TaxTMI 
TaxTMI 
2015 (6) TMI 345
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....aran Nigam Ltd., Jaipur (hereinafter referred 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 s....
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....system of RRVPNL are also decided by the Rajasthan State Electricity Regulatory Commission (RERC). RRVPNL governs all the 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....
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....blish the explanation made in these two letters as copy of relevant Return of Income filed by the deductee company, copy of intimation 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 u....
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.... (C) SLDC Charges SLDC Charges charged by RRVPNL for Scheduling and system operating by SLDS (State Load Dispatch Center) RRVPNL, which owns and manages the transmission lines of State Electricity Board in Rajasthan 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 paymen....
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....ideration for rendering of any managerial, technical or consultancy services. Here the word 'technical' is preceded by the word 'managerial" and succeeded by the word 'consultancy'. Since the expression 'technical services' is not clear, rule of noscitur a sociis 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'....
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....n at the number to which he desires to be connected. What applies to cellular mobile telephone is also applicable to fixed telephone service, for the purpose of section 194J neither service can be regarded as technical service. Further it is also submitted that when a person hires a taxi to move from one place to another, he uses a product 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 w....
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....ess it is proved that there is tax outstanding from the deductee and the amount has not been recovered from the deductee, the deductor cannot be asked to pay the shortfall of TDS.' 6. The ld. CIT(A), after considering the facts of the case and the submissions of the ld. A.R., cancelled the demand created u/s 201(1) at para 2.3 and also cancelled the interest charged in all the years under consideration. 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, inclu....
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.... the primarily executive or supervisory function within an organization etc; a person controlling the activities of a person or team in sports, It is therefore, clear that a managerial service would be one which pertains to or has the characteristic of a manager. It is obvious that the expression "manager" and consequently "managerial service" has a definite human element attached to it. To put it bluntly, a machine cannot be a 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....
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....construed in the abstract and general sense but in the narrower sense as circumscribed by the expressions 'managerial service' and 'consultancy service' as appearing in explanation 2 to section 9(1) (vii) of the said Act. Considered in this light, the expression 'technical service' would, have reference to only technical service rendered by a human. It would not include any service provided by machines or robots.' 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 calle....
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....ovided by use of machine/robot or where sophisticated equipments are installed and operated with a view to earn income by allowing the customers to avail of the benefit by user of such equipment, the same does not result in the provision of technical service to the customer for a fee. A technical service is involved where 'information concerning industrial, commercial or scientific knowledge, experience or skill is made available'. In the present 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....