TaxTMI 
TaxTMI 
2018 (3) TMI 1080
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....at on the facts and in the circumstances of the case, the Learned CIT (Appeals) erred in confirming the action of the Assessing Officer, in disallowing the appellant's claim fop deduction of an aggregate sum of Rs. 15,77,68,266/-, being the difference between the! purchase price of electricity billed by UPPCL amounting to Rs. 1,10,08,54,335/- and the purchase price of electricity debited to the P & L A/c by the appellant amounting to Rs. 94,30,86,069/- at the rates determined on the basis of methodology followed by the UPERC. 4(b) That the Learned CIT (Appeals) erred in confirming the action of the Assessing Officer in holding the aforesaid liability of the appellant as contingent in nature. 5(a) That on the facts and in the circumstances of the case and without prejudice to the admissibility of the impugned deduction in the AY 2013- 14, the Learned CIT (Appeals) erred in confirming the action of the Assessing Officer in not allowing deduction of Rs. 51,06,07,633/- representing further amount payable by the appellant to UPPCL as per order of UPERC on account of power purchase price in respect of the power supplied by the appellant for the year under considerat....
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....ction 115JAA of the Act. 9. That on the facts and in the circumstances of the case, the Learned CIT (Appeals) erred in confirming the action of Assessing Officer in charging interest u/s. 234B of the Act at Rs. 8,38,22,076/-. 10. That the appellant craves leave to add, amend, modify, rescind, supplement or alter any of the grounds stated hereinabove either before or at the time of hearing of this appeal. 3. The assessee is a company engaged in the business of distribution of power in the Greater Noida area. On 31.03.2012, the assessee filed its return of income. Subsequently, the assessee filed revised return of income declaring taxable income of Rs. NIL on 29.03.2014. The case was selected for scrutiny and notice u/s 143(2) of the Income Tax Act, 1961 was issued on 05.09.2014 by then DCIT, Circle-3, Noida and served upon the assessee. Subsequently, notices u/s 143(2) and 142(1) along with details questionnaire were also issued to the assessee. In response to the Notices the Authorised Representatives of the assessee appeared before the Assessing Officer and furnished the details and replies during the assessment proceedings. The Assessing Officer completed the....
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....d Nos. 6(a) to 6(e) of disallowance under section 40(a)(ia) for non-deduction of tax on payment of transmission charges, the Ld. AR submits that the issue is covered squarely in favour of the assessee by the decision of the Tribunal in the assessee's own case for the assessment years 2011-12 and 2012-13 wherein the Tribunal has held that no tax is required to be withheld from payment of transmission charges. Thus, the Ld. AR further submits that the Tribunal rightly held that tax is not required to be withheld from transmission charges and accordingly the disallowance made by the Assessing Officer on account of non-deduction of tax from such payments is bad in law and is liable to deleted. 6. Further, while disallowing the said expenses the Assessing Officer relied on an order dated 27th March, 2014 passed by DCIT (TDS) under section 201(i)/(iA) read with section 194J of the Act for the year under consideration. In this connection the Ld. AR submitted that an appeal was filed by the assessee before the CIT(A) against the said order dated 27th March, 2014 of the DCIT (TDS). The CIT(A) vide its order dated 25th May, 2015 [Appeal No. 145 & 350/2014-15, Noida] decided the appeal in ....
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....le Apex Court in this ease also dismissed the Revenue's Special Leave Petition against the order of the Bombay High Court. Further, the issue is also covered directly in favour of the assessee by the following decisions rendered by the Hon'ble jurisdictional Tribunal, Delhi Bench and various other Hon'ble Tribunal and Hon'ble High Court of the country': * ACIT vs. Madhyanchal Vidyut Vitran Nigam Ltd. [ITA No. 01/LKW/2013 and 505/LKW/2012 dated 27th February, 2015] (Lucknow) * Jaipur Vidyut Vitran Nigam Ltd. Vs. DCIT [123 TTJ 888 (Jp.)] * Chattisgarh Electricity Board vs. ITO [143 TTJ 151 (Chh.)] * Bangalore Electricity Supply Co. Ltd. vs. ITO [149 TTJ 103 (Bang.)] * Gridco Ltd. vs. ACIT [49 SOT 363 (Cut)] * M/s Auro Mira Biopower India Pvt Ltd vs, ITO (TDS) [ITA No. 2584 to 259o/Mds/20i4 Chennai] (Chennai) * ITO (TDS) vs. Hindustan Zinc Ltd [IT Appeal Nos. 488 to 491 (Jodh.) of 2010] (Jodhpur) * CIT vs Hubli Electric Supply Co. Ltd. [65 taxmann.com 208 (Karnataka)] * CIT vs Gulbarga Electricity Supply Co. Ltd [(2016) 386 ITR 622 (Karnataka)] The Ld. AR pointed out that the various Tribunals and ....
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....ed by the Hon'ble Supreme Court in [193 Taxman 97 (SC)]. 9. The Ld. AR further submitted that for the purpose of ascertaining whether or not the activity of transmission and wheeling could be said to be covered within the definition of the term 'fees for technical services' in the context of the present appeal, the only question which is required to be answered is whether process of transmission and wheeling involves human intervention or not. The Ld. AR further submitted that UPPTCL/NRLDC admittedly requires usage of various highly technical and sophisticated equipment however, the fact that UPPTCL/ NRLDC has installed such sophisticated and technical equipment in exchange to ensure transmission of electricity to the drawee entity, does not on that score, make it provision of a technical service to the customer. Installation and operation of sophisticated equipment with a view to earn income by allowing customers to avail the benefit of such equipment does not result in the provision of technical service to the customer for a fee. The term 'technical service' as referred to in section 9(i)(vii) of the Act contemplates rendering of a 'service' to the payer of the....
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....icity7 within the Region. All the parties involved with generation / distribution of electricity requiring transmission of power in the grid are to comply with direction of NRLDC and Regulatory Commission ensuring integrated grid operation and for achieving the maximum economy and efficiency in the operation of the power system in the State, the question of any person rendering service to another does not arise. In fact as a transmission licensee, PGCIL is to comply with the technical standard of operation and maintenance of transmission lines in accordance with the grids standards as may be specified by the authority. The operation and maintenance of transmission lines by NRLDC/PGCIL and drawing of power from these lines by the distribution companies for transmitting energy does not result into any technical services being rendered to the assessee. By the operation and maintenance of its own system by NRLDC/PGCIL, no technical services are rendered to the distribution companies and consequently there cannot be any question of deduction of tax at source under section 194J of the Act in this regards. 12. Therefore, the Ld. AR submitted that the assessee purchases power from vario....
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....ing the order of the ACIT in holding that that provisions of section 194J of the Act will be applicable while making payment of transmission and wheeling charges and thereby disallowing the said expenses under section 4o(a)(ia) of the Act. 14. The Ld. AR in respect of Ground No. 6(d), submitted that the amount considered by the Assessing Officer amounting to Rs. 24,70,24,128/- comprises of transmission charges amounting to Rs. 23,53,75,128 as stated above, whereas the balance amount comprised of operating charges and nonrefundable application fee on which tax is not deductible under any provision of the Act. The Ld. AR submitted that without prejudice to the contention of the assessee in this regard, even assuming though not admitting that tax is required to be deducted at source under section 194J of the Act on transmission charges as has been alleged by the Assessing Officer, the quantum of purported transmission and wheeling charges considered by the Assessing Officer should be restricted to Rs. 23,53,75,128/- instead of Rs. 24,70,24,128/- in view of the fact that no tax is legally required to be deducted at source from the amount paid towards operating charges and applicatio....
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....position stated by the Ld. AR is correct. The DR relied upon the orders of the Assessing Officer and the CIT(A). 17. We have heard both the parties and perused all the records. As regards Ground Nos. 1, 2, 3, 4(a), 4(b), 5(a) and 5(b) are not pressed by the Ld. AR as the same are academic and becomes infructuous. Therefore, Ground Nos. 1, 2, 3, 4(a), 4(b), 5(a) and 5(b) are dismissed. As relates to Ground Nos. 6(a) to 6(e) regarding disallowance under Section 40(a)(ia) for non-deduction of tax on payment of transmission charges the same is covered in favour of the assessee by the decision of the Tribunal in assessee's own case for A.Y. 2011-12 & 2012- 13 (ITA Nos. 5442 & 5443/DEL/2015 orders dated 29.11.2017 16.11.2017. ACIT vs. Noida Power Company Ltd.) relevant extract of 2012-13 order is as under:- "6 ......We find that section 194J would have application only when the technology or technical knowledge, experiences/skills of a person is made available to others which can be further used by him for its own purpose and not where by using technical systems, services are rendered to others. Rendering of services by allowing use of technical System is different than charg....