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2016 (5) TMI 1104 - AT - Income TaxTDS u/s. 194J / 194C - non-deduction of TDS on transmission charges and/or wheeling charges - invoking the provisions of section 40(a)(ia) - Held that:- The wheeling charges represent the charges for permitting use of state transmission utility for permitting use of state transmission utility by the person other than the distribution licensee. The transmission charges simply constitute a fee for availing of the transmission utility to be used by open asset concept for distribution of electricity, licensees and consumers. In our view, the wheeling charges and transmission charges are neither contractual payments nor fee for technical services u/s. 194C or 194J of the Act as contended by revenue because there is no human intervention or human interface and, therefore, this cannot be contractual payments or fee for technical services. Therefore, we are of the view that there is nothing on record to support the contentions of the revenue that the wheeling charges and transmission charges assumed the character of contractual payments and fee for technical services as noted by AO.- Decided against revenue Power factor rebate and power interruption charges - Held that:- As per terms and conditions of Tariff order of 2005-06, Power Factor Surcharge was payable by the High Voltage/Extra High Voltage Industrial consumers, whose monthly average power factor falls below 85%. On the other hand, if the monthly power factor was above 92%, he would get a power factor rebate. If the power factor is between 85% and 92%, there was neither any surcharge nor any rebate. So power factor rebate allowed to any consumer is a part of tariff, and given effect in the energy bill. Power factor rebate is computed as a percentage of energy charge specified in the tariff Order and the monthly power factor of the consumer. The AO was of the view that the payment for power factor rebate and power interruption charges was made by West Bengal State Electricity Board to Power Grid Corporation but this fact is incorrect. The power factor rebate is not paid to anybody. This rebate is granted to the high voltage industrial consumers for their energy consumption bills. Once this is the position, there is no payment made by assessee but this was a rebate adjusted against electricity consumption bills. This cannot be subject matter of TDS under any of the provisions of the Act whether Sec. 194C or 194J of the Act. Accordingly, CIT(A) has rightly deleted the disallowance made by AO by invoking the provisions of section 40(a)(ia) of the Act. - Decided against revenue Unscheduled Interchange (UI) - Held that:- UI charges do not fall within the purview of fee for technical services as defined in section 194J of the Act are not liable to TDS. Hence, we confirm the order of CIT(A) deleting the disallowance made by AO by invoking the provisions of section 40(a)(ia) of the Act.- Decided against revenue Fee payable to Regional Load Despatch Centre for Short Term Open Access and operating charges - TDS liability - Held that:- These are only fee paid and nothing else for operational work. Accordingly, this cannot be contractual payments or payments for fee for technical services and cannot come under the purview of sections 194C or 194J of the Act. Accordingly, this cannot be subject matter for TDS. In view of the above facts and circumstances, once these items are not liable for TDS disallowance u/s. 40(a)(ia) of the Act cannot be made and CIT(A) has rightly deleted the same - Decided against revenue Disallowance of payment towards license fee made by AO for non-deduction of TDS u/s. 194C - Held that:- The Government of West Bengal, Department of Power and Non Conventional Energy Sources, Kolkata notified the West Bengal Electricity (Fees for Application for Grant of Licence) Rules 2005 by Gazette notification dated 24th November, 2005. Rule 3(1) of the said rules provides that every application made to the commission for grant of licence under Section 14 of the said Act shall be accompanied by a fee of ₹ 2,00,000. Sub-rule (2) of Rule 3 further provides that every licensee shall pay to the commission an annual fee at the rate of 5 paise per hundred KWH of the energy that has been transmitted or distributed or traded as the case may be, by such licensee in the preceding financial year subject to a minimum annual fee of ₹ 5,00,000. In accordance with the aforesaid rules read with Section 14 of the said Act, WBSEB paid a licence fee of ₹ 67.74 lakhs to the West Bengal State Electricity Regulatory Commission. Payment of such licence fee does not fall within the purview of Section 194C of the said Act as held by the AO. In view of the above facts and circumstances of the case, we are of the view that the CIT(A) has rightly deleted the disallowance, because the assessee has not made any payment on which TDS is to be deducted rather license fee is paid by the parties is for granting of license and not for any expense, which was claimed by the assessee. Accordingly, we confirm the order of CIT(A) deleting the disallowance - Decided against revenue
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