TMI Blog2016 (10) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... , secret formula or process or trade mark or similar property and associated rights in that property to say that the open access charges paid by the assessee is coming within the meaning of royalty as defined u/s 9(1)(vi) of the Act. In our considered view, the A.O. without understanding the provisions, brought in the concept of definition of royalty provided in sub clause (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 fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was noticed that the assessee has paid open access charges of ₹ 2.12 crores and ₹ 1.11 crores respectively for the assessment years 2009-10 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 charges is neither coming under works contract as defined u/s 194C of the Act nor technical charges as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 open access charges is neither coming under the definition of works contract as defined u/s 194C of the Act, nor technical fees as defined u/s 194J of the Act, therefore, not deducted TDS on such charges. The assessee further submitted that open access charges incurred towards usage of transmission lines of electricity transmission companies, ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 defined u/s 9(1)(vi) of the Act. The D.R. further submitted that use of transmission lines owned by Electricity Transmission companies for transmission of power is coming within the definition of royalty as defined u/s 9(1)(vi) of the Act and accordingly, the assessee ought to have deducted TDS on open access charges. Since the assessee has failed to deduct TDS on such charges, the A.O. has rightly held that the assessee as an assessee in default u/s 201(1) 201(1A) of the Act and his order should be upheld. On the other hand, the Ld. A.R. for the assessee strongly supported the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , secret formula or process or trade mark of similar property as defined under explanation 2, clause (iva) of section 9(1)(vi) of the Act. 7. The question that needs to answered is whether on facts and circumstances of the case, 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. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 use of transmission lines. There is nothing on record to show that the assessee has used any patent, invention, model, design, secret formula or process or trade mark or similar property and associated rights in that property to say that the open access charges paid by the assessee is coming within the meaning of royalty as defined u/s 9(1)(vi) of the Act. In our considered view, the A.O. without understanding the provisions, brought in the concept of definition of royalty provided in sub clause (iva) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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