TaxTMI 
TaxTMI 
2015 (6) TMI 345
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....red to as RRVPNL for short) but did not deduct tax at source on such payments, which was required to be deducted as per provisions of the Act. These payments of transmission charges, SLDC charges and wheeling charges to RRVPNL were made during F.Ys. 2005-06, 2006-07, 2007-08 and 2008-09. The details of such payments of transmission charges, SLDC charges and wheeling charges made in the above F.Ys. are as under:- SI. No. Financial Year Amount of transmission charges Amount of SLDC charges Amt. of wheeling charges Total Amount (Rs.) 1 2005-06 5,36,85,654 15,89,382 25,04,541 5,77,79,577 2 2006-07 6,15,62,623 7,65,278 38,90,128 6,62,18,029 3 2007-08 6,06,73,033 9,15,000 25,75,368 6,41,63,401 4 2008-09 3,86,96,920 4,60,000 19,91,699 4,11,48,619 Total 2 1,46, 18,230 37,29,660 1,09,61,736 22,93,09,626 It was also noticed that the above payments made during F.Ys. 2005-06, 2006-07, 2007-08 and 2008-09 the tax had not been deducted at all whereas the assessee is liable to deduct tax as required to be deducted as per provisions of section 194J of the Act. He further observed that the assessee entered into an agreement dated 11.03.2005 with RRVPNL. ....
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....infrastructure of electric transmission lines and all Grid upto the power capacity of 33KV and carries out the activities of construction and maintenance of EHV lines and Grid sub-stations, State Loan Dispatch Centre (SLDC) operations, sharing of jointly owned power projects and transmission of bulk supply of electricity. The infrastructure/transmission system owned by RRVPNL is used for transmitting or wheeling the power generated by the power stations situated in Rajasthan, therefore RRVPNL is charging uniform wheeling charges- 10% of the energy fed into the Grids irrespective of the distance from generating station. It is specified that as per Para 10 of Policy for Promotion of Electricity Generation from Wind, 2003 RRVPNL/DISCOMs would undertake to transmit on their Grid the power generated by the eligible producer and make it available to such eligible producer within the State. Such sale would attract uniform wheeling charge of 10% of the energy fed into the Grid, irrespective of distance from the generating station. 2.3 It is mentioned at page 3 of the agreement of the assessee with RRVPNL for transmission of power that RRVPNL shall charge the transmission and wheeling char....
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....tion u/s 143(1), copy of assessment order, confirmation provided by the deductee, etc which could prove that the deductee had included payments made by the assessee in its income and paid due tax thereon or not tax liability existed, has rejected the contentions of the assessee. Accordingly, the assessee was held liable as per sections u/s 201(1) and related interest chargeable u/s 201(1A) of the Act vide order dated 26.12.2008. 3.1 Aggrieved by this order, the assessee filed appeal before the ld. CIT(A) for all the four years and was successful in getting the demand created u/s 201(1) of the Act and related interest chargeable u/s 201(1A) cancelled. Now the revenue is aggrieved and has filed its appeals for all the years against this common order of the ld. CIT(A) dated 6.7.2010. 4. The grounds raised in each appeal are mutatis mutandis identical. In case we extract grounds taken in ITA No. 488/JU/2010 for A.Y. 2006-07, it will give a glimpse and idea of similar grounds taken in other A.Ys. Therefore, we extract grounds in ITA No. 488/JU/2010 as under: "(1) Whether on the facts and circumstances of the case, the Ld CIT (A) was justified in law in holding that the payments made....
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....han State, gives open access for transmission of power generated by our company for utilization in company's another units situated at Rampura Agucha Mines, Raipura Danba Mines and other locations. These transmission lines are not laid down exclusively for our company. There is such clause in the agreement which prevents the RRVPNL to allow any other power generating entity to use the transmission lines. If any other neighbouring entity in Chanderiya wishes to use the open access system of RRVPNL to transfer the power to another entity it can very well do so. The charges for such utilization is governed by Rajasthan State Electricity Regulatory Commission and not controlled by our company in any manner. These tariffs are uniform to everyone using their infrastructure and the company doesn't have any say in the same. Perusal of the last para of Page 1 of the said show-cause notice reads as under: "Further TDS on payments of Rs. 4,11,48,619/- made during the period from 01.04.2008 to 31.10.2008 has been made only under section 194C of the Act, instead of section 194J of the Act. Thus the TDS on payment of Rs. 4.11,48,619/-made during current year is not made at applicab....
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....s is applicable which states that where two or more words which are susceptible of analogous meaning are coupled together, that are understood to be used in their cognate sense. They take, as it were, their colour from each other, the meaning of the more general being restricted to a sense analogous to that of less general. Hence the word "technical" would take colour from words "managerial'' and "consultancy". The word managerial means pertaining to, or characteristic of manager. The word manager means a person whose office is to manage an organization, business establishment or part of one. It is clear that managerial service definitely requires human element. The word "consultancy" means work or position of consultant. The word Consultant is derived from word consult which entails deliberations, consideration conferring about or upon a matter. The word 'consult' means to seek counsel or professional opinion from. It is obvious the service of consultancy also necessarily entails human intervention. It is apparent from the above that both managerial and consultancy involves human element. Consequently applying the rule of noscitur a sociis, the word technical....
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....duct of science and technology, viz. an automobile. It cannot on that ground be that the taxi driver who controls, the vehicle and monitors the movement is rendering a technical service. Similarly the electricity supplies to a consumer cannot on the ground that generators are used to generate electricity, transmission lines to carry the power, transformers to regulate the flow of current, meters to measure the consumption, be regarded as amounting to provisions of technical service to the consumers. We would like to place hereunder though at the cost of repetition that we are merely utilizing the system for transmission of power laid down by RRPNL in consideration of certain fee. We are in no way making payment for getting any technical service as none exists. It is none of our business to look as to system of transmitting power as we are not in this business. Mere collection of charges for standard facility does not tantamount to technical service and provisions of section 194J of the Act are not applicable as duly supported by the decision held in case of Skycell Communication mentioned above. REPLY 2: In continuance of our letter dated Dec 22, 2008 and without prejudice to....
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....n. 7. Before us, both the parties have reiterated their earlier stand by phrasing the crux of their contentions in hyperbolic and logical language. 8. After considering the rival submissions, we are of the considered opinion that the expression "fees for technical services" has not been defined u/s 194J of the Act. However, Explanation (b) appended to section 194J provides that this expression shall have the same meaning as supplied in Explanation 2 appended to clause (vii) of sub-section (1) of section 9 of the Act. Section 9 deals with income deemed to arrive or arrived in India. Fees for technical services, according to this Explanation, means any consideration including any lump-sum consideration for rendering of any managerial, technical or consultancy services, including the provision of services of technical or other personnel but does not include consideration for any construction, assemble, mining or like project undertaken by recipient or consideration which would be income of the recipient chargeable under the head 'salaries'. This term has been exhaustively examined by the Hon'ble Delhi High Court while deciding the case of CIT v. Bharti Cellular Ltd. 220 ....
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.... manager. 14. Similarly, the word, Consultancy" has been defined in the said Dictionary as "the work or position of a consultant; a department of consultants." "Consultant" itself has been defined, inter alia, as "a person who gives professional advice or services in a specialized field, "It is obvious that the word, "consultant" is a derivative of the word "consult" which entails deliberations, consideration, conferring with someone, conferring about or upon a matter. Consult has also been defined in the said Dictionary as "ask advice for, seek counselor a professional opinion from; refer to (a source of information); seek permission or approval from for a proposed action". It is obvious that the service also necessarily entails human intervention. The consultant, who provides the consultancy service, has to be a human being. A machine cannot be regarded as a consultant. 15. From the above discussion, it is apparent that both the words "managerial" and "consultancy" involve a human element. And, both, managerial service and consultancy service are provided by humans. Consequently, applying the rule of noscitur a sociis, the word "technical" as appearing in explanation 2 to secti....
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....' 9. Similar view has been taken in the case of Skycell Communications Ltd and Anr. Vs DCIT and Ors 251 ITR 53 [Mad]. 10. Reliance has been placed on other decisions including that of the Jaipur Bench of the Tribunal in the case of Jaipur Vidyut Vitran Nigam Ltd. v. Dy. CIT [2009] 123 TTJ 888 wherein it has been held as under: "Under the Rajasthan Power Sector Reforms Act, 1999 the role of Rajasthan State Electricity Board was unbundled to reform the functioning of the Board to introduce efficiency in power generation, transmission and distribution. Accordingly, the erstwhile Rajasthan State Electricity Board was unbundled into five Government companies which included the assessee as a distribution company and another company called RVPN which was a transmission company. The Assessing Officer noted that assessee was purchasing power from the generation company and selling it to consumers. The power from the generation point to the consumers was transmitted through the "transmission network of RVPN. It governed all the infrastructure of electric transmission lines and all grids up to the power capacity of 33KVA and carried out the activities of the construction and maintenan....
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....resent case no scientific knowledge, experience or skill was made available/rendered by the RVPN to the assessee. The assessee itself had its own engineers and technicians who consistently monitored and supervised the flow of the electricity to its system and ultimately supplied to its customer. The function of State Load Dispatch Centre as regulator and controller for optimum scheduling and dispatch of electricity, and supervision over the intra-State transmission system was statutory function which was also entrusted to RVPN and, therefore, RVPN by discharging such statutory function did not provide any technical service. There was also force in alternate argument of the assessee that the payment of transmission/wheeling/SLDC charges was reimbursement of the cost. The provisions of Chapter XVI1-B were not applicable since there was no payment of income/revenue by the assessee. Thus, the lower authorities were not justified in holding that the assessee was liable for deduction of tax at source on the payment of transmission/SLDC charges to RVPN." 11. Thus it becomes amply clear that the provisions of section 194J would have application only when the technology or technical knowl....