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2012 (8) TMI 519 - AT - Income TaxNon deduction of tax at source from rent u/s 194-I - Demand raised u/s 201(1)/201(1A) - whether or not the payment for transmission charges can be termed as "rent" for the purposes of section 194-I - Assessee purchases power from various sources and distributes and sells to the consumers - Held that:- As evident from a plain reading of the agreements under which impugned payments have been made are for the services of transmission of electricity and not the use of transmission wires per se - transmission lines used for transmission of electricity to the assessee and to various other entities effectively in the control of PGCIL, without any involvement of the assessee in actual operations of the same. It is a condition precedent for invoking section 194-I that the asset, for the use of which the payment in question is made, should have some element of its control by the assessee. Here is a case in which the assessee has no control over the operations of the transmission lines, and all that he gets from the arrangements is that he can draw the electrical power purchased from PGCIL's transmission lines in an agreed manner - in a situation in which the payment is made only for the purpose a specific act, i.e. power transmission in this case, and even if an asset is used in the said process, the payment cannot be said to be for the use of an asset - section 194-I has no application so far as the impugned payments for transmission of electricity is concerned. The authorities below were thus quite unjustified in brushing aside the assessee's contentions to the effect that since PGCIL has already discharged all his income-tax obligations, demands under section 201(1) cannot be raised at all - as the provisions of section 194-I cannot apply in respect of payments made for transmission of power by the PGCIL , the impugned demands raised under section 201(1) read with sections 194-I and 201(1A) read with section 201(1A) are cancelled - in favour of assessee.
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