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2012 (7) TMI 340 - AT - Income TaxAddition made on account of non realization of ‘Provision for surcharge’- CIT(A) deleted the addition - Held that:- assessee changed its method of accounting after seeking necessary approval of CAG, shows that as far as the assessee is concerned, the collection of surcharge was contingent and did not accrue due to assessee. The liability will accrue on the basis of crystallization i.e. the payment of the surcharge or passing of a suitable order by the appropriate authority on the dispute raised by the customer - assessee being a state PSU the surcharge on delayed payment being disputable item was not mandatorily payable at the time of payment of electricity consumption bill was not an accrued receipt in view of the accounting policy accepted by the revenue - such amount of surcharge cannot be held to be taxable as it is not the real income of the assessee and is hypothetical by nature in given facts and circumstances, and does not amount to accrued of receipt taxable as income - in favour of assessee. Addition u/s 40(a)(ia) on account of non deduction of tax on the payment of wheeling / transmission charge - CIT(A) deleted the addition - Held that:- Considering the clauses of transmission service agreement it is clear that all the parties involved with generation, transmission and distribution of electricity are to comply with the direction of State Load Dispatch Center and the Regulatory Commission for achieving the economy and efficiency in the operation of power system and therefore question of any person rendering service to another does not arise. The operation and maintenance of transmission lines by RVPNL and the use of these lines by assessee for transmitting energy does not result into any technical service being rendered to the assessee - the services rendered qua interconnection/port access do not involve any human interface and, therefore, the same cannot be regarded as 'technical services' as contemplated under section 194J - there is no liability to deduct tax at source on payment of transmission/wheeling/SLDC charges under section 194J or for that matter under section 194C - transmission/wheeling/SLDC charges is reimbursement of the cost, therefore the provisions of Chapter XVII-B are not applicable since there is no payment of income/revenue by the assessee - in favour of assessee.
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