Income Tax Appellate Tribunal - Delhi
Ndmc, New Delhi vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH 'E' : NEW DELHI)
BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER
and
SHRI C.M. GARG, JUDICIAL MEMBER
ITA No.1046 & 1047/Del./2011
(Finance Year : 2007-08)
New Delhi Municipal Council, vs. Addl.CIT, Range 50,
Director (Commercial), New Delhi.
NDMC, Mezannine Floor,
Palika Kendra, Parliament Street,
New Delhi.
(PAN : DELNO0008B)
(APPELLANT) (RESPONDENT)
ASSESSEE BY : Shri Suresh Ramchandani, Advocate
REVENUE BY : Shri R.S. Negi, Senior DR
ORDER
PER B.C. MEENA, ACCOUNTANT MEMBER :
These appeals filed by the assessee emanate from the order of CIT (Appeals)-XXX, New Delhi dated 30.12.2010 for the Assessment Year 2007-
08.
2. The assessee, New Delhi Municipal Council (hereinafter referred to as 'NDMC') is the Municipal Government of New Delhi vested powers as per NDMC Act, 1994. As per this Act, the NDMC entrusted to make adequate provisions by any means or measures for many obligatory functions including supply and distribution of electricity to the public as enumerated. The NDMC 2 ITA No.1046 & 1047/Del./2011 has the obligations of a licencee under the Indian Electricity Act, 1910 in respect of the New Delhi Area. Under Section 200 of the NDMC Act, 1994, NDMC has the powers to fix charges to be levied for the electricity supplied by it, subject to the provisions of any law for the time being in force. Assessing Officer held that assessee had committed default in not deducting tax at source u/s 194J of the Act on charges, i.e. wheeling charges, SLDC, UI Charges and transmission charges. CIT (A) partly allowed relief.
3. Assessee has filed appeals before us by taking the identical following grounds which read as under :-
"On the facts and in the circumstance of the case Id. CIT (Appeal) erred in
1) Holding that the payments made by the appellant to DTL, PGCIL are for technical services and thus attract a liability under section 194J of the Income tax Act;
2) Not deciding on merits the appellant's ground of appeal challenging the applicability of section 194J of the Income tax Act; on the contrary, confirming the action of the ld.
Addl. Commissioner of Income tax on the ground that there are not much judgments of HC/SC on this issue;
3) Holding that provisions of section 194J are applicable in Para 14 of the order even though holding that provisions of section 194C are applicable vide Para 12.5;
4) Without prejudice to above, even the provisions of section 194C are not applicable;
5) Holding that Provisions of section 133A are applicable to the appellant.
3 ITA No.1046 & 1047/Del./2011
4. In the ground nos.1 to 4, the issue involved is regarding non-deduction of tax at source from the payments made to DTL (Delhi Transco Ltd.) and PGCIL (Power Grid Corporation of India Ltd.). CIT (A) held that services provided by DLT and PGCIC were technical services, hence attract provision of section 194J of the Act. In the ground no.5, the issue raised is regarding the applicability of the provisions of section 133A (survey) of the Act. Since the issue raised in ground no.5 is related to the jurisdiction of the income-tax authorities, therefore, it is being considered and decided first. Assessee had raised this issue in additional ground before CIT (A)
5. CIT (A) has decided this issue raised by holding as under :-
"10. I have given my careful consideration to the ground of appeal and submissions made thereon. I am of the opinion that Income tax authority has jurisdiction to enter any place where business or profession is carried on. In appellant's case NDMC is carrying on the business of distribution of electricity to people of NCT, Delhi region. Hence there is no illegally involved here by conducting survey u/s 133A by TDS authority. They have been given separate jurisdiction on functionally basis by CBDT. Even TDS authority can verify current financial year's books of accounts of all DDO's in Govt. authority to check proper tax deducted there on. TDS authority is silent soldier of department who can mop up more revenue by bringing new tax payers to taxnet, by conducting such surveys. In our socio-economic condition, public sector plays a balancing role by proving more jobs to economy and creating a balance between capitalist and communist economy. Even TDS authority should have access to pure Govt. controlled business and expenses, so that proper tax can be collected from cross border transactions as well. Hence TDS survey on NDMC is not at all illegal.
Again role of tax deductor is private participation in public tax gathering machinery i.e. public private 4 ITA No.1046 & 1047/Del./2011 partnership(PPP) is in-built in TDS provisions to bring more efficiency to tax collection in I.T.Act. NDMC being local authority should help Govt. in collecting TDS if any on behalf of govt. and deposit the same in Govt. a/c. The AO(TDS) has power to enter any territory in his jurisdiction and find out the administration of TDS provisions from books of a/c of that entity. It is joint responsibility of AO-TDS & other private/public authority to administer LT. Act properly. Hence this ground of appeal is dismissed."
6. Before us, the ld. AR submitted oral arguments and also filed written submission which read as under :-
"The appellant is a Municipal Council set up under the New Delhi Municipal Council Act, 1994 empowered to engage in the municipal governance of the territory of New Delhi. It is discharging the functions of the Government in as much as it has been empowered to levy various taxes including the property tax.
It has various mandatory functions as stated in the section 11 of the Act. One of such functions is to supply and distribute electricity to the public. It is incumbent upon the appellant to discharge this function. It does not have any discretion in this regard as a person engaged in business will have whether to run it or not. Its income is also exempt under section 10 (20) of the Income tax Act.
The provisions of Section 133A empowers the department to enter only upon the premises where business or profession is being carried on. As stated above, the appellant in the process of distribution of electricity is not conducting any business but discharging statutory and mandatory function.
The term 'business' has come for interpretation before various courts. Delhi High Court while upholding the decision of ITAT Delhi in the case of DIT (Exemption) vs. The Institute of Chartered Accountants has discussed various Supreme Court decision. One of the landmark decisions is CST vs. Sai Publication Fund (2002) 4 SCC 57 and is under the Sales tax Act. The fund was set up for spreading message of Sai Baba.5 ITA No.1046 & 1047/Del./2011
The question before Supreme court was whether the fund by conducting sale of books containing message of Saibaba was conducting business and attracted sales tax. It was held that if the main activity is not business then any incidental activity would not amount to business. The Trust is not carrying on trade, commerce etc., in the sense of occupation to be a "dealer"
as its main object is to spread message of Saibaba of Shirdi as already noticed above. Here also the main object is to discharge municipal functions and to provide civic necessities like water, electricity, sanitation etc; in fact that is the object for which the appellant has been set up and not running for business.(Kindly see page 6 of the enclosed decision) even though the definition of 'Business' is of much wider amplitude under the Sales tax Act than under the Income tax Act. A comparison is as under:
Section 2(13) of the Income Section 2(5A) of the Sales Tax Act Tax Act 'Business' includes any trade, 'Business' includes any trade, commerce or manufacture or commerce or manufacture or any adventure or concern in any adventure or concern in the nature of trade, commerce the nature of trade, commerce or manufacture or manufacture whether or not such trade, commerce, manufacture, adventure or concern is carried on with a motive to make gain or profit and whether or not any gain or profit accrues from such trade, commerce, manufacture, adventure or concern and any transaction in connection with, or incidental or ancillary to, the commencement or closure of such trade, commerce, manufacture, adventure or concern; ....
The appellant also relies upon several decisions quoted in the Sai Publications (supra) which bring home repeatedly that one 6 ITA No.1046 & 1047/Del./2011 must look at the objective of the assessee. If the object was to run a business it would have been set up as a PSU. Unlike ONGC, and others, it can not raise money through subscription, it does not distribute profits. THUS THE APPELLANT WAS NOT CARRYING ON ANY BUSINESS AND AN ACTION UNDER SECTION 133A WAS ILLEGAL AND THE ORDER NEEDS TO BE QUASHED.
If this law enunciated in the following cases is applied, the survey operations and consequential steps are entirely without jurisdiction Income Tax Officer & Ors. vs. Lakhmani Mewal Das, reported at (1976) 103 ITR 43 (SC), L.R. GUPTA & Ors. vs. Union of India & Ors., reported at (1992) 194 ITR 3 (Delhi), Vindhya Metal Corporation & Ors. vs. Commissioner of Income Tax & Ors., reported at (1985) 156 ITR 233 (All.), Commissioner of Income Tax vs. Vindhya Metal Corporation & Ors. reported at (1997) 224 ITR 614 (SC) and the judgment of Bombay High Court in Cartini India Ltd. vs. Additional Commissioner of Income Tax & Ors., reported at (2009) 314 ITR 275, BOMBAY High court, NAGPUR BENCH WRIT PETITION NO. 2150 OF 2010 in the case of M/s. Spacewood Furnishers Pvt. Ltd., Versus The Director General of Income-tax (Investigation), Pune."
Ld. AR pleaded to set aside the order of CIT (A) on this issue.
7. On the other hand, the ld. DR relied on the orders of the authorities below. The NDMC has the obligation of a licensee under the Indian Electricity Act in respect of the New Delhi area. Under Section 200 of the NDMC Act, 1994, NDMC has the powers to fix charges to be levied for the electricity supplied by it, subject to the provisions of any law for the time being in force. The NDMC is not distributing the electricity to the consumers free of cost or at cost. As per the provisions of Electricity Act, 2003, w.e.f. 1.4.2007 the responsibility for arranging supply of power in 7 ITA No.1046 & 1047/Del./2011 Delhi shall rest with Distribution Companies. The Distribution Company would trade in power. Delhi Electricity Regulatory Commission decides retail supply tariffs for all consumer categories. The tariff is decided every year by making adjustment on account of variation in uncontrollable parameters. The tariffs of the electricity are decided by the Delhi Electricity Regulatory Commission (DERC) on the basis of information and material supplied by the assessee. The tariff is also decided by taking into consideration the capital employed in performing this function and reasonable returns thereon. This activity of supplying electricity to consumers by licencee NDMC is being run on a regular basis. The profit element is invaded in the tariff fixed for the consumers to be paid in the consumption of the electricity. Ld. DR also submitted that making it mandatory for supply and distribution of the electricity to the residents of NDMC area has rather given an opportunity to do a monopoly business in the specified area. Assessee earns surplus profit that too without any competition. Ld. DR pleaded that the assessee is engaged in the business of distribution of electricity even though it was a mandatory function as per the NDMC Act. The assessee is engaged in the business of supply and distribution of the electricity in the NDMC area. Therefore, there was no discrepancy or irregularity in conducting a survey operation u/s 133A of the Act at the premises of the assessee. He pleaded to uphold the order of the CIT (A). 8 ITA No.1046 & 1047/Del./2011
8. We have heard both the sides on this issue. Supply and distribution of electricity is an obligatory functions of the NDMC mentioned in the NDMC Act, 1994. The assessee was under the obligation to supply and distribute the electricity to the consumers in the area under its jurisdiction. Assessee had monopoly in supply of electricity in the specified area. DERC regulates power purchase, transmission, distribution, sale and supply. It also promotes efficiency and economy activities of electricity industry. It also regulates the working of licencee. NDMC is one of the licencee. On the petition of NDMC, DERC decides retail supply tariff. NDMC submits its business plan to DERC. Assessee also earns income by unscheduled inter-charge transmission and sale of surplus power. Assessee also justified its case for revision of tariff on the basis of capital expenditure requirement and also on commercial principles. Return on capital base is also part of aggregate revenue requirements. The Income-tax Act, 1961 provides the power for conducting the survey u/s 133A of the Act. The relevant portion of Section 133A reads as under :-
"133A. (1) Notwithstanding anything contained in any other provision of this Act, an income-tax authority may enter--
(a) any place within the limits of the area assigned to him, or
(b) any place occupied by any person in respect of whom he exercises jurisdiction, [or] [(c) any place in respect of which he is authorised for the purposes of this section by such income-tax authority, who is assigned the area within which such place is situated or who exercises jurisdiction in respect of any person occupying such place,] 9 ITA No.1046 & 1047/Del./2011 at which a business or profession is carried on, whether such place be the principal place or not of such business or profession, and require any proprietor, employee or any other person who may at that time and place be attending in any manner to, or helping in, the carrying on of such business or profession--
(i) to afford him the necessary facility to inspect such books of account or other documents as he may require and which may be available at such place,
(ii) to afford him the necessary facility to check or verify the cash, stock or other valuable article or thing which may be found therein, and
(iii) to furnish such information as he may require as to any matter which may be useful for, or relevant to, any proceeding under this Act."
As per this section, the Income-tax authorities have power to enter in any place within the limits of the area assigned to such authority or any place occupied by a person in respect of whom such officer exercised jurisdiction or any place in respect of which such officer is authorized for the purposes of section 133A by the income-tax authorities, who has been assigned the area within which such place is situated or to exercise any person occupied such place at which business or profession is carried on. The assessee is supplying and distributing electricity in its area to the consumers on rate of tariffs fixed by DERC on the petitions made by the assessee. The DERC considers the petition and also other aspects which include the return on capital base as one of the criteria. The reasonable return on capital base is determined by DERC. The supply and distribution is not free of cost or on cost. Thus, there is a sound commercial principle in the determination of the tariffs to be charged 10 ITA No.1046 & 1047/Del./2011 from the consumers. This activity of supply of electricity to consumers is being done on regular basis. The electricity is purchased from various electricity producers and it is supplied to the consumers in the area. By doing so, the assessee is not only meeting out its obligatory functions but also earning element of reasonable return on capital base. In view of this, we hold that assessee is engaged in the business of electricity supply and distribution to various type of consumers in the area to which licence has been granted. The assessee's reliance on the Hon'ble Supreme Court decision in the case of CST vs. Sai Publication Fund - (2002) 4 SCC 57 is of no help as in that case the facts were completely at variance. The trust was engaged to spread the message of Saibaba of Shirdi. In furtherance of and to accomplish this object, the trust publishes books, pamphlets and other literature containing the message of Saibaba under the aegis of Sai Publications which were available to the devotees of Saibaba at nominal charges just to meet the cost. Further, the sale proceeds of such publication were going to the trust and were forming the part of the property of the trust. These earnings could be utilized only for the advancement of the objects of the trust and when the trust fails to carry out the aims and objects, then the remaining funds were to be handed over to Sansthanam of Shirdi. Further it was a case under the Sales-tax Act of Maharashtra. Assessee's case is under the Income-tax Act, 1961 where the definition of 'business' is wide and inclusive. The assessee's activity to 11 ITA No.1046 & 1047/Del./2011 supply and distribution of electricity is regular and continuous. The tariff rates for various consumers are fixed by the DERC by considering the reasonable return on capital base. The charges of supply of electricity are not only to meet the cost of supply as was the case of Sai Publications. In view of these facts, the ratio decided by the Hon'ble Supreme Court in the Sai Publications is not applicable to the facts of the assessee's case. In our considered view, the income-tax authorities were having jurisdiction to carry out the survey u/s 133A at the premises of the assessee. In conducting the survey u/s 133A, we find no lack of jurisdiction, therefore, we sustain the order of CIT (A).
9. In the ground nos.1 to 4, the issue involved is non-deduction of TDS on the payments made to DTL and PGCIL.
10. The ld. AR has submitted oral arguments and also submitted written submissions as under :-
"Why transmission charges are not technical services?
To understand the entire system of working of the appellant, kindly refer to the chart contained at Page 52 of the paper book. Under the existing electricity law, the essential functions of generating power, transmission of power and distribution of power are assigned to different and separate agencies. Overall controlling agency is DERC (Delhi Electric Regulatory Commission). It has powers to fix the price of energy, fix the fees for transmission and fix the tariff for distribution agencies to be charged from the customers.
The department after conducting the survey and without service of a proper notice brought all the payments made by the appellant, be it for the purchase of energy or for transmission or state levies treated all of them as fees for technical services and raised a whopping demand of 186 crores.12 ITA No.1046 & 1047/Del./2011
The reasons given by the ld. AO are self-contradictory, vague and out of context. The Id. AO herself refers to 'licensee generating companies, traders' etc. The appellant is neither a generating company nor a trader; it is a licensee distributor. So whatever has been stated by the AO is not applicable to the appellant.
Then she refers to wheeling charges/transmission charges requiring extensive data. Undoubtedly yes, but this again is applicable to transmission utilities and not to the appellant. Even a domestic supply of electricity or mobile service to an individual consumer requires to keep such infrastructure. But are we deducting tax at source from payments made for such services In any case, maintenance of data and framework ipso facto does not result into technical services. Even as per AO these are applicable to the Transmission Utilities.
In appeal before CIT(A), the CIT(A)
1. Accepted that SLDC and other charges (excepting transmission charges) do not constitute technical services;
2. Did not accept that transmission charges do not constitute technical services;
3. Did not accept that the department's action under section 133A was illegal;
4. Accepted that the TDS was not payable since payees had shown the payments in their Returns of income and paid taxes thereon. Hence reduced demand substantially. Only retained the interest under section 201 for the period till the payees deposited the taxes in their cases;
Arguments in support of transmission charges being not technical services.
The CIT(A) also in his order, has not dealt the issue in its correct perspective; on one hand he confirms as the services being technical and on the other hand in para 12.2, he says that it a work contract and section 194C is applicable. However, that is not the case of the department nor does it arise out of the grounds of appeal filed by the appellant.
1. The only reason given by the Id. CIT(A)( after reproducing appellant's submission from page 25 to 28) is in Para 14 of the order on page 39 which is worthy of reproduction:
"However, there are not much judgments of HC/SC on interpretation of 194-C vis-a-vis 194-J, as the provisions are recent development of law. Therefore I take the payment to 13 ITA No.1046 & 1047/Del./2011 deductee companies as payment of technical services under section 194-J of the Act."
4. The appellant relies upon the submissions made before the CIT(A) in this regard contained in the paper book.
5. The issue is squarely covered by the decision of the ITAT Jaipur in the case of in the case of Jaipur Vidyut Vitaran Nigam Ltd. vs. ITO 2009-(026)-DTR-0154- TJAI."
Ld. AR pleaded to set aside the order of CIT (A).
11. On the other hand, the ld. DR relied on the orders of the authorities below.
12. We have heard both the sides on the issue. We have also considered the decisions relied upon. Assessee claimed that this issue is covered in favour of the assessee by the decision of ITAT, Jaipur Bench in the case of Jaipur Vidyut Vitaran Nigam Ltd. vs. ITO - 2009-(026)-DTR-0154-TJAI wherein the ITAT has held as under :-
"An analysis of above cases lays down the proposition that s. 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 s. 194J would come into effect only when by making payment of fee for technical services, assessee acquired certain skill/knowledge/intellect which can be further used by him for its own purpose/research. Where facility is provided by use of machine/robot, or where sophisticated equipments are installed and operated with a view to earn income by allowing the customers to avail of the benefit by use of such equipment, the same 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).
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 14 ITA No.1046 & 1047/Del./2011 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 s. 194C/194J/194H. On going through the papers filed at pp. 34 to 41 of the paper book filed by the Department we note that as per those papers only some report/letters has been issued by the TDS officer requiring the deduction of tax at source on such, payment. Similarly M/s. Hindustan Zinc Ltd. deducting the tax at source under s. 194C in respect of payment of transmission charges to RVPN cannot lay down the law. Here it would be pertinent to mention that even the CIT(A) in assessee's own case for asst. yr. 2006-07 against the order of AO under s. 143(3) has given a finding on p. 54 of his order that these payments are not covered under s. 194C against which no appeal is filed by the Department though we are otherwise convinced with the argument of learned Authorised Representative that s. 194C is not applicable on this payment in view of the detailed submission made in this regard at paper book pp. A-18 to A-
21. The decision relied by the ITO (TDS) in the case of CBDT & Ors. vs. Oberoi Hotels (India) (P) Ltd. (supra) Circular No. 187, dt. 23rd December, 1975 and in the case of Continental Construction Ltd. vs. CIT (supra) though relates to s. 80-0 of the IT Act, supports the case of the assessee that a technical service is involved where 'information concerning industrial, commercial or scientific knowledge, experience or skill is made available'. In the present case no scientific knowledge, experience or skill is made available/rendered by the RVPN to the assessee. The assessee itself has its own engineers and technicians who consistently monitor and supervise the flow of the electricity to its system and ultimately supplies to its customer. The function of SLDC as regulator and controller for optimum scheduling and dispatch of electricity, and supervision over the intra-State transmission system is statutory function which is also entrusted to RVPN and therefore, RVPN by discharging such statutory function do not provide any technical service.
We have also considered the other decisions relied by the learned Departmental Representative which are clearly distinguishable on facts. In the case of Singapore Airlines Ltd. vs. ITO (supra) the navigation charges paid was for getting the technical service like weather report, instruction over flights to fly over technical territories and such other technical services which are needed to fly the aircraft on the Indian territory. By giving these instructions and technical services to fly the aircraft the technical knowledge of a person was made available to the assessee and therefore it was held to be a payment for technical services which is not the facts of the present case. The case of Canara Bank vs. ITO (supra) in respect of payment of MICR charges to SBI which involved human skill and computerised machine and not simply making available the technical equipment working on its own and therefore held to be a payment towards managerial services. The decision in the case of 15 ITA No.1046 & 1047/Del./2011 Dr. Hutarew & Partner (India) (P) Ltd. vs. ITO (supra) is with reference to s. 195 and not s. 194J. In this case also the non-resident to whom payment was made was not maintaining any server for everybody that anyone can feed the data and get the solutions. The solutions were provided on the specific needs of the customers. The information supplied is specific which helps the assessee in finalizing its design. The information supplied to the assessee was a technical information which has been used in further generating the product of the assessee. Therefore, such specific client based information was held not equitable with the standard services provided by telecommunication company. Thus these decisions are quite distinguishable and not applicable on the facts of the present case. We therefore hold that there is no liability to deduct tax at source on payment of transmission/wheeling/SLDC charges under s. 194J or for that matter under s. 194C."
The ITAT, Jaipur Bench had also decided the alternate plea about the payment as reimbursement of the cost as under :-
"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 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. 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 sections 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 mode of collection and recovery of the tax. On actual reimbursement, provision of deduction of tax at source would not a apply as held in case of ITO vs. Dr. Willmar Schwabe India (P) Ltd. (supra), headnote 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 16 ITA No.1046 & 1047/Del./2011 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 August, 1995 [(1995) 127 CTR (St), 13], relied upon by the AO 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 s. 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. We thus, set aside the order of the lower authorities and allow the ground of the assessee. The ground NO.1 is thus allowed.
Thus, the Hon'ble ITAT has held that there was no liability to deduct tax at source on payment of transmission/wheeling/SLDC charges u/s 194J. However, in subsequent para, while deciding the alternate plea of the assessee, the ITAT, Jaipur Bench has given a finding that the payment of transmission/wheeling/SLDC charges were reimbursement of the cost. The transmission company was not allowed any return on its capital. The tariff is determined on the principle of no profit no loss. On these facts, the ITAT decided that the provisions of Chapter XVII-B were not applicable as there is no payment of income or revenue. In the case under consideration, we find that there is no such finding available on record although the tariffs are fixed 17 ITA No.1046 & 1047/Del./2011 by the regulator - DERC. There is no finding on record that the tariff is determined on the principle of no profit no loss. In the absence of such finding, we find it difficult to grant relief to assessee on the basis of decision of Hon'ble ITAT, Jaipur Bench. In view of these facts, we find it appropriate to restore the issue to the file of the Assessing Officer to decide afresh after taking necessary details on record.
13. In the result, the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in open court on this 31st day of May, 2012.
Sd/- sd/-
(C.M. GARG) (B.C. MEENA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : the 31st day of August, 2012/TS
Copy forwarded to:
1.Appellant
2.Respondent
3.CIT
4.CIT(A)-XXX, New Delhi.
5.CIT(ITAT), New Delhi.
AR, ITAT
NEW DELHI.