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2015 (5) TMI 396 - HC - Income TaxTDS on wheeling and transmission charges - payment made by the assessee to entities like Maharashtra State Electricity Transmission Company Limited (MSETCL) and Power Grid Corporation of India Limited (PGCIL) for the use of transmission lines or other infrastructure i.e. plant, machinery and equipment - whether payment could not be termed as rent under the provisions of section 194I and consequently the provisions of sections 201 and 201(1A) could not be applied ? - Held that:- No 'service' is being provided by the MSETCL or the STU. No doubt, MSEDCL as transmission licensee is required to provide superintendence, maintenance and repairs to the system. However, no such service is rendered by the MSETCL to MSEDCL. MSETCL is obliged to maintain the system by value of operation of law under the Electricity Act. MSEDCL accesses the STU and distributes electricity passing through the STU. Our views stand fortified by the very fact that the revenue itself is confused and unsure as to the nature of the charge. The focus of the revenue is only the requirement of deduction of tax whether under Section 194-I or Section 194-J. This approach is erroneous. The revenue contends that the WT charges could be rent or fees for technical services but in our view it is neither. Wheeling charges represent the charge for permitting use of the STU by persons other than the Distribution licence. The Transmission charges simply constitute fees for availing of the said transmission utility to be used by open access concept for distribution of electricity to licensees and consumers. In view of the above discussion, we are of the view that the WT charges are neither rent nor fees for technical services. Keeping the said interpretation into effect into effect, we find that while interpreting the expression 'rent' in the present scenario, we must bear in mind that taking into account the functioning of MSEDCL which is a public utility, it will not be appropriate to equate the transmission charges or wheeling charges to rent or fees for technical service. Electricity Act of 2003 was enacted partly on account of deteriorating performance of the State Electricity Boards on account of various factors, including difficulties in power tariff fixation by the erstwhile electricity boards which were unable to take decisions on the tariff in a professional and independent manner. As a result, there were subsidies of unsustainable levels. The restructuring of the electricity boards had created various relationships amongst the four entities inter se namely, MSEB Holding Company Limited, Maharashtra State Electricity Transmission Company Limited, Maharashtra Power Generation Co., Maharashtra State Electricity Distribution Company Limited. Our decision in this appeal is restricted to the State Electricity Boards and the reconstituted entities, to exclusion of others in an attempt to avoiding any absurd results which was not intended by the Legislature. In this behalf, we find it appropriate to make a reference to the following observations of the Hon'ble Supreme Court in the case of Commissioner of Income-Tax, Bangalore V/s. J.S. Gotla Yadagiri reported in (1985 (8) TMI 5 - SUPREME Court ). Thus Transmission charges and / or Wheeling charges are not amounts paid under any arrangement for use of land, building, plant machinery, equipment, furniture, fitting, etc. and, therefore, not rent. Equally, the amounts are not fees for technical services.- Decided in favour of the Assessee
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