Income Tax Appellate Tribunal - Bangalore
M/S Bangalore Electricity Supply ... vs Department Of Income Tax on 5 March, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
BANGALORE BENCH "A"
BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND
SHRI JASON P. BOAZ, ACCOUNTANT MEMBER
ITA Nos. & Appellant Respondent.
Assessment Years
530 to 535/BANG/2011 Bangalore Electricity Supply Co. Income Tax Officer (TDS),
2005-06 to 2007-08 Ltd., Corporate Office, Ward 16(1), Bangalore.
IV Floor, K.R. Circle,
Bangalore-560 001.
546 to 548/BANG/2010 Bangalore Electricity Supply Co. Income Tax Officer (TDS),
2005-06 to 2007-08 Ltd., Corporate Office, Ward 16(1), Bangalore.
IV Floor, K.R. Circle,
Bangalore-560 001.
541 to 545/BANG/2010 Income Tax Officer (TDS), Bangalore Electricity Supply
2004-05 to 2008-09 Ward 16(1), Bangalore. Co. Ltd.,
Corporate Office,
IV Floor, K.R. Circle,
Bangalore-560 001.
256 to 260/BANG/2011 Income Tax Officer (TDS), Bangalore Electricity Supply
2004-05 to 2008-09 Ward 16(1), Bangalore. Co. Ltd.,
Corporate Office,
IV Floor, K.R. Circle,
Bangalore-560 001.
Assessee By : Shri V. Sridhar.
Revenue By : Shri S.K. Ambastha.
Date of Hearing : 05.03.2012.
Date of Pronouncement : 16.03.2012.
O R D E R
Per Bench :
These are multiple appeals filed by the assessee and Revenue directed against the consolidated order of the Commissioner of Income Tax (Appeals)-V, Bangalore dt.29.1.2010 on the issue of non-deduction of tax under section 201(1) of the Income Tax 2 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 Act, 1961 (herein after referred as 'the Act') and charge of interest under section 201(1A) r.w.s.194J of the Act.
2. The details of appeals filed are as under :
2.1 Revenue filed appeals in ITA Nos.541 to 545/Bang/2010 for Assessment Years 2004-05 to 2008-09 on 16.4.2010 in respect of disputes arising out of the applicability of section 194J for non-deduction of tax under section 201(1) and charge of interest under section 201(1A) of the Act. The assessee too filed appeals on the issues of SLDC charges in ITA Nos.546 to 548/BANG/2010 for Assessment Years 2005-06 to 2007-08 on 20.4.2010. During the course of hearings, this Tribunal instructed both the assessee and Revenue to file separate appeals for each year in respect of the orders under section 201(1) and 201(1A) respectively. In pursuance of defect Memos' issued, Revenue filed appeals in ITA Nos.256 to 260/BANG/2011 for Assessment Years 2004-05 to 2008-09 on 10.3.2011 on the issue of charge of interest under section 201(1A) of the Act. The learned Departmental Representative also filed revised grounds of appeal in respect of non-deduction of tax under section 201(1) and requested that the appeals Nos.541 to 545/BANG/2010 filed on 16.4.2010 be treated as in respect of the dispute relating to section 201(1). The assessee too filed fresh appeals on 9.5.2011in ITA Nos.530, 532 and 534/BANG/2011 in respect of the dispute under section 201(1) and appeals in ITA Nos.531, 533 and 535/BANG/2010 in respect of charge of interest under section 201(1A) of the Act.3
ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 2.2 During the course of hearings, the learned Authorised Representative submitted that in view of the filing of separate appeals for levy of penalty for non-deduction of tax under section 201(1) and charge of interest under section 201(1A) on 9.5.2011, the original appeals filed by the assessee viz. ITA Nos.546 to 548/BANG/2010 are now not maintainable and may be treated as withdrawn. In this view of the matter, the appeals in ITA Nos.546 to 548/BANG/2010 filed by the assessee for Assessment Years 2005-06 to 2007-08 are accordingly dismissed.
2.3 In view of the facts mentioned above at paras 2.1 and 2.2, the following appeals now remain to be decided :
Assessment Department Department Assessee's Assessee's Year Appeals u/s. 201(1) appeals u/s. appeals appeals r.ws. 194J 201(1A) u/s.201(1) u/s.201(1A) r.w.s. 194J 2004-05 541/BANG/2010 256/BANG/2011 -- -
2005-06 542/BANG/2010 257/BANG/2011 530/BANG/2011 531/BANG/2011 2006-07 543/BANG/2010 258/BANG/2011 532/BANG/2011 533/BANG/2011 2007-08 544/BANG/2010 259/BANG/2011 534/BANG/2011 535/BANG/2011 2008-09 545/BANG/2010 260/BANG/2011 -- --
In view of common issues being involved and the ground of appeals raised being similar, these appeals are heard together and disposed off by way of this common order.
3. Facts of the cases, as per records, are as under :
3.1 The assessee-company, Bangalore Electricity Supply Company Ltd. (hereinafter referred to as BESCOM) is a company incorporated on 30.4.2002 under the Indian 4 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 Companies Act, 1956 as a wholly owned Govt. of Karnataka undertaking. Certificate of commencement of business was obtained on 13.5.2002. The Govt. of Karnataka vide order No.DE 14 PSR 2002 dated 31.5.2002 published the Second Transfer Scheme called Karnataka Electricity Reforms to give effect to the approval of distribution undertakings.
Accordingly it was notified that the Karnataka Electricity Board (KEB) would be unbundled into the following entities :
i) Karnataka Power Corporation Ltd. (KPCL) (Power generation company)
ii) Karnataka Power Transmission Corpn. Ltd. (KPTCL) (Transmission company)
iii) Bangalore Electricity Supply Co. Ltd. (BESCOM) (Distribution company)
iv) Mangalore Electricity Supply Co. Ltd. (MESCOM) (Distribution company)
v) Hubli Electricity Supply Company Ltd. (HESCOM) (Distribution company)
vi) Gulbarga Electricity Supply Co. Ltd. (GESCOM) (Distribution company)
vii) Chamundeswari Electricity Supply Co. Ltd. (CESCOM) (Distribution company) 3.2 According to the scheme, BESCOM was vested with certain assets and liabilities as opening balances as on 1.6.2002 in order to carry on the distribution of electricity in the local area assigned (presentty covering the 8 districts of Bangalore Urban, Bangalore Rural, Chikkaballapur, Tumkur, Chitradurga, Kolar and Davangere). The assessee was granted licnence for distribution and retail supply of power by Karnataka Electricity Regulatory Commission (KERC) under section 19 of the KERC Act, 1999. From its inception till 10.6.2005, BESCOM purchased electricity directly from KPTCL and was charged both for cost of electricity and cost of transmission. From 10.6.2005, BESCOM 5 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 was directed by the State Government that in accordance with the Electricity Act, 2003 should purchase electricity directly from generators of electricity and to avail the transmission network of KPTCL upto the interface points. The tariff for both power purchase and transmission charges was periodically reviewed by KERC keeping in view all aspects of costs involved in transmission in order to have equitable and justifiable prices in fixation of power costs to the public. Similarly, BESCOM has also availed the transmission network of Power Grid Corporation of India Ltd. (PGCIL) for drawing electricity from central generating power stations owned by National Thermal Power Corporation (NTPC) and Nuclear Power Corporation (NPC) at the transmission tariff fixed by the Central Electricity Regulatory Commission (CERC).
3.3 The bifurcation of the function of Karnataka Electricity Board (KEB) between the above 7 entities necessitated the formation of a co-ordinating body to resolve probable conflicts of interest that may arise among them. In anticipation of such situations, the Electricity Act, 2003 mandated the State Government to establish a State Load Despatch Centre (SLDC) to discharge such co-ordinative functions as per section 31 clause (2) thereof which reads as under :
" (2) The SLDC shall be operated by a Government company OR any authority OR corporation established OR constituted by OR under any State Act, as may be notified by the State Government.
Provided that until a government company OR Authority OR Corporation is notified by the State Government, the STU shall operate the SLDC." 6
ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 3.4 The functions to be performed by SLDC are laid out in sections 32 and 33 of the Electricity Act, 2003 and basically mandate that it shall be responsible for optimum scheduling and dispatch of electricity within the state in accordance with the terms of contract between the contracting parties therein; monitor grid operation; keep an account of the quantity of electricity transmitted through the state grid; supervision and control over the intra-state transmission systems and be responsible for carrying out real operations for grid control and dispatch of electricity throughout the State. 3.5 In pursuance of the above mandate, the Govt. of Karnataka by an order dt.10.5.2005 formed the SLDC for smooth flow of operations amongst generating companies. As a separate organization was in the process of formation during the relevant period, the key personnel of SLDC were drawn on deputation mainly from amongst qualified and experienced personnel of KPTCL (the STU) and other organizations. The employees of SLDC perform their duties as personnel of SLDC, a separate, independent statutory body under the Electricity Act, 2003 and it is not as arm or wing of KPTCL though some of its employees may be drawn from there. 3.6 In this case, the Income Tax Department carried out a survey under section 133A of the Act on 15.12.2008 at the business premises of the assessee. In the course of verification, it was seen that the assessee had made payments of transmission charges to KPTCL and PGCIL in the F.Ys 2004-05 to 2008-09 and SLDC charges on which no TDS was made. In response to a show cause notice issued, Shri Ramesh, Asst. General Manager 7 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 stated that as per the following decided cases provisions of section 194J were not applicable to the assessee's case :
i) CIT Vs. Bharati Cellular Ltd. (2008) (220 CTR 258) (Del) and
ii) Skycell Communication Ltd. Vs. DCIT (251 ITR 53) (Mad) The statement of C. Sreenivasan, Chief General Manager (F & C) of the assessee company was also recorded on 28.1.2009 in which he was examined as to why the assessee company had not made TDS in accordance with provisions of section 194J when making these payments. He has also stated that the provisions of section 194 J for TDS to be made from payments of transmission charges to KPTCL and SLDC charges were not applicable in the assessee's case. The Assessing Officer, however, held that both these payments made by the assessee (a) to KPTCL for transmission charges and (b) SLDC charges, were payments for technical services rendered and were liable for deduction of tax at source under section 194J for the following reasons which emanate from the order of assessment;
i) The list of works performed by KPTCL for the assessee is a service.
ii) Transmission of electricity is a technical service as it is not just a case of using the system set up by KPTCL. But, KPTCL has to perform certain activities to provide the service and to maintain the quality thereof for which technical support of sophisticated instruments and services of technically qualified staff like engineers etc are required to operate and manage the system.
iii) Since the activities carried outby KPTCL required technical support and service of technically qualified staff to maintain and operate the system in an efficient and economical manner, therefore it was providing technical services to BESCOM falling under section 194J. The Assessing Officer was of the view that the judicial decisions relied on by the assessee in Bharati Cellular (Supra) and Skycell Communications Ltd. (supra) were distinguishable on facts.8
ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010
iv) The Assessing Officer placed reliance on the following decisions : Singapore Airlines Ltd. Vs. ITO (2006) 7 SOT 84 (ITAT, Chennai), Canara Bank Vs. ITO 305 ITR 189 and Continental Construction Ltd. Vs. CIT (1992) (195 ITR 81) (SC).
3.7 The assessee carried these issues of the Assessing Officer holding the payments of transmission charges to KPTCL and SLDC charges as fees for technical services rendered to the assessee being liable to TDS under section 194J and consequent non-deduction of tax under section 201(1) and charging of interest under section 201(1A) in appeal before the CIT(A). The CIT(A) examined the details on record, the submissions made and the judicial decisions relied on by both the Assessing Officer & the assessee and was of the view that transmission charges paid to KPTCL and SLDC charges paid by BESCOM are distinct and different from each other and dealt with each one separately. 3.7.1 SLDC Charges : In respect of SLDC charges paid, the learned CIT(A) was of the view that the functions performed by SLDC involved rendering services to BESCOM that require managerial and technical expertise which skills can be rendered by humans only. He was also of the opinion that SLDC in its form, during the relevant period, appeared to be interim in nature and is not fully functional. It had no office of its own ; took its staff on deputation from KPTCL and depended for its funding on reimbursement of its expenses by other enterprises over whom it has control. In para 7.10.0 of his order the learned CIT(A) proceeded to hold that the payments of SLDC charges are to be considered as 'fees for technical services' and are liable to TDS as per section 194J(1)(b) 9 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 of the Act and in view of the assessee's failure for non-deduction of tax under section 201(1) and charge of interest under section 201(1A) was sustained by him. 3.7.2 Transmission charges paid to KPTCL.
In the course of hearings before the learned CIT(A), the assessee placed reliance for its claim for not being liable to deduct tax on payments of transmission charges to KPTCL and SLDC charges on the facts and decision of the Hon'ble ITAT, Jaipur Bench in the case of Jaipur Vidyut Vitram Nigam Ltd. Vs. DCIT (2009) (123 TTJ 888) (JP). The learned CIT(A) was of the view that the facts of the cited case (supra) were exactly similar to that of the assessee (BESCOM) and the finding therein applicable to it. He was of the opinion that, the services involved in transmission of electricity was 'automatic' from the generating point of KPTCL to the receiving point of the assessee and was rendered by machines not by humans. The services rendered by humans in this process was to operate and maintain the transmission system of KPTCL and no services were rendered to the assessee. He, therefore, in paras 15.6.0 and 15.7.0 of his order proceeded to hold that the payment of transmission charges by the assessee to KPTCL were not in the nature of fees for technical services and therefore the payments of transmission charges to KPTCL, cannot come under the purview of section 194J and no tax was to be deducted thereon.
3.7.3 The learned CIT(A) further held in para 16.3.0 of his order that in view of CBDT's Circular NO.275/201/95-IT dt.29.1.1997 and the decision of the Hon'ble Apex 10 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 Court in the case of Hindustan Coca Cola Beverages Ltd. Vs. CIT 293 ITR 226 and the fact that the recipient of the payment has paid the tax thereon, there was no need to recover the same once again from the assessee. He, therefore, directed the Assessing Officer not to enforce the demand raised for non-deduction of tax under section 201(1) and consequent charge of interest under section 201(1A) of the Act.
4. Both the Revenue and the assessee are now in appeal before us on these issues in various years. As discussed in paras 2.1 to 2.4 of this order above, the appeals of both parties have been listed out for proceeding to decide these appeals issue-wise. 4.1 Transmission charges paid to M/s. KPTCL by BESCOM.
The learned CIT(A)'s order dt.29.1.2010 is challenged by Revenue on two counts in multiple appeals (for A.Ys 2004-05 to 2008-09).
i) In ITA Nos.541 to 545/BANG/2010, Revenue has challenged the CIT(A)'s finding that no TDS was to be made on transmission charges paid by the assessee to KPTCL as the provisions of section 196J are not attracted and the deletion of consequent penalty under section 201(1). Revenue has also made an alternate claim that the CIT(A) ought to have held that 194I was applicable in this case (for A.Ys 2004-05 to 2008-09). The grounds of appeal raised are as under :
a) " The CIT(A) has erred in holding that the installation and operation of sophisticated equipments with a view to earn income by allowing customers to avail the benefit of the use of such equipment does not result in the provisions of technical services to the customer for a fee.
b) The CIT(A) has erred in holding that the services rendered by the technical personnel for installations and maintenance of the transmission system is rendered to KPTCL itself and not to the BESCOM.
c) The CIT(A) has erred in not appreciating the fact that the use of such equipment would not be feasible but for the technical service being available.11
ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010
d) The CIT(A) has erred in not appreciating the fact that the essential factors of human interface and technical skill being remunerated exists in the deductor's case.
e) The CIT(A) has erred therefore in holding that the provisions of section 194J do not apply.
f) The CIT(A) has erred in not holding that such payments are liable for a deduction under section 194I for use of equipments as per his own findings.
g) The CIT(A) has erred in not directing the Assessing Officer to recomputed the interest under section 201(1A) by applying the provisions of section 194I of the Act.
h) For these and other grounds that may be urged during the course of appeal."
ii) In ITA Nos.256 to 260/BANG/2011 (for A.Ys 2004-05 to 2008-09), Revenue has challenged the action of the learned CIT(A) in not directing the Assessing Officer to recompute the interest chargeable under section 201(1A) of the Act. 4.2 The learned Departmental Representative submitted that in these appeals the question was whether TDS was liable to made on transmission charges paid by the assessee to KPTCL in accordance with the provision of section 194J. He further submitted that the operating and maintenance of the transmission system of electricity is as technical as generation and requires to be manned by skilled technicians which require humans involvement and interface. The learned Departmental Representative placed reliance on the decision of the Hon'ble Karnataka High Court in the case of Medi Assist India TPA P. Ltd (2010) 324 ITR 356. He drew our attention to para 17 thereof wherein it was observed that a perusal of the terms of payout would clearly indicate that it is the duty of the TPA to pay the hospitals, whereas the insurer has no direct role. Ultimately the agreement entered into between the hospital and the TPA for payment of money holds the field and it was held that in these circumstances, the TPA had to deduct the tax at source as the provisions of section 194J was attracted. The learned Departmental 12 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 Representative also placed reliance on the decision in the case of CIT Vs. Kotak Securities Ltd 62 DTR 339 (Bom). He drew our attention to para 29 thereof when the Court held that in the facts of the case, the transaction charges paid by the assessee to the Stock Exchange for rendering managerial services, by regulating the business of shares, constitute fees for technical services in accordance with section 194J r.w.s. Explanation 2 to section 9(i)(vii) of the Act and hence the assessee was liable to deduct tax at source before crediting the transaction charges to the account of the stock exchange. The learned Departmental Representative contended that as the facts of the above cases which were similar to that of the assessee, the provisions of section 194J was applicable in the instant case and prayed that the order of the CIT(A) be reversed and that of the Assessing Officer upheld.
4.3 The learned Authorised Representative at the outset supported the findings of the learned CIT(A) that transmission charges paid to KPTCL by the assessee are not liable for making TDS thereon as the provisions of section 196J of the Act are not attracted and consequently deduction of tax under section 201(1) and interest charged under section 201(1A) are not enforceable. He further submitted that the cases cited by the learned Departmental Representative are distinguishable and not applicable to the assessee's case. In the case of Medi Assist India TPA P. Ltd. Vs. DCIT (TDS) & Other 324 ITR 356 (Kar), the learned Authorised Representative pointed out that TPA's were private parties engaged by the Insurance companies, Hospitals to perform functions the Hospital is 13 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 otherwise supposed to do namely, processing of bills of patients for their entitlements. TPA's also render professional services to Insurance companies for settlement of claims for payment as per insurance policies. He stressed that there is a clear and direct human element involved in the services given by TPA's and therefore the provision of section 194J were attracted in taht case. Similarly in the case of Kotak Securities Ltd. (supra), the learned Authorised Representative pointed out that their Lordships had held that the stock exchange had provided managerial and technical services to the Brokers/Members for regulating the carrying on of trading for which 'transaction charges' paid constitute 'fees for technical services' covered under section 194J. In the assessee's case, however, he submitted it is only the transmission of electricity by KPTCL to BESCOM which is automatic and the assessee receives no technical service from the personnel employed to maintain KPTCL transmission so as to derive any additional benefit in carrying on of its work of distribution and retail supply of power. In view of this, the learned Authorised Representative urged that the facts of these cases are clearly distinguishable from the facts of the assessee's case.
4.4 The learned Authorised Representative referred to the provisions of section 194J and reiterated his reliance on the decisions already relied on by him before the learned CIT(A) namely :
i) CIT Vs. Bharati Cellular Ltd (2008) 220 CTR (Delhi) 258.
ii) Skycell Communication Ltd Vs. DCIT 251 ITR 53 (Mad).
iii) Jaipur Vidyut Vitran Nigam Ltd. Vs. DCIT (2009) 123 TTJ (Jp.) 888 14 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 The learned Authorised Representative submitted that from the law, concept and principle laid down in these decisions (supra) it is clear that section 194J applies only when the technology or technical knowledge of a person is made available to others and not when by using such technical systems services are rendered to others. He stressed that whereas in the assessee's case electricity is provided automatically by use of the machines in the transmission system of KPTCL, it is different from charging fees for rendering technical services. In the case of Skycell Communication Ltd (supra) it was held that use of transmission lines to carry power, transformer to regulate to flow of current and meters to measure the consumption would not be regarded as provision of technical services to a customer so as to warrant TDS. He placed strong reliance on the decision in the case of Jaipur Vidyut Vitran Nigam Ltd. (JVVNL) (supra) which he submitted was identical in factual matrix and also on the issue of applicability of section 194J as in the case of the assessee, BESCOM and especially to paras 9.2, 9.3, 9.4, 9.6, 9.7 and 9.10 thereof and pleads that the assessee's case is covered by the findings therein.
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 Vitraqn 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. 15
ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 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 :
" 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 1 94J 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-- 16
ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 "9. Income deemed to accrue or arise in India.--(l) 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 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 Dethi High Court in the case of Bharti Cellalar 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 17 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 which pertains to or has 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(l)(viz) 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 )(vn) 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.
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 mvolves sophisticated technology. The facility may even be construed as a 'service' in the broader sense 18 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 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 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 19 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 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 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 20 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 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 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)(vix) 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 21 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 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."
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 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)(vit). 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 22 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 does not result in the provision of technical service to the customer for a fee. Similar is the proposition laid down in other cases relied by the learned Authorised Representative supra. j 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 23 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 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 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 24 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 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. 6.0 Application of section 194I of the Act to Transmission charges paid by the assessee to KPTCL 6.1 The Department in the grounds of appeal has also made an alternate claim that the CIT(A) should have held that the provisions of section 194I are attracted on the transmission charges paid by the assessee to KPTCL and tax should have been deducted at source thereon. The learned D.R. reiterated the claim made by the department. The learned A.R. argued that this alternate claim of the department was not tenable and in support of this claim reliance has been placed on the decision of the ITAT Mumbai Bench in the case of Chattisgarh State Electricity Board Vs. ITO (2012) 143 TTJ (Mum) 151 wherein it was held that transmission charges paid does not come within the purview of section 194I. He pointed out that in the said decision, it was held that the transmission lines are used not only for the transmission of electricity to the assessee but also for transmission to various other entities, and the assessee has no say in the manner in which such transmission lines can be controlled or used by PGCIL - Assessee has no control over the operations of the transmission lines and all that it gets from the arrangement is that it can draw electrical power from PGCIL's transmission lines in an agreed manner - In a 25 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 situation in which the payment is made only for the purpose of a specific act, it cannot be said to be for the use of an asset even if an asset is used in the said process. Therefore, s. 194I has no application to the impugned payments for transmission of electricity. 6.2 On careful appraisal of the facts and issues of the instant case of BESCOM with that of the cited case of Chattisgarh State Electricity Board (supra), we find that they are squarely applicable to the case on hand. We are, therefore, of the view that the facts and issues of both cases are identical and in consonance herewith hold that the assessee (BESCOM) is not liable to deduct tax at source on payments of transmission charges to KPTCL as the provisions of section 194I are not attracted. Therefore, Revenue's alternate ground of appeal is rejected.
6.3 In the result, Revenue's appeals in ITA Nos.541 to 545/BANG/2010 and 256 to 260/BANG/2011 both for Assessment Years 2004-05 to 2008-09 are dismissed. 7.0 SLDC Charges 7.1 In respect of SLDC charges, the appeals are directed by the assessee, BESCOM, against the orders of the learned CIT(A)-V, Bangalore dt.29.1.2010 for A.Ys 2005-06 to 2007-08 in ITA Nos.530, 532 and 534/BANG/2011 for non-deduction of tax under section 201(1) and in ITA Nos.531, 533 & 535/BANG/2011 for levy of interest u/s.201(1A) as he was of the view that the provisions of section 194J were attracted in the assessee's case on this issue. The reasons for the CIT(A)'s finding has been brought out in para 3.7.1 of this order.
26
ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 7.2 The grounds of appeal preferred by the assessee against the levy u/s.201(1) for non-deduction of tax is as under :
" 1. The CIT(A) failed to appreciate the conclusion of the Assessing Officer that SLDC is not an arm or wing of KPTCL but an independent body constituted under Electricity Act, 2003.
2. The CIT(A) erred in holding even though that persons managing SLDC are deputed from KPTCL to work and it does not constitute part of KPTCL.
3. The functions discharged by the personnel in SLDC even if it is managerial and technical does not in any way make it rendering of technical service to the appellant as the appellant does not use / receive / benefit from the said services in discharging their functions.
4. The CIT(A) failed to appreciate that the amount paid to SLDC is only the reimbursement of the actual expenses as per Karnataka Gazette Notification dated 18.11.2004 which specifies the amount to be paid to SLDC.
5. The CIT(A) failed to appreciate that KPTCL is accounting the receipts and payments in respect of SLDC charges as a Trustee as per the accounting procedure adopted vide Karnataka Power Transmission Corporation Ltd Circular dt.3.12.2005 and the same is not accounted as income by KPTCL as per annual accounts.
6. The CIT(A) failed to appreciate unless SLDC is a statutory authority it cannot have the power to levy penalty including KPTCL apart from various ESCOM.
7. The CIT(A) failed to appreciate that the charges paid to SLDC a statutory body which are paid as per the Direction of KERC is only a statutory levy to which the provisions of section 201/201(1A) does not apply.
8. The CIT(A) erred in coming to the conclusion that provisions of section 201 & 201(1A) applies even after holding that the charges paid to SLDC are only reimbursement of expenses, as the Government has not allotted any fund for functions of SLDC.
9. The CIT(A) erred in holding that provisions of section 201 & 201(1A) applies to amount reimbursed in proportion of actual expenses of SLDC a state Government constituted body as per the Electricity Act 2003 as reimbursement of charges does not attract the provisions of section 201 & 201(1A).
10. For these and other grounds that may be adduced at the time of hearing the appeal may kindly be allowed and justice rendered."27
ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010
8. In respect of the appeals preferred by the assessee against charge of interest u/s.201(1A), the grounds of appeal are as under :
" 1. The CIT(A) failed to appreciate the conclusion of the Assessing Officer that SLDC is not an arm or wing of KPTCL but an independent body constituted under Electricity Act, 2003.
2. The CIT(A) erred in holding even though that persons managing SLDC are deputed from KPTCL to work and it does not constitute part of KPTCL.
3. The functions discharged by the personnel in SLDC even if it is managerial and technical does not in any way make it rendering of technical service to the appellant as the appellant does not use / receive / benefit from the said services in discharging their functions.
4. The CIT(A) failed to appreciate that the amount paid to SLDC is only the reimbursement of the actual expenses as per Karnataka Gazette Notification dated 18.11.2004 which specifies the amount to be paid to SLDC.
5. The CIT(A) failed to appreciate that KPTCL is accounting the receipts and payments in respect of SLDC charges as a Trustee as per the accounting procedure adopted vide Karnataka Power Transmission Corporation Ltd Circular dt.3.12.2005 and the same is not accounted as income by KPTCL as per annual accounts.
6. The CIT(A) failed to appreciate unless SLDC is a statutory authority it cannot have the power to levy penalty including KPTCL apart from various ESCOM.
7. The CIT(A) failed to appreciate that the charges paid to SLDC a statutory body which are paid as per the Direction of KERC is only a statutory levy to which the provisions of section 201/201(1A) does not apply.
8. The CIT(A) erred in coming to the conclusion that provisions of section 201 & 201(1A) applies even after holding that the charges paid to SLDC are only reimbursement of expenses, as the Government has not allotted any fund for functions of SLDC.
9. The CIT(A) erred in holding that provisions of section 201 & 201(1A) applies to amount reimbursed in proportion of actual expenses of SLDC a state Government constituted body as per the Electricity Act 2003 as reimbursement of charges does not attract the provisions of section 201 & 201(1A).
10. The CIT(A) erred in holding that provisions of section 201(1) applies to amount reimbursed in proportion of actual expenses of SLDC, a State Government constituted body as per the Electricity Act, 2003, and hence, consequently it does not attract the provisions of 201(1A).28
ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010
11. For these and other grounds that may be adduced at the time of hearing the appeal may kindly be allowed and justice rendered."
8.1 The main argument of the learned A.R. were that the learned CIT(A) was wrong in forming the view that SLDC was an arm/wing of KPTCL ; that even though personnel of SLDC are deputed from KPTCL, SLDC is an independent body constituted by the State Government as mandated by the Electricity Act, 2003. It is pleaded that though the functions discharged by personnel of SLDC may be managerial or technical, in nature, the assessee i.e. BESCOM does not in any way use, receive or derive benefit from the said service in discharging their own functions which is of distribution and retail supply of power. It is argued that the CIT(A) failed to realize that the amounts paid to SLDC is only reimbursement of actual expenses as per the specification of the Karnataka Gazette Notification on 18.11.2004 and in accordance with the procedure adopted for accounting of charges by KPTCL's income. Circular No.FA(A&R)/(A/cs)/AAO-11/CYS.56 dt.3.12.2005 and Circular No.FA(A&R)/(A/cs)/AAO-11/CYS.55 dt.28.11.2005 issued by KPTCL regarding accounting transaction of SLDC. It is submitted that, as the charges paid to SLDC are only reimbursement of expenses and, are paid as per the direction of KERC as a statutory levy, the provisions of sections 201 & 201(1A) are not attracted. The learned A.R. placed reliance on the decision of JVVNL (supra) in which it was held that the learned CIT(A) was not justified in holding that the assessee was liable u/s. 194J for deduction of tax at source on payment of SLDC charges. He, therefore, pleaded for reversing the decision of 29 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 A.O./CIT(A) as the facts of the case are identical and the decision of the Tribunal in that case should cover the assessee's favourably.
8.2 The learned D.R. supported the finding of the A.O. and CIT(A) that the provisions of section 194J were applicable to SLDC charges and consequently the levy for non-deduction of tax u/s. 201(1) and charging of interest u/s.201(1A) were in order and submitted that the orders of learned CIT(A) be upheld.
8.3 We have heard both parties, perused the material on record and the judicial decisions cited. Admittedly the SLDC is a 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 30 ITA Nos.256 to 260, 530 to 535/BANG/2011 & 541 to 548/BANG/2010 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.
9. In the result, the asseessees appeals in ITA Nos.530 to 535/BANG/2011 are allowed.
Order pronounced in the open court on 16th March, 2012.
Sd/- Sd/-
(P. MADHAVI DEVI) (JASON P BOAZ)
Judicial Member Accountant Member
Bangalore,
Dated: 16.03.2012.
*Reddy gp
31
ITA Nos.256 to 260,
530 to 535/BANG/2011 &
541 to 548/BANG/2010
Copy to :
1. Appellant
2. Respondent
3. C.I.T.
4. CIT(A)
5. DR, - A Bench.
6. Guard File.
(True copy) By Order
Asstt. Registrar, ITAT, Bangalore