TMI Blog2016 (9) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Appellate Tribunal, Bangalore Bench A , dismissing the appeal filed by the Revenue, confirming the order passed by the Commissioner of Income Tax (Appeals), Hubli, in CIT(A) 191/HBL/2011-12, insofar as it relates to transmission of charges to State Load Dispatching Centre charges. 2. The brief facts of the case are that- The respondent/assessee, a company registered under the Companies Act, 1956, is engaged in the business of buying and selling of electricity. The assessee purchases electricity from the generators of Karnataka Power Corporation Limited (KPCL), Central Generation Stations like NTPC, NLC, MAPS and non-conventional electricity generators like Jindal Energy Limited, Bhourukha, etc and sell the same to different categories of consumers in its jurisdiction. The power from the generation point to the customers is transmitted through the transmission network of Karnataka Power Transmission Corporation Limited. 3. For the Assessment year 2009-10, the assessee filed its returns of income on 30.09.2009 declaring loss of ₹ 179,46,45,174/-. The return of income was processed under the provisions of Section 143(3) of the Income Tax Act, 1961 ( Act for short) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 194C of the Act. 7. The assessment was completed by an order under Section 143(3) of the Act on 30.11.2011 wherein the income of the assessee was determined at ₹ 69,76,80,360/- in view of the following disallowances under Section 40(a)(ia) of the Act: (i) on payments made to KPTCL, without deducting tax at source under section194J of the Act on transmission charges and SLDC charges ₹ 113,05,08,348/- (ii) on payments towards composite contracts without deducting tax at source as required under Section 194C of the Act ₹ 136,18,17,186/- 8. Aggrieved by the said assessment order, the assessee preferred an appeal before the CIT (Appeals), Hubli. The CIT (Appeals), who after considering the entire material on record, relied upon the decision of the co-ordinate Bench of the Tribunal in assessee s own case in ITA Nos.874 to 879/Bang/2011 dated 31.08.2012 for assessment year 2006-07 to 2011-12 and allowed the appeal by an order dated 28.02.2013. 9. Aggrieved by the said order of the CIT (Appeals) dated 28.02.2013, the Revenue filed second appeal before the Tribunal in ITA No.703/Bang/2013 urging various grounds. The Tribunal, after h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (Appeals) and sought to rely on the decision of the co- ordinate bench of this Court dated 22.03.2016 in the case of The Commissioner of Income Tax and another vs. Gulbarga Electricity Supply Company Limited made in ITA No.438/2012 and connected matters and prayed for dismissal of the appeal of the Revenue. 15. We have given our anxious consideration to the arguments advanced by the learned counsel for the parties and perused the entire material on record, carefully. 16. The Revenue is aggrieved by the decision of the ITAT holding that the compliance of Section 194J mandating deduction of tax at source are not attracted to the facts and circumstances of the present case and the assessee was not liable to deduct tax at source on payment of transmission charges to KPTCL and also SLDC charges paid by the assessee. The provisions of Section 194J reads as under: 194J. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of- (a) fees for professional services, or (b) fees for technical services [or] [(ba) any remuneration or fees or commission by whatever name called, other than those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r profession as is notified36 by the Board for the purposes of section 44AA or of this section; (b) fees for technical services shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9; [(ba) royalty shall have the same meaning as in Explanation 2 to clause (vi) of sub- section (1) of section 9;] (c) where any sum referred to in sub-section (1) is credited to any account, whether called suspense account or by any other name, in the books of account 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. 17. It is relevant to state at this stage that the coordinate bench of this Court while considering the said provisions in identical circumstances in the case of The Commissioner of Income Tax, TDS, HMT Bhavan, Bellary Road, Bangalore and another vs. Hubli Electric Supply Company Limited in its judgment dated 15.12.2015 made in ITA No.437/2012 and connected matters, has held as under:- 8. Irrefutable facts in these cases are KPTCL and assessee have entered into a power transmission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w, 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 may possess. There was neither transfer of any technology nor any service attributable to a technical service offered by the KPTCL and accepted by the assessee. Therefore, application of Section 194J of the Act to the facts of this case by the Revenue is misconceived. (emphasis supplied) 18. This Court, while considering the provisions of Section 194J of the Act in the case of The Commissioner of Income Tax and another vs. Gulbarga Electricity Supply Company Limited made in ITA No.438/2012 and connected matters in its judgment dated 22.03.2016 , following the aforesaid judgment on identical circumstances, has held as under: 6. The learned counsel appearing for the assessee at the outset pointed out that the identical substantial questions of law raised in the case of The Commissioner of Income Tax and another vs. Hubli Electric Supply Company Ltd., (ITA No.437/2012 and connected matters dated 15.12.2015) , this Court has answered the same against the revenue. Placing relian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f natural justice and that too at this juncture in the appeal proceedings under the fiscal statute. The arguments advanced on behalf of the revenue deserve to be rejected and accordingly they are rejected. (emphasis supplied) 9. The judgment of Hubli Electric Supply Company Ltd., is squarely applicable to the facts of the present case. We do not see any reasons to differ from the view taken by the co-ordinate Bench of this Court in Hubli Electric Supply Company Ltd. case (supra). We are in agreement with the view taken by this Court and answer the substantial questions of law raised against the revenue and in favour of the assessee. 19. The Division Bench of the Delhi High Court, while considering the provisions of Section 194J for the assessment year 2005-06 in the case of Commissioner of Income Tax vs Delhi Transco Ltd reported in (2016)380 ITR 398 (Delhi) has held as under: Held, dismissing the appeals, that PGCIL was operating and maintaining its own system using the services of engineers and qualified technicians. PGCIL was in that process not providing technical services to others, including the assessee. A comparison could be made with the system of distri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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