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TaxTMI 
TaxTMI 
TaxTMI 
2014 (11) TMI 440
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....Neeraj Seth and Shri K.K. Ved supported the conclusion drawn in the impugned orders by further pleading that the impugned issue is covered in the own case of the assessee for Assessment Year 2007-08 and 2008-09. Reliance was also placed upon the decision in DCIT (TDS) vs. Reliance Infrastructure Ltd. (ITA Nos.2814 to 2819/Mum/2013 dt.20/8/2014). The assessee also filed paper book running into 1 to 60 pages mostly containing the aforesaid orders of the Tribunal . 2.1 We have considered the rival submissions and perused the material available on record. In view of the above we are reproducing hereunder the relevant portion from the aforesaid order dated 27/6/2012 of the Tribunal in the case of the assessee itself (ITA No.2872/Mum/2010) for ready refernce:- " 2 . Assessee is a company established by the Gov t. of Maharashtra and was incorporated on 31.5.2005 pursuant to the provisions of Section 131, 133 and 134 of Part-XII of the Electricity Act , 2003 relating to the reorganization of Maharashtra State Electricity Board, by the Govt. of Maharashtra which notified four companies, whi le restructuring the erstwhi le Maharashtra State Electricity Board on 6.6.2005. Assessee purchases....
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.... Bench in the case of Chhattisgarh State Electricity Board (Supra) which decided the issue as under: "10. We have heard the rival contentions, perused the material on record and duly considered the factual matrix of the case as also the applicable legal position. 11. We find that the power purchase agreement entered into by the assessee with NTPC (copy placed before us at pages 15 to 27 of the paper book) , specifically provides that 'Power shall be made available by the NTPC at the busbars of the station and it shall be obligation and responsibility of the CSEB to make the required arrangement for evacuation of power from such delivery points of NTPC". It is pursuant to these obligations that the assessee, along with other bulk power beneficiaries, namely, M. P. State Electricity Board, Gujarat Electricity Board, Maharashtra State Electricity Board, Electricity Department- Government of Goa, Administration of Daman & Diu, and Electricity Department-Administration of Dadra and Nagar Haveli, has entered into a "bulk power transmission agreement" with PGCIL. The preamble of this agreement, inter alia, notes that the PGCIL "is desirous to transmit energy from the Central Sector ....
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....sion lines enabling the beneficiary to utilize the power to the extent of his allocation. On these facts, the question that requires our adjudication is whether or not the payment for transmission charges can be termed as "rent "for the purposes of section 194-I of the Act. 12. Let us now take a look at the statutory provision with regard to tax withholding from rent payments, which is set out in section 194-I of the Act, and analyze the same. Section 194-I provides as follows: "Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draf t or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of - (a) two per cent for the use of any machinery or plant or equipment; and (b) ten per cent for the use of any land or building (including factory building) or land appurtenant to a building (including factory building) or furniture or fittings: Provided that no deduction shall be made under this section where the amount of such income or....
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....on (i) to section 194-1, as we have noted above, defines rent as any payment, by whatever name called, under any lease, sub-lease, or tenancy or any other agreement or arrangement 'for the use of' land, building, plant, machinery or equipment, etc. As evident from a plain reading of the agreements under which impugned payments have been made, the payment s have been made for the services of transmission of electricity and not the use of transmission wires per se. It is a significant fact that these transmission lines are not only being used for transmission of electricity to the assessee but also of transmission to electricity to various other entities. The transmission lines continue to be not only under control and possession of the PGCIL in legal terms, but, what is more important , these transmission lines are effectively in the control of PGCIL, without any involvement of the assessee in actual operations of the same. On these facts, in our humble understanding, the assessee has made the payments for transmission of electricity in which transmission lines have been used rather than for the use of transmission lines per se. The payments could be said to have been made f....
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....reement, then it would be a transfer of the right to use the goods and fall under the extended def inition of 'sale' . On the other hand, if the customer entrusts to the assessee the work of achieving a certain desired result and that involves the use of goods belonging to the assessee and rendering of several other services and the goods used by the assessee to achieve the desired result continue to be in the effective and general control of the assessee, then, the transaction will not be a transfer of the right to use goods falling within the extended definition of 'sale'. Let me now clarify the position further, with an illustration which is a variation of the illustration used by the Andhra Pradesh High Court in the case of Rashtriya Isp at Nigam Ltd. v. CTO. (i) A customer engages a carrier (transport operator) to transport one consignment (a frill lorry load) from place A to B, for an agreed consideration which is called freight charges or lorry hire. The carrier sends its lorry to the customer's depot, picks up the consignment and proceeds to the destination for delivery of the consignment . The lorry is used exclusively for the customer's consignmen....
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...., any payment made to the PGCIL for transmission of power on the transmission lines and infrastructure owned controlled and in physical possession of PGCIL can be said to have been made for "the use of' these transmission lines or other related infrastructure. Viewed in this perspective, section 194-I has no application so far as the impugned payments for transmission of electricity is concerned. For this short reason alone the impugned demands must be held to unsustainable in law. 18. We have taken note of learned Departmental Representative's reliance on the Hon'ble Delhi High Court's judgment in the case of CIT v. Japan Airlines Co. Ltd. [2010]325 ITR 298 (Delhi), which in turn follows its earlier decision in the case of United Airlines U. CIT [2006] 287 ITR 281 (Delhi), in support of the proposition that even in a situation in which landing and parking charges are paid by airlines to the Airport Authority, and when such charges are not in respect of the specific area of land, the provisions of section 194-I come into play. By the same logic, according to the learned Departmental representative, transmission charges are paid by the assessee, even though the same....
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....he Revenue authorities. These provisions, contained in section 201(1) and 201(1A), are set out in Chapter XVIIB titled as "Collection and Recovery of Tax". The next set of consequences are contained in section 271C and section 276B, covered by Chapter XXI- "Penalties imposable" and Chapter XXI I - "Offences and prosecutions" respectively. Section 276B, as it stands now, is not applicable on the facts of this case which comes to the play only when the assesse e has deducted the tax at source but he does not pay, or does not pay in time, the taxes so deducted at source. Section 271C deals with levy of penalty for total or partial failure to deduct tax at source, i.e. for non-deduction and short deduction of tax at source. This provision is clearly a penalty provision which is applicable for the cases of tax deductor's not discharging, wholly or partially, statutory obligations of deducting taxes at source, but then considerations which are relevant for examining a case having been made out for imposition of penalty are, as is the settled legal position, altogether different and the different yardsticks for such a case apply. However, unlike section 271C, section 201(1) is not of ....