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1. By this appeal, the revenue has proposed the following questions to be substantial questions of law :-

(a) Whether on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal was justified in holding that the payments of wheeling and transmission itxa336-13 charges made by the assessee to entities like Maharashtra State Electricity Transmission Company Limited (MSETCL) and Power Grid Corporation of India Limited (PGCIL) for the use of transmission lines or other infrastructure i.e. plant, machinery and equipment could not be termed as rent under the provisions of section 194I of the Act and consequently the provisions of sections 201 and 201(1A) could not be applied ?

(b) Without prejudice to the above, whether on the facts and in the circumstances of the case and in law, payment of WT charges to entities like MSETCL and PGCIL should have been treated as fees for technical services and tax should have been deducted at source u/s.194J of the Act from the payments ?

(c) Whether on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal was justified in holding that payments made for use of transmission lines could not be considered as rent under section 194I without properly appreciating the factual and legal matrix brought out by the Assessing Officer in the assessment order wherein, in respect of payment of WT charges made without deduction of tax at source made without deduction of tax at source, the Assessing Officer had treated the assessee in default under section 194J as well as 194I which was modified by the CIT(A) as payment covered under section 194I only and the same was not appealed further by the Revenue as there was no loss of revenue as the rates of TDS for the sections 194I and 194J were the same ?

Accordingly, the Assessing Officer (AO) had found that the payment was in the nature of fees for technical services.

4. The assessee had contended that in the present case, there is no question of payment of Wheeling charges and/or Transmission charges (hereinafter referred to 'WT charges' being treated as a technical service since there was no human service element involved. The only activities are of transmission of the electricity produced to different locations. The AO rejected the itxa336-13 assessee's contention that the WT charges includes technical manpower services and it actually involves an intricate system of checking, managing of transmission losses, metering, management of interconnection points, managements of delivery voltages as per grid code connection conditions, management of protection systems including maintenance of the metering system regarding non involvement of human part. The AO found that the tax was to be deducted on all payments under Section 194J of the Act at the rate of 11.33%. Furthermore and without prejudice to these considerations though the assessee was liable to deduct tax under section 194J of the Act, the AO was of the view that TDS on payment of WT charges was required to be deducted under Section 194-J of the Act. Admittedly, he did not elaborate the rate of deduction of tax under Sections 194I or 194J of the Act.

9. According to Mr. Chhotaray, whether WT charges are treated as rent or fees for technical service, tax should have been deducted at source under Sections 194I or 194J, as the case may be. He submitted that since the rate of tax under section 194I and 194J is the same, the choice was only which section to attribute the deductions to. He defended the interpretation of the AO and the Commissioner. While canvassing the revenue's case, Mr. Chhotaray submitted that the tariff is paid by the assessee under the BPTAs as determined by the Maharashtra Electricity Regulatory itxa336-13 Commission (MERC). He submitted that the tariff was fixed and it should be treated as "rent". Making reference to Section 194-I, Mr. Chhotaray submitted that the explanation to Section 194I clarifies that "rent means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of land, building, plant, machinery, equipment etc either separately or together. Thus, according to Mr. Chhotaray, the MSETCL and PGCIL, transmission system fits the description of equipment and machinery and the payment being made for the said use of the system amounted to rent. According to him, the assessee's business included transmission of electricity to its customers against payment of charges and in terms of the BPTAs between the parties, the assessee had paid WT charges to MSETCL and PGCIL for transmission of electricity by using the transmission lines from the generation point to distribution point.