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2012 (11) TMI 385 - AT - Income TaxTDS u/s 194J - Fees for technical services – Whether payment of transmission charges by company engaged in supplying electricity is liable to TDS u/s 194J - The assessee was granted license for distribution and retail supply of power by KERC – AO argued that the payments of transmission charges and SLDC charges, were payments for technical services rendered - Held that:- Following the decision in case of Jaipur Vidyut Vitran Nigam Limited. (2009 (4) TMI 489 - ITAT JAIPUR-A) that the applicability of Sec. 194J would come into effect only when by making payment of fee for technical services, assessee acquired certain skill/knowledge/intellect which can be further used by him for its own purpose/research. Where facility is provided 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. Therefore, the assessee was not liable to deduct tax at source on payments of transmission charges to KPTCL as the provisions of Sec. 194J are not attracted thereon. In favour of assessee TDS u/s 194I – Whether transmission charges liable TDS u/s 194I – Held that:- The transmission lines are used not only for the transmission of electricity to the assessee but also for transmission to various other entities, and the assessee has no say in the manner in which such transmission lines can be controlled. Assessee has no control over the operations of the transmission lines and all that it gets from the arrangement is that it can draw electrical power from transmission lines in an agreed manner. In a situation in which the payment is made only for the purpose of a specific act, it cannot be said to be for the use of an asset even if an asset is used in the said process. Therefore, Sec. 194I has no application to the impugned payments for transmission of electricity. In favour of assessee TDS u/s 194J - Whether payment for service by State Load Despatch Centre to company engaged in supplying electricity is liable to TDS u/s 194J – Held that:- As the functions these personnel of SLDC perform, may be of managerial and technical nature, the assessee or its employees do not receive OR derive any benefit in their sphere of work i.e. distribution and retailing of electricity and neither do they perform any of assessee’s work. What is paid by BESCOM as SLDC charges are only reimbursement of actual expenses. Hence not liable to deduct to TDS u/s 194J. In favour of assessee
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