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of 2. The AO disallowed Rs. 17,01,90,088 under s. 36(1)(va) due to delayed payment of employees' contribution to PF and ESI. The CIT(A) upheld this disallowance, referencing the Jaipur Bench's decision in the assessee's own case for previous years. The assessee argued that payments made before the due date of filing the return under s. 139(1) should not be disallowed, citing decisions from Karnataka High Court and Delhi High Court. The Tribunal found that the contributions were paid before the due date of filing the return, supported by various judicial decisions, and directed the deletion of the disallowance. This ground was allowed.
Ground No. 2: Disallowance under s. 40(a)(ia) for Non-Deduction of TDS on Transmission/Wheeling/SLDC Charges3. The assessee, a distribution company, paid transmission/wheeling/SLDC charges to RVPN, a transmission company, under a transmission service agreement. The AO held that these payments were for technical services, requiring TDS under s. 194J, and disallowed Rs. 2,04,83,00,000 under s. 40(a)(ia). The CIT(A) confirmed this, stating that the services involved technical support and human interface.
4. The assessee argued that the payments were for the use of transmission systems, not technical services, and cited several judicial decisions to support this. The Tribunal examined the transmission service agreement and relevant legal provisions, concluding that the payments were for the use of transmission systems and not technical services. It held that no technical knowledge or services were made available to the assessee, distinguishing the case from others where technical services were provided. The Tribunal also found that the payments were reimbursements of costs, not income, and thus not subject to TDS. Consequently, the disallowance under s. 40(a)(ia) was deleted.
Ground No. 3: Charging of Interest under s. 234B10. The CIT(A) confirmed the levy of interest under s. 234B, citing Supreme Court and Tribunal decisions that the charging of interest is mandatory. However, the Tribunal noted that interest under s. 234B is applicable only when there is a liability to pay advance tax under s. 208 and s. 209. The Tribunal found that the assessee had no liability to pay advance tax due to carried forward unabsorbed depreciation and no order under s. 210(3) was issued by the AO. Citing judicial precedents, the Tribunal held that interest under s. 234B is mandatory only when the condition for advance tax payment exists. The issue was set aside to the AO for re-adjudication, considering the specific facts of the case.
12. The appeal in ITA No. 132/Jp/2009 was partly allowed.
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