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DCIT, Circle-3 (1) (TDS) , Vijayawada Versus M/s. Nava Bharat Ventures Ltd.

2016 (10) TMI 551 - ITAT VISAKHAPATNAM

TDS u/s 194J - whether open access charges paid by the assessee towards transmission of electricity from its plants to various parts of the country is coming within the definition of royalty as defined u/s 9(1)(vi) of the Act? - Held that:- We find that the assessee has used transmission lines owned by M/s. Power Grid Corporation of India Ltd. for transmitting power from its plant to various parts of India. The assessee has paid open access charges through M/s. Reliance Energy Trading Ltd. for u .....

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lause (iva) of explanation2 of section 9(1)(vi) of the Act, the use or right to use any industrial, commercial or scientific equipment to cover open access charges incurred by the assessee within the definition of royalty as defined u/s 9(1)(vi) of the Act. Therefore, we are of the view that open access charges incurred by the assessee towards transmission of electricity from its plant to various parts of the country, through transmission lines owned by M/s. Power Grid Corporation of India is no .....

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G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant by : Shri T. Satyanadham,DR For The Respondent : Shri G.V.N. Hari, AR ORDER PER G. MANJUNATHA, Accountant Member: These two appeals filed by the revenue are directed against the common order passed by the CIT(A), Vijayawada dated 26.3.2013 for the assessment years 2009-10 & 2010-11. Since, the facts are identical and issues are common, they are clubbed, heard together and disposed-off by way of this common order for the sake of convenience. .....

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& 2010-11. When questioned about the nature of said expenditure, it was replied that open access charges has been paid to M/s. Power Grid Corporation of India Ltd. towards transmission of electricity through electrical lines/distribution system and associate facilities owned by transmission companies from assessee s plant to various parts of the country. The assessee further submitted that it has not deducted TDS on such charges, as the expenditure incurred under the head open access charge .....

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place to another place is carried out by public sector companies, who hold exclusive license for carrying on such business through network of transmission lines and allied equipment owned by them and any payment made by the customers to said companies towards transmission of electricity, partakes the nature of royalty as defined under the provisions of section 194J of the Act. The A.O. further held that the assessee used transmission lines owned by transmission companies, which is coming within .....

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IT(A), the assessee reiterated the submissions made before the A.O. The assessee further submitted that it has entered into a power purchased agreement with M/s. Reliance Energy Trading Ltd. and transmitted power produced in its plant through transmission lines owned by M/s. Power Grid Corporation of India Ltd. to various parts of country for which it has paid open access charges towards usage of transmission lines through M/s. Reliance Energy Trading Limited. The assessee further submitted that .....

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ess or trade mark, etc. of transmission companies. It has used transmission lines owned by such companies by paying charges fixed by the Electricity Regulatory Commission (ERC), therefore, the A.O. was not correct in applying the definition of royalty as defined u/s 9(i)(vi) of the Act, to hold that open access charges incurred by it is coming under the definition of technical fees as defined u/s 194J of the Act. 4. The CIT(A) after considering the explanation furnished by the assessee, held tha .....

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r observed that since it is a sale of energy, the question of applicability of the provisions of section 194J of the Act does not arise. With these observations, directed the A.O. to delete the demand raised u/s 201(1) & 201(1A) of the Act. Aggrieved by the CIT(A) order, the revenue is in appeal before us. 5. The Ld. D.R. submitted that the CIT(A) is erred in concluding that transaction between the assessee and M/s Power Grid Corporation Limited is purchase and sale, instead of royalty as de .....

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hould be upheld. On the other hand, the Ld. A.R. for the assessee strongly supported the order of the CIT(A). 6. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The factual matrix of the case is that the assessee is a manufacturer of electricity entered into Power purchase agreement with M/s. Reliance Energy Trading Ltd. In the process, the assessee has used transmission lines owned by M/s. Power Grid Corporation of .....

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see as an assessee in default and computed tax and interest u/s 201(1) & 201(1A) of the Act. It is the contention of the assessee that open access charges incurred towards transmission of electricity from its plants to various parts of India is not coming within the definition of technical fees as defined u/s 194J of the Act. The assessee further submitted that it has used transmission lines owned by M/s. Power Grid Corporation of India Ltd. and paid charges as fixed by Electricity Regulator .....

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defined u/s 9(1)(vi) of the Act. The Hon ble High Court of Delhi, in the case of CIT Vs. Delhi Transco Ltd. (2015) 124 DTR 170, held that transmission of electricity through the network without any human intervention cannot be characterized as a provision of technical services and thus, wheeling charges could not be characterized as payment of technical service and cannot be brought within the hold of section 194J of the Act. The ITAT, Jaipur A Bench in the case of Principal Officer, Jaipur Vid .....

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ission/SLDC charges to the transmission company and also there is no liability to deduct tax at source for the reason that the payment of transmission/wheeling/SLDC charges is reimbursement of cost . A similar view has been expressed by the Hon ble High Court of Karnataka, in the case of CIT Vs. Hubli Electricity Supply Company Ltd. (2016) 136 DTR 105, wherein the Hon ble High Court held that the assessee has done nothing more than transmitting certain quantum of power from one place to another .....

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