TMI Blog2012 (12) TMI 1198X X X X Extracts X X X X X X X X Extracts X X X X ..... pliance of TDS provisions. During the course of verification it was noticed that Assessee had entered into an agreements with GSECL and other electricity generation companies (for purchase of electricity), with GETCO, Power Grid Corporation and other companies (for transmission of electricity) and with MGVCL (for supply of electricity). In terms of the agreement, Assessee was purchasing electricity from GSECL and other generating companies and through the system of GETCO and Power Grid Corporation, electricity was supplied to MGVCL. Assessee was paying transmission/ welling charges to GETCO, Power Grid Corporation etc. It was also noticed that apart from the purchase of electricity from GSECL, the Assessee was also purchasing electricity from various other electricity companies like NTPC, Nuclear Power Plant etc. The AO was of the view that the transmission of electricity being a technical service, the Assessee should have deducted TDS u/s 194J of the Act. AO was of the view that since the Assessee has not deducted TDS before making payment of account of transmission/wheeling charges the assessee was an assessee in default as per the provisions of section 201(1) and 201(1A) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the principles of no profit no loss is also not tenable for the same reasons. Thus, the assertion of the appellant that no amount is paid by the distribution companies to the Transmission Company but only cost incurred by Transmission Company is reimbursed by distribution companies through the mechanism of tariff fixed by regulatory commission also falls flat in the given facts and circumstances of the case. 4.3.3 It is a fact that the appellant pays for transmission of electricity, which is not denied. It is also a fact that while paying the charges, TDS is deducted at the rate of 2%. Getting these amounts reimbursed is an internal arrangement, where funds available are so arranged so as to provide uninterrupted power supply to the end customers. In the case of ITO vs. Dr.Wilmar Schwave (I) Pvt.Ltd. 95 TTJ 53 (Delhi), the technician was taken on a vehicle for performing technical services and in those circumstances, it was held that reimbursement of vehicle expenses was outside the TDS provisions, where as in the case of the appellant, the power itself was transmitted to the end user and as such the citation relied on by the appellant was out of context and of no help to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of transmission charge u/s.194C because in this case transmission line is owned by GETCO which was used by GUVN Ltd. (M/s.Gujarat Urja Vikas Nigam Ltd., Baroda) therefore, payment of transmission charge may be considered as rent u/s.1941 for use of plant and machinery (transmission line) alternatively to u/s.194J of the Act. This ground is raised being a legal issue involved as per Supreme Court s decision in the case of National Thermal Power Co.Ltd. 229 ITR 383 (SC). 3. On the facts and in the circumstances of the case, the Ld.CIT(A) ought to have upheld the order of the Assessing Officer. 5.1. The ground of Assessee in ITA No.3381/Ahd/2009 reads as under: 1.0 The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in holding that the transmission charges payable by the appellant company are liable for deduction of tax at source at 2% under section 194C of the I T Act and has thereby confirmed charging of interest under section 201(1A) of the I T Act. 6. Before us the Ld.D.R. submitted that the transmission/wheeling charges paid by the Assessee to GETCO and others was in the nature of technical services for the reason that transmissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technical services being rendered to the assessee, apart from the fact that the payment of transmission/wheeling/SLDC charges is reimbursement of the cost and, therefore, the payments could not be disallowed under s.40(a) (ia); provisions of s.40(a)(ia) are not applicable also for the reason that they apply only when the amount is payable i.e., due whereas the assessee has made actual payment. 8.2. In the case of Maharashtra State Electricity Distribution (supra) the Mumbai Tribunal has relying on the decision in the case of Jaipur Vidyut has held that wheeling and transmission charges paid by assessee state electricity distribution company in case of which provisions of Electricity Act 2003 is applicable are not liable for deduction of tax either u/s 194J or 194C of the Act. 8.3. In the case of Chattisgarh State Electricity Board (supra) the Mumbai Tribunal has concluded as under: Payment made by the assessee, a State Electricity Board, to PGCIL for transmission of power purchased by it from NTPC was made for the services of transmission of electricity and not for the use of transmission wires per se in as much as these transmission lines are used not only for transm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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