments made to the cable operator. Installation and operation of sophisticated equipments with a view to earn income by allowing customers to avail of the benefit of the user of such equipment does not result in the provision to technical service to the customers for a fee.
6. When a person decides to subscribe to a cellular telephone service in order to have the facility of being able to communicate with others, he does not contract to receive a technical service. What he does agree to is to pay for the use of the airtime for which he pays a charge. That fact that the telephone service provider has installed sophisticated technical equipment in the exchange to ensure connectivity to its subscriber, does not on that score, make it provision of a technical service to the subscriber. The subscriber is not concerned with the complexity of the equipment installed in the exchange' or the location of the base station. All that he wants is the facility of using the telephone when he wishes to, and being able to get connected to the person at the number to which he desires to be connected. What applies to cellular ITA Nos.839 to 844/Bang/11 and 874 to 879/Bang/11 Page 12 of 18 mobile telephone is also applicable in fixed telephone service. Neither service can be regarded as 'technical service' for the purpose of section 194J of the Act.
7. The use of the internet and the world wide web is increasing by leaps and bounds, and there are hundreds of thousands, if not millions, of subscribers to that facility.
The internet is very much a product of technology, and without the sophisticated equipment installed by the internet service providers and the use of the telephone fixed or mobile through which the connection is established, the service cannot be provided. However, on that score, every subscriber of the internet service provider cannot be regarded as having entered into a contract for availing of technical services from the provider of the internet service, and such subscriber regarded as being obliged to deduct tax at source on the payment made to the internet service provider.
8. At the time the IT Act was enacted in the year 1961, as also at the time when Expln. 2 to section 9(l)(vii) was introduced by the Finance (No. 2) Act, w.e.f. 1st April, 1977, the products of technology had not been in such wide use as they are today. Any construction of the provisions of the Act must be in the background of the realities of day-to-day life in which the products of technology play an important role in making life smoother and more convenient. Sec. 194J, as also Expln. 2 in section 9(l)(vii) of the Act were not intended to cover the charges paid by the average householder or consumer for utilizing the products of modern technology, such as, use of the telephone fixed or mobile, the cable TV, the internet, the automobile, the railway, the aeroplane, consumption of electrical energy, etc., such facilities which when used by individuals are not capable of being regarded as technical service cannot become so when used by firms and companies. The facility remains the same whoever the subscriber may be individual, firm or company.
9. Technical service' referred in section 9(1)(vii) contemplates rendering of a 'service' to the payer of the fee. Mere collection of a 'fee' for use of a standard facility provided to all those willing to pay for it does not amount to the fee having been received from technical services."
ITA Nos.839 to 844/Bang/11 and 874 to 879/Bang/11 Page 13 of 18 Thus Hon'ble Court while dealing with the case of "transmission of voice" has equated the same with the "transmission of the electricity" and held that the same does not amount to providing the technical service. Para 9.5. In the case of Parasrampuria Synthetics Ltd. (supra) it was held as under:
"There may be use of services of technically qualified person to render the services but that itself do not bring the amount paid as 'fees for technical services' within the meaning of Expln, 2 to section 9(1)(vii). The amount paid are towards annual maintenance contract of certain machinery or for converting partially oriented yard (POY) into texturised/twisted yarn. The technology or technical knowledge of persons is not made available to the assessee but only by using such technical knowledge services are rendered to the assessee. In such a case, it cannot be said that the amount is paid as 'fees for technical services'. Rendering services by using technical knowledge or skill is different than charging fees for technical services! In the later case the technical services are made available due to which assessee acquired certain right which can be further used. Accordingly where the persons rendering certain services has only maintained machinery or converted yarn but that knowledge is not vested with the assessee by which itself it can do research work, the amount paid cannot be considered as fees for technical services within the meaning of section 194J of the Act."
Para 9.6. An analysis of above cases lays down the proposition that section 194J 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 is different than charging fees for rendering technical services. The applicability of section 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 does not result in the provision of technical service to the customer for a fee.
ITA Nos.839 to 844/Bang/11 and 874 to 879/Bang/11 Page 14 of 18 Similar is the proposition laid down in other cases relied by the learned Authorised Representative supra. Para 9.7. The arguments of the learned Departmental Representative that human element is involved in providing such service making the payment of wheeling/SLDC charges liable for deduction of tax at source as technical service has no merit as the technical service is not provided to the personnel of the assessee. We are also unable to pursue (sic) ourself with the contention of the learned Departmental Representative that other persons are making deduction at source on such payment under section 194C/ l94J/194H." The Tribunal then in para 9.10 thereof went on to hold that the assessee M/s. Jaipur Vidyut Vitran Nigam Ltd. was not liable for deduction of tax at source on payment of transmission / SLDC charges to Rajasthan Vidyut Prasaran Nigam Ltd., the transmission company as under :
" 9.10. We also find force in alternate argument of the learned Authorised Representative that the payment of transmission/wheeling/SLDC charges is reimbursement of the cost. Therefore the provisions of Chapter XVII-B are not applicable since there is no payment of income/revenue by the assessee. We find that the tariff is fixed by an independent regulatory body i.e., Rajasthan Electricity Regulatory Commission. The transmission company is not allowed any return on its capital; the tariff is determined on the principle of no profit no loss. From the tariff order (paper book 90-93) we find that tariff is fixed, by estimating the actual cost of operation of RVPN. In case, on the basis of such tariff, any surplus is left with the RVPN, they give credit of the same to the assessee as evident from the extract of the minutes of the board and the copy of the journal voucher by which such credit is given to the assessee (paper book 136-138). Thus when no income is paid by assessee to transmission company the question of deduction of tax at source do not otherwise arise even when under certain section of Chapter XVII-B liability of TDS is on payment of any sum and under certain sections it is on payment of income as ultimately the tax is on the income and deduction of tax at source is only one of the modes of collection and recovery of the tax. On actual reimbursement, provision of deduction of tax at source would not apply as held in case of Dr. Willrnar Schwabe India (F) Ltd. (supra) (paper book 124-125), head-note of which reads as under:
"As agreed by and between the assessee company and ITCL, a vehicle was to be provided by the assessee company to the said consultant for attending to its work ITA Nos.839 to 844/Bang/11 and 874 to 879/Bang/11 Page 15 of 18 and thus, the assessee company was to bear the vehicle expenses actually incurred by the said party. Bills for such expenses incurred by the said consultant were separately raised by them on the assessee company in addition to bills for fees payable on account of technical services and since the amount of bills so raised was towards the actual expenses incurred by them, there was no element of any profit involved in the said bills. It was thus a clear case of reimbursement of actual expenses incurred by the assessee and the same, therefore, was not of the nature of payment covered by s, 194J, requiring the assessee to deduct tax at source therefrom. The CBDT Circular No. 715, dt. 8th Aug., 1995 [(1995) 127 CTR (St) 131 relied upon by the A0 in support of his case on this issue was applicable only in the cases where bills are raised for the gross amount inclusive of professional fees as well as reimbursement of actual expenses and the same, therefore, was not applicable to the facts of the present case where bills were raised separately by the consultants for reimbursement of actual expenses incurred by them. As such, considering all the facts of the case, the provisions of section 194J were not applicable to the reimbursement of actual expenses and the assessee company was not liable to deduct tax at source from such reimbursement."
Under these circumstances, we hold that the lower authorities were not justified in holding that the assessee is liable for deduction of tax at source on the payment of transmission /SLDC charges to RVPN."
From the relevant portions of the Tribunal decision in the case of J.V.V.N.L. reproduced (supra), we are of the opinion that it is clear that the facts and issues are identical to the assessee's case and that the decision therein is squarely applicable to the assessee's case. We, therefore, respectfully following the decision of the Jaipur Bench of ITAT in the case of JVVNL (supra), uphold the finding of the learned CIT(A) that the assessee, BESCOM was not liable to deduct tax at source on payments of transmission charges to KPTCL as the provisions of section 194J of the Act are not attracted thereon."
9. With regard to SLDC charges, the Tribunal held as follows:-
"8.3 We have heard both parties, perused the material on record and the judicial decisions cited. Admittedly the SLDC is a ITA Nos.839 to 844/Bang/11 and 874 to 879/Bang/11 Page 16 of 18 statutory body constituted by the State Government in pursuance to the mandate to the Electricity Act, 2003 and is an independent body. This constitution is in accordance with section 31(2) thereof and the functions to be performed are as per sections 32 and 32 viz. for optimum scheduling and dispatch of electricity within the state. While it is true that in the relevant period many of its personnel may be, on deputation from KPTCL and other organizations, they work exclusively for SLDC. It is seen that though the functions these personnel of SLDC perform, may be of managerial and technical nature, the assessee, BESCOM or its employees do not receive OR derive any benefit in their sphere of work i.e. distribution and retailing of electricity and neither do they perform any of BESCOM's work. What is paid by BESCOM as SLDC charges are only reimbursement of actual expenses as per the direction in Karnataka Gazette Notification on 18.11.2004 and the same are in accordance with the procedure adopted for accounting of charges by the KPTCL Circulars dt.3.12.2005 and 28.11.2005 SLDC charges are not accounted as KPTCL's income. The very same question/issue of whether on payment of SLDC charges the assessee was liable to make TDS in accordance with the provisions of section 194J was before the Jaipur Tribunal in the case of JVVNL (supra) and the Tribunal after considering the issue in detail has come to the finding in para 9.10 of its order (reproduced supra) that the provisions of section 194J were not applicable to SLDC charges paid and therefore no deduction of tax was to be made thereon. We find that this issue is decided and covered in favour of the assessee- company by the decision of the ITAT, Jaipur Bench in the case of JVVNL (supra) and therefore hold that on SLDC charges paid by the assessee, no deduction of tax is to be made at source as the provisions of section 194J are not attracted or applicable. Accordingly, the impugned demand raised u/s.201(1) r.w.s. 194J and 201(1A) are cancelled. The assessee gets relief accordingly."
10. The parties agreed before us that the facts and circumstances and the basis of the conclusions arrived by the revenue authorities are identical in the cases decided by the Tribunal and the present appeals. In the circumstances, respectfully following the decision of the Tribunal in the case of Bangalore Electric Supply Company Ltd. supra, we uphold the order of the ld. CIT(A) so far as it relates to transmission charges and ITA Nos.839 to 844/Bang/11 and 874 to 879/Bang/11 Page 17 of 18 reverse the order of the ld. CIT(A) with reference to SLDC charges. In view of the above conclusion, the issues regarding levy of interest, the question whether (SLDC) was Government within the meaning of section 196 of the Act and the question whether the liability of the person making payment will stand extinguished on payment of taxes by the recipient of the payment and the question of period of levy of interest u/s. 201(1A) of the Act do not require any consideration. The Revenue has apart from the original grounds of appeal raised has sought to file additional grounds of appeal. These additional grounds of appeal are a reiteration of the stand of the revenue as reflected in the original grounds of appeal but on different facets of the issue raised in the original grounds of appeal. The additional grounds are admitted for adjudication. In view of the conclusion which we have arrived at based on the earlier orders of the Tribunal, we are of the view that these additional grounds cannot be sustained on merits and they are also dismissed.
11. In the result, ITA Nos.839 to 844/Bang/11 are allowed, ITA Nos.874 to 879/Bang/2011 are dismissed.
Pronounced in the open court on this 31st day of August, 2012.
Sd/- Sd/-
( JASON P.BOAZ ) ( N.V. VASUDEVAN )
Accountant Member Judicial Member
Bangalore,
Dated, the 31st August, 2012.
Ds/-
ITA Nos.839 to 844/Bang/11
and 874 to 879/Bang/11
Page 18 of 18
Copy to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT, Bangalore.
6. Guard file
By order
Senior Private Secretary
ITAT, Bangalore.