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2015 (12) TMI 1533 - KARNATAKA HIGH COURT

2015 (12) TMI 1533 - KARNATAKA HIGH COURT - [2016] 386 ITR 271 - TDS u/s 194J - tds liability - Held that:- There is no mention of any offer with regard to any “technical services” by the KPTCL. Plain and simple intention of the parties to the agreement as discernable from the power transmission agreement is that the assessee was desirous of using the transmission network belonging to the KPTCL in accordance with the provisions of the Electricity Act subject to payment of charges applicable and .....

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tion company. The only service which the assessee has availed from the KPTCL is “transmission of power” on payment of charges fixed by KERC. No material is placed by the Revenue before this Court to substantiate its contention that assessee had availed of any technical services. In our considered view, assessee has done nothing more than transmitting certain quantum of power from one place to the other for a price fixed by KERC. Assessee was oblivious to the technical expertise which the KPTCL m .....

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tioner : RI. Y.V.RAVIRAJ & SRI. K.V.ARAVIND, ADVS. For the Respondent : SRI. S. PARTHASARATHI, SRI. MALAHARA RAO, H.R.KAMBIYAVAR & SRI. P.DINESH, ADVS. JUDGMENT Revenue has presented following appeals raising certain questions of law. Sl. Nos. ITA No. ITA No. Before Tribunal Assessment years 1. 437/2012 910/Bang/2012 2009-10 2. 439/2012 909/Bang/2012 2008-09 3. 440/2012 908/Bang/2012 2007-08 4. 442/2012 906/Bang/2011 2009-10 5. 444/2012 905/Bang/2011 2008-09 6. 445/2012 904/Bang/2011 200 .....

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Tribunal is justified in holding that Section 194J of the Act is not applicable to the facts and circumstances of this case? 3. Heard Shri Y.V.Raviraj, learned counsel for the appellants/Income Tax Department and Shri Parthasarathi, learned counsel for the respondent/assessee. 4. Learned counsel for the Revenue made following submissions with regard to factual matrices of appeals (i) Assessee, Hubli Electricity Supply Company Limited (HESCOM) is a State owned Company registered under the Compani .....

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a term of 25 years there from. (ii) During the survey conducted by the Revenue in the premises of assessee under Section 133A of the Income Tax Act, 1961 ( Act for short), it was noticed that the assessee had made payments towards transmission charges to KPTCL; Power Grid Corporation of India Limited (PGCIL) and SLDC charges to State Load Dispatching Centre (SLDC) without deducting tax deductible at source under Section 194J of the Act. After issuing summons and following all procedure, the ass .....

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ommissioner of Income Tax (Appeals) that the payee namely the KPTCL had paid the taxes due on its income. Accordingly, the assessee urged that no demand be raised against the assessee, as the taxes were already paid by the payee KPTCL. Following the decision of the Hon ble Supreme Court in the case of Hindustan Coca Cola Beverages (P) Ltd., vs. CIT 293 ITR 226 (SC) the Commissioner held that no demand could be visualized under Section 201(1) of the Act in cases where assessee had successfully de .....

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e before the Income Tax Appellate Tribunal (ITAT), Bengaluru. The said appeals were dismissed by common order dated 31.07.2012 impugned herein. Assessee was aggrieved by the order of the Commissioner to the extent that it has been rendered liable to pay interest. Revenue was aggrieved by the order passed by the Commissioner against a finding that no demand could be visualized under Section 201 when the assessee would satisfy the Revenue that the taxes were paid by the payee. With the dismissal o .....

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ission of electricity through intra- state transmission system and ensures development of efficient, coordinated and economical system for smooth flow of electricity from generating station to the load centres. (iv) State Load Dispatching Centre is also an another arm of KPTCL and collects fixed rate from generating companies called as SLDC charges . SLDC is a statutory body and functions as per Section 32 of the Electricity Act. It is responsible for optimum scheduling and dispatch of electrici .....

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g power under the aforementioned power transmission agreement. Therefore, Commissioner (Appeals) fell in an error while coming to a conclusion that no demand could be visualized under Section 201(1) of the Act, if the assessee satisfied the Revenue that the payee had paid the taxes and further directing the ITO (TDS) to workout the interest from the due date of remittance of TDS till the date of filing of returns. Similarly, the ITAT also fell in an error in dismissing the appeals filed by the R .....

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the Commissioner (Appeals), he submitted that the service which the KPTCL offers is transmission of power from the generating point to the consumer s point. So far as the assessee is concerned, it has not sought for any technical service from KPTCL. The functions carried out by the KPTCL under Section 39 of the Electricity Act, 2003 and the functions carried out by the SLDC under Section 32 of the Act, assessee has no other option but to utilize the services of KPTCL as it functions under a sta .....

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by the ratio of the judgment of the Hon ble Supreme Court in the case of Hindustan Coca Cola Beverages (P) Ltd., (supra). He further contended that ITAT, rightly following the case of Bangalore Electricity Supply Company vs. ITO (TDS) ITA No.530 to 535 / Bang / 2011 has dismissed the appeals by the impugned order. Thus, he submitted that the instant appeals do not merit any consideration and accordingly prayed for their dismissal 7. We have given our careful considerations to the submission made .....

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s for professional services, or (b) fees for technical services 26,27 [or] 28[(ba) any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, to a director of a company, or] 27[(c) royalty, or (d) any sum referred to in clause (va) of section 28,] shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earli .....

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) 30[thirty thousand rupees], in the case of fees for professional services referred to in clause (a), or (ii) 30[thirty thousand rupees], in the case of fees for technical services referred to in 31[clause (b), or] 32[(iii) 30[thirty thousand rupees], in the case of royalty referred to in clause (c), or (iv) 30[thirty thousand rupees], in the case of sum referred to in clause (d) :] 33[Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover .....

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on the sum by way of fees for professional services in case such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family.] (2) 30[***] (3) 30[***] Explanation.-For the purposes of this section,- (a) professional services means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising o .....

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unt of the person liable to pay such sum, such crediting shall be deemed to be credit of such sum to the account of the payee and the provisions of this section shall apply accordingly In the instant cases, the above provision would come into play only when there is payment of fee for availing technical services. Compliance or otherwise of the above provision by the assessee entirely hinges upon the factual matrix with regard to availing of technical services if any from the KPTCL. Thus, in orde .....

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e obligations contained in Article 2 of the agreement and to perform other obligations. Assessee has agreed to pay transmission charges on a monthly basis in terms of Article 8 of the agreement. Both parties have agreed to comply with the provisions of the State Grid Code and Regulations and Rules issued by KERC from time to time. 9. SLDC is required to maintain records of quantity of energy flowing through the State Grid and issue State Energy Account under KERC (Terms and Conditions of Tariff) .....

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nical services by the KPTCL. Plain and simple intention of the parties to the agreement as discernable from the power transmission agreement is that the assessee was desirous of using the transmission network belonging to the KPTCL in accordance with the provisions of the Electricity Act subject to payment of charges applicable and determined by KERC. KPTCL was willing to provide its transmission network for the purpose of carrying electricity to its users subject to payment of transmission and .....

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