2012 (11) TMI 546 - AT - Income Tax

Tribunal: No TDS on Karnataka Power Transmission Charges

Hubli Electric Supply Versus The Income Tax Officer, TDS, Hubli.

Hubli Electric Supply Versus The Income Tax Officer, TDS, Hubli. - TMI Issues Involved:1. Tax Deduction at Source (TDS) on Transmission Charges2. TDS on State Load Dispatching Centre (SLDC) Charges3. Liability for Interest on Non-Deduction of TDS4. Applicability of Section 196 of the Income Tax Act5. Condonation of Delay in Filing Appeals by RevenueIssue-wise Detailed Analysis:1. Tax Deduction at Source (TDS) on Transmission Charges:The core issue was whether payments made by the assessee to Karnataka Power Transmission Corporation Ltd. (KPTCL) for transmission charges should be subjected to TDS under Section 194J of the Income Tax Act. The Tribunal referenced its earlier decision in the case of Bangalore Electricity Supply Company Ltd. (BESCOM) and Jaipur Vidyut Vitran Nigam Ltd. (JVVNL), concluding that the transmission charges do not qualify as 'fees for technical services' as defined under Section 194J. It was held that the services provided did not involve any human intervention and were automated, thus not falling under the purview of technical services requiring TDS.2. TDS on State Load Dispatching Centre (SLDC) Charges:The Tribunal also examined whether SLDC charges paid by the assessee to the State Load Dispatching Centre were subject to TDS under Section 194J. The CIT(A) had held that SLDC, being an independent statutory body, provided managerial and technical services, thereby attracting TDS. However, the Tribunal, following its earlier ruling in BESCOM's case, concluded that SLDC charges were merely reimbursements for actual expenses and did not constitute fees for technical services. Consequently, no TDS was required on SLDC charges.3. Liability for Interest on Non-Deduction of TDS:The Tribunal addressed the issue of interest levied under Section 201(1A) for non-deduction of TDS on transmission and SLDC charges. The CIT(A) had ruled that interest should be calculated from the due date of TDS remittance until the date of filing of returns by the recipients. However, since the Tribunal concluded that no TDS was required on either transmission or SLDC charges, the question of interest liability became moot.4. Applicability of Section 196 of the Income Tax Act:The assessee argued that payments to SLDC should be exempt from TDS under Section 196, which exempts payments to the government from TDS obligations. The CIT(A) rejected this argument, stating that SLDC could not be considered as the government. The Tribunal did not delve into this issue further, given its conclusion that no TDS was required on SLDC charges.5. Condonation of Delay in Filing Appeals by Revenue:The Tribunal noted that the revenue had filed appeals beyond the prescribed time limit under Section 253 of the Act. However, since the revenue had already filed timely appeals covering the same grievances, the delay was condoned as a technical defect. Consequently, the later appeals (ITA Nos. 908 to 913/Bang/2012) were accepted, while the earlier appeals (ITA Nos. 904 to 906/Bang/2011) were dismissed as infructuous.Conclusion:The Tribunal upheld the CIT(A)'s decision that transmission charges paid to KPTCL did not attract TDS under Section 194J. Conversely, it reversed the CIT(A)'s decision regarding SLDC charges, holding that these too did not require TDS. The appeals by the assessee (ITA Nos. 896 to 903/Bang/11) were allowed, while the revenue's appeals (ITA Nos. 904 to 906/Bang/2011) were dismissed, and the delayed appeals (ITA Nos. 908 to 913/Bang/2012) were also dismissed.