CHHATTISGARH STATE ELECTRICITY BOARD THROUGH CG STATE POWER HOLDING COMPANY LTD RAIPUR, RAIPUR v. ITO TDS- RAIPUR, RAIPUR

ITA 20/BIL/2010 | 2006-2007
Pronouncement Date: 30-11-2011 | Result: Allowed

Appeal Details

RSA Number 2019914 RSA 2010
Assessee PAN AABCC7876Q
Bench Mumbai
Appeal Number ITA 20/BIL/2010
Duration Of Justice 1 year(s) 10 month(s) 7 day(s)
Appellant CHHATTISGARH STATE ELECTRICITY BOARD THROUGH CG STATE POWER HOLDING COMPANY LTD RAIPUR, RAIPUR
Respondent ITO TDS- RAIPUR, RAIPUR
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted H
Tribunal Order Date 30-11-2011
Assessment Year 2006-2007
Appeal Filed On 22-01-2010
Judgment Text
PAGE 1 OF 17 FIT FOR PUBLICATION IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI H BENCH MUMBAI BEFORE SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) AND SHRI VIJAY PAL RAO (JUDICIAL MEMBER) ITA NOS. 20 TO 23/BLPR/2010 ASSESSMENT YEAR: 2006-07 TO 2009-2010 CHATTISGARH STATE ELECTRICITY BOARD ...AP PELLANT (NOW KNOWN AS CG STATE POWER HOLDING CO. LTD.) GROUND FLOOR VIDYUT SEVA BHAWAN RAIPUR 492 001 [PAN AABCC7876Q] VS. INCOME TAX OFFICER (TDS) RESPONDENT CENTRAL REVENUE BUILDING CIVIL LINES RAIPUR 492 001 APPEARANCES: SOLI E. DASTUR FOR THE APPELLANT GOLI SRINIVAS RAO FOR THE RESPONDENT DATES OF HEARING : OCTOBER 20 AND 24 2011 DATE OF PRONOUNCEMENT : NOVEMBER 30 2011 O R D E R PER PRAMOD KUMAR: 1. IN THIS BUNCH OF FOUR APPEALS WHICH ARE DIRECTE D AGAINST COMMON ORDER DATED 7 TH OCTOBER 2009 PASSED BY THE CIT(A) THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF CIT(A)S UP HOLDING THE FOLLOWING DEMANDS RAISED ON THE ASSESSEE UNDER SECT ION 201(1) AND PAGE 2 OF 17 201(1A) R.W.S. 194 I OF THE INCOME TAX ACT 1961 F OR ALLEGED NON- COMPLIANCE WITH TAX WITHHOLDING REQUIREMENTS IN RES PECT OF PAYMENTS FOR ELECTRICITY TRANSMISSION CHARGES: SL ASSESSMENT DEMAND U/S DEMAND U/S TOTA L YEAR 201(1)-TDS 201(1A)- INTEREST* 1 2006-07 2 08 63 979 81 63 158 2 90 27 137 2 2007-08 4 85 23 892 1 37 75 324 6 22 99 216 3 2008-09 4 69 51 547 77 31 511 5 46 83 058 4 2009-10 6 56 98 260 31 77 291 6 88 75 551 21 48 84 962 * AS COMPUTED FOR THE PERIOD UP TO THE DATE OF DEMA NDS HAVING BEEN RAISED BY THE ASSESSING OFFICER. 2. LET US TAKE A LOOK AT THE RELEVANT MATERIAL FACT S AND THE DEVELOPMENTS LEADING TO THIS LITIGATION BEFORE US. THE APPELLANT BEFORE US IS CHATTAISGARH STATE ELECTRICITY BOARD THROUGH ITS SUCCESSOR C G STATE POWER HOLDING CO LTD (REFERRED TO AS CSEB IN SHORT). CHATTISGARH STATE ELECTRICITY BOARD A PUBLIC SECTOR UNDERTAKIN G OWNED BY THE GOVERNMENT OF CHATTISGARH WAS FORMED UNDER SECTION 5 OF THE ELECTRICITY SUPPLY ACT 1948 AND WITH EFFECT FROM 1 ST JANUARY 2009 IT WAS DIVIDED INTO FIVE SEPARATE COMPANIES INCLUDING CG STATE POWER HOLDING CO LTD WHICH WAS ITS SUCCESSOR IN THE PRE SENT APPEAL. CSEB IS ENGAGED INTER ALIA IN THE BUSINESS OF DISTRIBU TION OF ELECTRICITY TO CONSUMERS WITHIN CHATTISGARH. 3. THE ACTIVITY OF DISTRIBUTING ELECTRICITY TO END CONSUMERS IS PRECEDED BY TWO IMPORTANT INTERMEDIATE STEPS NAME LY PRODUCTION OF ELECTRICITY AND ITS TRANSMISSION FROM POINT OF PRO DUCTION TO THE POINT OF DISTRIBUTION AND IT IS HERE THAT TWO SIGNIFICANT P LAYERS NAMELY NATIONAL THERMAL POWER CORPORATION LTD (NTPC IN SH ORT) AND POWER PAGE 3 OF 17 GRID CORPORATION OF INDIA LTD (PGCIL IN SHORT) COM E INTO PLAY. 4. NTPC A GOVERNMENT OF INDIA OWNED PSU GENERATES ELECTRIC POWER AND IS ONE OF THE MAJOR SOURCES OF ELECTRICAL POWER IN THE COUNTRY. HOWEVER WHEN CSEB OR FOR THAT PURPOSE ANY OTHER S TATE ELECTRICITY BOARD BUYS THE ELECTRICAL POWER NTPCS OBLIGATION ENDS WITH AVAILABILITY OF THE ELECTRICAL POWER AT DELIVERY PO INTS WHICH ARE TECHNICALLY TERMED AS BUSBARS OF THE POWER GENER ATING STATION. IT IS FOR THE CSEB TO ORGANIZE THAT ELECTRICAL POWER SO P URCHASED FROM THE NTPC IS TRANSMITTED FROM SUCH DELIVERY POINTS TO TH E POINTS WHERE CSEB NEEDS ELECTRICAL POWER. THIS TRANSMISSION OF ELECTR ICAL POWER TERMED AS WHEELING IN TECHNICAL PARLANCE CAN ONLY BE DONE BY THE PERSONS DULY AUTHORIZED BY THE GOVERNMENT OF INDIA IN THIS BEHAL F. 5. PGCIL ANOTHER GOVERNMENT OF INDIA PSU IS ENGAGED IN THE BUSINESS OF TRANSMITTING THE POWER AND IS DULY AUT HORIZED FOR THE PURPOSES OF TRANSMITTING POWER FROM DELIVERY POINTS TO THE BULK BENEFICIARIES LIKE ASSESSEE BEFORE US. IT OPERATES AND MAINTAINS INTER- STATE TRANSMISSION SYSTEM AND OPERATION OF REGIONAL POWER GRIDS AND IT HAS ALSO BEEN NOTIFIED AS THE CENTRAL TRANSMISSI ON UTILITY (CTU) OF THE COUNTRY. IN ADDITION TO THE FACILITIES SET UP B Y PGCIL IT HAS BEEN CONTROLLING THE EXISTING LOAD DESPATCH CENTRES IN T HE COUNTRY WITH A VIEW TO ACHIEVE BETTER GRID MANAGEMENT AND OPERATIO N. CSEB BUYS FROM THE POWER FROM NTPC AND THE POWER SO PURCHASED BY THE CSEB IS TRANSMITTED TO BY PGCIL. 6. IT IS IN THIS BACKDROP AND DURING THE COURSE OF VERIFICATION OF TAX DEDUCTION AT SOURCE RETURNS THAT THE ASSESSING OFF ICER NOTED THAT CSEB HAS ENTERED INTO AN AGREEMENT WITH NTPC AND PG CIL FOR USE OF TRANSMISSION SYSTEM OWNED BY THE PGCIL AND EXPRESS ED THE VIEW THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE F ROM SUCH PAYMENTS PAGE 4 OF 17 IN TERMS OF THE PROVISIONS OF SECTION 194 I OF THE ACT. THE ASSESSING OFFICER WAS OF THE VIEW THAT AS EVIDENT FROM THE A GREEMENT THAT THE ASSESSEE ENTERED INTO WITH PGCIL THE PGCIL HAD DEV ELOPED THE NATIONAL POWER GRID TO ENSURE TRANSMISSION OF POWER WITHIN AND ACROSS THE DIFFERENT REGIONS OF THE COUNTRY. THE A SSESSING OFFICER NOTED THAT THE ASSESSEE HAD MADE THE PAYMENT FOR TR ANSMISSION CHARGES FOR USE OF TRANSMISSION SYSTEM. HE NOTED TH AT THE THE PLAIN READING OF VARIOUS CLAUSES OF THE AGREEMENT CLARIFY THAT THE TRANSMISSION CHARGES ARE COLLECTED ON ACCOUNT OF US E OF TRANSMISSION SYSTEM AND THAT THE WESTERN GRID IS MADE EXCLUSIV ELY FOR CSEB TO TRANSMIT THE POWER. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE UTILIZATION OF TRANSMISSION SYSTEM IMPLIES EXISTENC E OF SOME EQUIPMENT OR PHYSICAL BODY AND DOES NOT INDICATE TH E INVOLVEMENT OF THE MANPOWER IN THE FORM OF PROFESSIONAL TECHNICIA N OR ANY LABOUR TO RUN THE ELECTRIC CURRENT. HE ALSO NOTED THAT THE ACCESS LINE CONSISTING OF CIRCUITS IS WITHIN THE REACH OF THE C SEB AND IT IS THROUGH THAT PRIVATE LINE/ ACCESS LINE AND RELATED EQUIPMEN T PLACED AT PGCIL STATION THAT THE TRANSMISSION OF ELECTRICITY TAKES PLACE ... THE ASSESSING OFFICER ALSO NOTED THAT THERE IS DEDICATE D MACHINERY AND EQUIPMENT IDENTIFIED AND ALLOWED TO BE USED IN THE HANDS OF THE CSEB. IT WAS NOTED THAT PGCIL IS MAINLY RESPONSIBLE FOR T RANSMITTING POWER FROM PRODUCTION CENTRE TO THE CONSUMERS AND IN TH E PROCESS IN COVERTS DC INTO AC POWER. IT REQUIRES TRANSFORMERS AND OTHER ELECTRICAL APPARATUS FOR THIS PROCESS AND TRANSMISS ION. THE STAND OF THE ASSESSING OFFICER WAS THAT THE PAYMENTS MADE BY THE ASSESSEE TO PGCIL FOR THE PURPOSE OF TRANSMITTING POWER FROM N TPCS DELIVERY POINT TO ASSESSEES FACILITIES CAN BE SAID TO BE P AYMENTS IN THE NATURE OF RENT FOR TRANSMISSION FACILITIES AND ACCORDING LY BE HIT BY THE PROVISIONS OF SECTION 194 I OF THE ACT. A REFERENC E WAS MADE TO HONBLE ALLAHABAD HIGH COURTS JUDGMENT IN THE CASE OF CIT VS INDIAN TURPENTINE AND RESIN CO LTD (75 IITR 533) IN SUPPOR T OF THE PAGE 5 OF 17 CONTENTION THAT TRANSMISSION EQUIPMENT CONSTITUTE P LANT AND MACHINERY AND THEREFORE PAYMENT FOR TRANSMISSION CHARGES SHOULD BE CONSTRUED AS PAYMENT FOR USE OF PLANT AND MACHIN ERY. 7. THE ASSESSING OFFICER REJECTING THE ELABORATE A RGUMENTS OF THE ASSESSEE IN SUPPORT OF THE CONTENTION THAT THE PAYM ENT FOR TRANSMISSION CHARGES IS NOT IN THE NATURE OF RENT F OR TRANSMISSION EQUIPMENT OBSERVED THAT THE ABSENCE OF EXPRESSION RENT IN THE AGREEMENT DOES NOT ALTER THE FACTUAL SITUATION IN T HIS CASE AND THAT THE EXPRESSION RENT HAS A MUCH WIDER CONNOTATION UNDE R EXPLANATION (I) TO SECTION 194 I. IT WAS NOTED THAT THE AS LONG AS PAYMENT IS MADE BY WHATEVER NAME CALLED FOR USE OF EQUIPMENT PLANT MACHINERY THE SAME WILL BE COVERED BY THE DEFINITION OF RENT FOR THE PURPOSE OF THIS SECTION. AS REGARDS THE ASSESSEES CONTENTION THAT THE ASSESSEE DOES NOT HAVE ANY LIABILITY UNDER SECTION 201(1) IN VIE W OF THE FACT THAT THE PGCIL HAS PAID THE TAXES DIRECTLY AND IN THE LIGHT OF EXPLANATION (I) TO SECTION 191 THE ASSESSING OFFICER REJECTED THIS CO NTENTION AS WELL AND OBSERVED THAT THE PAYMENT OF ADVANCE TAX BY DEDUCT EE CANNOT BE TREATED AS DISCHARGE OF TAX LIABILITY UNDER SECTION 194I OF THE ACT AS IT IS LIABILITY OF THE ASSESSEE TAX DEDUCTOR. HE WAS OF THE VIEW THAT BOTH THESE LIABILITIES I.E. OF THE TAX WITHHOLDING LIAB ILITY OF THE PERSON MAKING THE PAYMENT AND OF TAX LIABILITY OF RECIPIEN T OF INCOME ARE INDEPENDENT LIABILITIES AND CANNOT BE EQUATED WITH EACH OTHER. HE HELD THAT ONE OF THE BASIC INTENTIONS TO INTRODUCE THE TDS PROVISIONS OF THE ACT IS TO PROVIDE GOVERNMENT REGULAR CASH FL OW FOR DEVELOPMENT WORKS TO PREVENT THE REVENUE LOSS CAUSED IN CASES W HERE THE DEPARTMENT FAILS TO TAP THE REVENUE FROM DEDUCTEE L ATER ON THAT THIS CLAIM OF EXEMPTION FOR NON DEDUCTION HITS ADVERSEL Y THE BASIC INTENTION OF THE LEGISLATURE WHICH IS AGAINST THE LAW AND THEREFORE THIS ARGUMENT PUT FORTH BY THE LEARNED COUNSEL HAS NO FORCE. THE PAGE 6 OF 17 ASSESSEE WAS ACCORDINGLY TREATED AS IN DEFAULT IN RESPECT OF THE AMOUNTS WHICH THE ASSESSEE OUGHT TO HAVE DEDUCTED A T SOURCE UNDER SECTION 194 I OF THE ACT. CONSEQUENT DEMANDS UNDER SECTION 201(1) AND 201(1A) AGGREGATING TO RS 21 48 84 970 (AFTER ROUNDING OFF) WERE RAISED ON THE ASSESSEE. 8. AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL BUT WITHOUT ANY SUCCESS. WHILE LEARNED CIT(A) METICULOUSLY RECORDED WRITTEN SUBMISSIONS OF THE ASSESSEE HE PREFERRED NOT TO DE AL WITH THESE VERY ERUDITE AND DETAILED SUBMISSIONS IN DETAIL AND REJ ECTED THE SAME RATHER SUMMARILY BY OBSERVING AS FOLLOWS: I HAVE GONE THROUGH THE ORDER OF THE AO AND SUBMISS ION OF THE APPELLANT. I HAVE ALSO PERUSED THE BULK POWER TRANS MISSION AGREEMENT (BPTA) BETWEEN PGCIL AND MPSEB AND ALSO T HE POWER PURCHASE AGREEMENT (PPA) BETWEEN NTPC AND CSEB. THE APPELLANT HAS NOT FURNISHED ANNEXURE C TO BPTA WH ICH PROVIDES FOR TRANSMISSION TARIFF. IT IS AN UNDISPUTED FACT T HAT THE PGCIL HAS ESTABLISHED POWER TRANSMISSION SYSTEM/ LINES WHICH HAVE BEEN USED BY THE APPELLANT FOR TRANSMISSION OF POWER IN CONSIDERATION OF MONTHLY CHARGES PAID. THE ISSUE ARISES WHETHER T HE TRANSMISSION CHARGES PAID BY THE APPELLANT IS RENT WITHIN DEFINITION PROVIDED UNDER SECTION 194 I AND LIABLE TO TDS. AS PER ITO(TDS) IT IS AN ARRANGEMENT FOR USE OF TRANSMISS ION ASSETS OWNED AND DEVELOPED BY PGCIL AND THUS MONTHLY CHARG ES PAID BY THE APPELLANT IS RENT WITHIN THE DEFINITION PROVIDE D IN EXPLANATION TO SECTION 194I.THE ITO TDS HAS FURTHER HELD THAT T HE DEFINITION OF RENT HAS BEEN SUBSTITUTED BY TAXATION LAWS (AMENDME NT) ACT 2006 AND IS ALSO APPLICABLE SINCE INCEPTION OF SEC TION 194 I BEING CLARIFICATORY IN NATURE. THE ITO (TDS) HAS ALSO REJ ECTED PLEA OF THE APPELLANT THAT FOR TRANSMISSION CHARGES PAID SECTI ON 194 C IS APPLICABLE INSTEAD OF SECTION 194 I (REFER PARA 9; PAGE 10 OF THE ORDER). ACCORDINGLY ITO(TDS) HAS HELD THAT THE APP ELLANT HAS FAILED TO DEDUCT TAX AT SOURCE AS PER PROVISIONS O F SECTION 194 I AND THEREFORE DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER SECTION 201 AND ALSO LIABLE TO INTEREST UNDER SECTION 201(1 A). THE APPELLANT CONTENDED BEFORE THE ITO (TDS) THAT TRANS MISSION CHARGES PAID BY THE APPELLANT IS IN THE NATURE OF S ERVICE CHARGES AND DO NOT FALL WITHIN THE AMBIT OF RENT. IT WAS F URTHER SUBMITTED THAT THE DEFINITION OF RENT HAS BEEN SUBSTITUTED WI TH EFFECT FROM PAGE 7 OF 17 13.07.2006 AND THEREFORE IS NOT APPLICABLE PRIOR TO THAT SINCE IT IS NOT CLARIFICATORY IN NATURE. BY AMENDMENT SCOPE OF RENT HAS BEEN ENLARGED. FINALLY IT WAS SUBMITTED THAT THE D EDUCTEE I.E. PGCIL HAS ALREADY PAID TAX ON TRANSMISSION CHARGES RECEIVED BY IT AND THEREFORE NO DEMAND UNDER SECTION 201(1) SHOULD BE ENFORCED. PERUSAL OF EXPLANATION TO SECTION 194 I I.E. DEFINITION OF RENT REVEALS THAT ANY ARRANGEMENT FOR USE OF LA ND OR BUILDING OR PLANT OR MACHINERY OR EQUIPMENT OR FURNITURE OR FITTING SHALL BE TREATED AS RENT FOR THE PURPOSE OF SECTION 194 I. P ERUSAL OF CLAUSE 5 OF BPTA AND 3.4 OF PPA REVEALS THAT TRANSMISSION CHARGES IS PAYABLE FOR UTILIZATION OF TRANSMISSION SYSTEM OWNE D BY PGCIL AND THEREFORE IS IN THE NATURE OF RENT. IN FACT THE CHARGES PAID ARE FOR FACILITY PROVIDED FOR TRANSMISSION OF POWER AND NOT FOR ANY SERVICES RENDERED AND THEREFORE THE TRANSMISSION CHARGES ARE PAYMENTS IN CONSIDERATION FOR ARRANGEMENT FOR FACIL ITY PROVIDED FOR TRANSMISSION OF POWER. ACCORDINGLY THE APPELLA NT WAS OBLIGATED TO DEDUCT TDS ON SUCH PAYMENT AS PER THE PROVISIONS OF SECTION 194 I OF THE INCOME TAX ACT WHICH HE HAS FAILED. AS REGARDS THE APPLICABILITY OF AMENDMENT W.E.F. 13.0 7.2006 OR FROM INCEPTION TO SECTION 194 I I AGREE WITH THE CONTE NTION OF THE AO THAT THE AMENDMENT IS CLARIFICATORY IN NATURE AND THEREFORE THE SAME IS APPLICABLE IN ALL THE YEARS UNDER CONSIDERA TION. THUS THE APPELLANT HAS FAILED TO DEDUCT TDS AS REQUIRED UNDE R INCOME TAX ACT AND THEREFORE IS DEEMED TO BE IN DEFAULT IN RESPECT OF TAX TO BE DEDUCTED AND CONSEQUENTLY ALSO LIABLE TO PAY INT EREST UNDER SECTION 201(1A). 9. THE ASSESSEE IS NOT SATISFIED BY THE STAND SO TA KEN BY THE CIT(A) AS WELL AND IS IN FURTHER APPEAL BEFORE US. 10. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED TH E MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CA SE AS ALSO THE APPLICABLE LEGAL POSITION. 11. WE FIND THAT THE POWER PURCHASE AGREEMENT ENTE RED INTO BY THE ASSESSEE WITH NTPC (COPY PLACED BEFORE US AT P AGES 15-27 OF THE PAPER-BOOK) SPECIFICALLY PROVIDES THAT POWER SHAL L BE MADE AVAILABLE BY THE NTPC AT THE BUSBARS OF THE STATION AND IT SH ALL BE OBLIGATION AND RESPONSIBILITY OF THE CSEB TO MAKE THE REQUIRED ARR ANGEMENT FOR PAGE 8 OF 17 EVACUATION OF POWER FROM SUCH DELIVERY POINTS OF NT PC. IT IS PURSUANT TO THESE OBLIGATIONS THAT THE ASSESSEE ALONG WITH OTHER BULK POWER BENEFICIARIES NAMELY M P STATE ELECTRICITY BOARD GUJARAT ELECTRICITY BOARD MAHARASHTRA STATE ELECTRICITY BOARD ELECTRI CITY DEPARTMENT GOVERNMENT OF GOA ADMINISTRATION OF DAMAN & DIU A ND ELECTRICITY DEPARTMENT ADMINISTRATION OF DADRA AND NAGAR HAVE LI HAS ENTERED INTO A BULK POWER TRANSMISSION AGREEMENT WITH PGC IL. THE PREAMBLE OF THIS AGREEMENT INTER ALIA NOTES THAT THE PGCIL IS DESIROUS TO TRANSMIT ENERGY FROM THE CENTRAL SECTOR POWER STATI ON(S) TO THE BULK POWER BENEFICIARIES AND THAT THE SAID BULK POWER BE NEFICIARIES ARE DESIROUS OF RECEIVING THE SAME THROUGH POWERGRID TR ANSMISSION SYSTEM ON MUTUALLY AGREED TERMS AND CONDITIONS. TH IS AGREEMENT PROVIDES THAT POWERGRID SHALL OPERATE AND MAINTAIN THE TRANSMISSION SYSTEM BELONGING TO IT IN THE WESTERN REGION AS PER AGREED GUIDELINES AND THE DIRECTIVES OF THE WESTERN REGIONAL ELECTRICITY BOARD AND THE REGIONAL LOAD DISPATCH CENTERS AND C OOPERATE WITH THE BULK POWER BENEFICIARIES OF THE REGION SO AS TO MA INTAIN THE SYSTEM PARAMETERS WITHIN ACCEPTABLE/ REASONABLE LIMITS EXC EPT WHERE IT IS NECESSARY TO TAKE MEASURES TO PREVENT IMMINENT DAMA GE TO ANY EQUIPMENT. IN RESPECT OF THESE SERVICES THE BULK POWER BENEFICIARIES ARE TO PAY TO PGCIL A MONTHLY CHARGES COMPUTED IN T HE MANNER SET OUT IN CLAUSE 9 OF THE SAID AGREEMENT. THIS CLAUSE IN TURN REFERS TO FORMULA SET OUT IN A.4 OF ANNEXURE 1 WHICH REFERS T O THE SAME RATIO OF AGREED ANNUAL CHARGES DIVIDED BY 12 AS IS BETWEEN P OWER TRANSMITTED TO EACH BENEFICIARY TO TOTAL SALES FROM THAT PARTIC ULAR POINT OF DELIVERY. IN OTHER WORDS WHILE THE ANNUAL CHARGES ARE FIXED THESE ARE DIVIDED BETWEEN THE BENEFICIARIES IN THE SAME RATIO AS IS R ATIO OF POWER EVACUATED BY A BENEFICIARY TO THE TOTAL SALE OF POW ER FROM THAT DELIVERY POINT. IT IS HOWEVER NOT IN DISPUTE THAT THE TR ANSMISSION LINES ARE IN THE PHYSICAL CONTROL OF PGCIL THESE ARE MAINTAINED AND OPERATED BY THE PGCIL AND SO FAR AS THE ASSESSEE IS CONCERNED ITS INTEREST IN THE PAGE 9 OF 17 TRANSMISSION LINES IS RESTRICTED TO THE FACT THAT E LECTRICAL POWER PURCHASED BY THE ASSESSEE SIMULTANEOUSLY ALONGWITH ELECTRICAL POWER PURCHASED BY OTHER BULK POWER BENEFICIARIES IS TRA NSMITTED THROUGH THESE TRANSMISSION LINES. THE WAY IT WORKS IS LIKE THIS. THE POWER AVAILABLE AT THE DELIVERY POINTS COLLECTIVELY FOR ALL THE BULK POWER BENEFICIARIES IS LOADED FOR TRANSMISSION ON THESE TRANSMISSION LINES OR POWERGRID AND EACH OF THE BENEFICIARIES IS ALLOWED TO UTILIZE THE POWER TO THE EXTENT ALLOCATED TO HIM. IT IS NOT THE CASE THAT PURCHASES BY EACH OF THE BULK BENEFICIARY CAN BE PHYSICALLY IDENTIFIE D AND THAT PARTICULAR BENEFICIARY IS ONLY ALLOWED TO USE THAT PHYSICALLY IDENTIFIED PORTION OF POWER. STRICTLY SPEAKING THEREFORE IT IS NOT THE TRANSMISSION OF POWER FROM ONE POINT TO ANOTHER BUT AVAILABILITY OF POWER ON THE ENTIRE POWER GRID OR TRANSMISSION LINES ENABLING THE BENEFICIARY TO UTILIZE THE POWER TO THE EXTENT OF HIS ALLOCATION. ON THESE FACTS T HE QUESTION THAT REQUIRES OUR ADJUDICATION IS WHETHER OR NOT THE PA YMENT FOR TRANSMISSION CHARGES CAN BE TERMED AS RENT FOR TH E PURPOSES OF SECTION 194 I OF THE ACT. 12. LET US NOW TAKE A LOOK AT THE STATUTORY PROVISI ON WITH REGARD TO TAX WITHHOLDING FROM RENT PAYMENTS WHICH IS SET OUT IN SECTION 194 I OF THE ACT AND ANALYZE THE SAME. SECTION 194I PROVIDE S AS FOLLOWS: ANY PERSON NOT BEING AN INDIVIDUAL OR A HINDU UNDI VIDED FAMILY WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY INCOME BY WAY OF RENT SHALL AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE WHICHEVER IS EARLIER DEDUCT INCOME-TAX THERE ON AT THE RATE OF (A) TWO PER CENT. FOR THE USE OF ANY MACHINERY OR PLANT OR EQUIPMENT; AND (B) TEN PER CENT. FOR THE USE OF ANY LAND OR BUILDING (INCL UDING FACTORY BUILDING) OR LAND APPURTENANT TO A BUILDING (INCLUDING FACTORY B UILDING) OR FURNITURE OR FITTINGS: PROVIDED THAT NO DEDUCTION SHALL BE MADE UNDER THIS SECTION WHERE THE AMOUNT OF SUCH INCOME OR AS THE CASE MAY BE THE A GGREGATE OF THE AMOUNTS OF SUCH INCOME CREDITED OR PAID OR LIKELY TO BE CRE DITED OR PAID DURING THE PAGE 10 OF 17 FINANCIAL YEAR BY THE AFORESAID PERSON TO THE ACCOU NT OF OR TO THE PAYEE DOES NOT EXCEED [ONE HUNDRED EIGHTY THOUSAND RUPEES] : PROVIDED FURTHER THAT AN INDIVIDUAL OR A HINDU UNDI VIDED FAMILY WHOSE TOTAL SALES GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS OR PROFESSION CARRIED ON BY HIM EXCEED THE MONETARY LIMITS SPECIFIED UNDER C LAUSE (A) OR CLAUSE (B) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WHICH SUCH INCOME BY WAY OF RENT IS CREDITE D OR PAID SHALL BE LIABLE TO DEDUCT INCOME-TAX UNDER THIS SECTION. EXPLANATION : FOR THE PURPOSES OF THIS SECTION [( I) 'RENT' MEANS ANY PAYMENT BY WHATEVER NAME CALLED UNDER ANY LEASE SUB-LEASE TENANCY OR ANY OTHER AGREEMENT OR ARRANGEMENT FOR THE USE OF ( EITHER SEPARATELY OR TOGETHER) ANY (A) LAND; OR (B) BUILDING (INCLUDING FACTORY BUILDING); OR (C) LAND APPURTENANT TO A BUILDING (INCLUDING FACTO RY BUILDING); OR (D) MACHINERY; OR (E) PLANT; OR (F) EQUIPMENT; OR (G) FURNITURE; OR (H) FITTINGS WHETHER OR NOT ANY OR ALL OF THE ABOVE ARE OWNED BY THE PAYEE;] (II) WHERE ANY INCOME IS CREDITED TO ANY ACCOUNT W HETHER CALLED 'SUSPENSE ACCOUNT' OR BY ANY OTHER NAME IN THE BOOKS OF ACCO UNT OF THE PERSON LIABLE TO PAY SUCH INCOME SUCH CREDITING SHALL BE DEEMED TO BE CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE AND THE PROVISIONS OF T HIS SECTION SHALL APPLY ACCORDINGLY. 13. THE CASE OF THE ASSESSING OFFICER WHICH HAS B EEN SUSTAINED IN THE FIRST APPEAL IS THAT SINCE EXPRESSION 'REN T' FOR THE PURPOSE OF SECTION 194 I INCLUDES ANY PAYMENT BY WHATEVER N AME CALLED UNDER ANY LEASE SUB-LEASE TENANCY OR ANY OTHER AGREEMEN T OR ARRANGEMENT FOR THE USE OF MACHINERY PLANT OR EQUIPMENT AND S INCE THE ASSESSEE HAS MADE THE PAYMENTS TOWARDS TRANSMISSION CHARGES FOR USE OF THE MACHINERY PLANT AND EQUIPMENT COLLECTIVELY CONSTIT UTING MODE OF TRANSMISSION OF POWER THE PROVISIONS OF SECTION 1 94 I COME INTO PLAY ON THE FACTS OF THIS CASE. PAGE 11 OF 17 14. THE CORE ISSUE THAT WE MUST DEAL WITH IS WHETHE R THE PRESENT ARRANGEMENT UNDER THE BULK POWER TRANSMISSION AGREE MENT CAN BE TERMED CAN BE COVERED BY THE SCOPE OF EXPRESSION AN Y OTHER AGREEMENT OR ARRANGEMENT FOR THE USE OF APPEARING IN EXPLAN ATION (I) TO SECTION 194 I. 15. EXPLANATION (I) TO SECTION 194 I AS WE HAVE NO TED ABOVE DEFINES RENT AS ANY PAYMENT BY WHATEVER NAME CALLED UNDER ANY LEASE SUB- LEASE OR TENANCY OR ANY OTHER AGREEMENT OR ARRANGE MENT FOR THE USE OF LAND BUILDING PLANT MACHINERY OR EQUIPMENT ETC. AS EVIDENT FROM A PLAIN READING OF THE AGREEMENTS UNDER WHICH IMPUG NED PAYMENTS HAVE BEEN MADE THE PAYMENTS HAVE BEEN MADE FOR THE SERVICES OF TRANSMISSION OF ELECTRICITY AND NOT THE USE OF TRAN SMISSION WIRES PER SE. IT IS A SIGNIFICANT FACT THAT THESE TRANSMISSIO N LINES ARE NOT ONLY BEING USED FOR TRANSMISSION OF ELECTRICITY TO THE A SSESSEE BUT ALSO FOR TRANSMISSION TO ELECTRICITY TO VARIOUS OTHER ENTITI ES. THE TRANSMISSION LINES CONTINUE TO BE NOT ONLY UNDER CONTROL AND POS SESSION OF THE PGCIL IN LEGAL TERMS BUT WHAT IS MORE IMPORTANT THESE TRANSMISSION LINES ARE EFFECTIVELY IN THE CONTROL OF PGCIL WITH OUT ANY INVOLVEMENT OF THE ASSESSEE IN ACTUAL OPERATIONS OF THE SAME. O N THESE FACTS IN OUR HUMBLE UNDERSTANDING THE ASSESSEE HAS MADE THE PAY MENTS FOR TRANSMISSION OF ELECTRICITY IN WHICH TRANSMISSION L INES HAVE BEEN USED RATHER THAN FOR THE USE OF TRANSMISSION LINES PER SE . THE PAYMENTS COULD BE SAID TO HAVE BEEN MADE FOR THE USE OF TRA NSMISSION LINES IN A CASE IN WHICH THE OBJECT OF CONSIDERATION FOR WHI CH PAYMENTS ARE MADE WAS THE USE OF TRANSMISSION LINES SIMPLICTOR AND SUCH A USE BY THE ASSESSEE DOES NOT EXTEND BEYOND THE TRANSMISSIO N OF ELECTRICITY THROUGH SUCH LINES IN THE SENSE THAT THE SAME TRANS MISSION LINES CONTINUE TO BE IN THE CONTROL OF PGCIL FOR TRANSMIS SION OF ELECTRICITY FOR OTHER ENTITIES AND FOR ALL PRACTICAL PURPOSES. EVEN AS ELECTRICITY PAGE 12 OF 17 PURCHASED BY THE ASSESSEE IS TRANSMITTED TO THE ASS ESSEE FROM THE NTPC BUSBAR TO ITS LANDING POINTS THE SAME TRANSMI SSION LINES CONTINUE TO BE ENGAGED IN SIMILAR TRANSMISSION OF E LECTRICITY FOR OTHER ENTITIES AND THE ASSESSEE HAS NO SAY IN THE MANNER IN WHICH SUCH TRANSMISSION LINES CAN BE CONTROLLED AND USED BY TH E PGCIL. UNDOUBTEDLY FOR THE PURPOSE OF AN ARRANGEMENT BEIN G TERMED AS IN THE NATURE OF RENT FOR THE PURPOSE OF SECTION 194 I THE CONTROL AND POSSESSION IN LEGAL TERMS OF AN ASSET MAY NOT N OT NEEDED TO BE WITH THE PERSON BENEFITING FROM THE ASSET IN QUESTION I T IS A CONDITION PRECEDENT FOR INVOKING SECTION 194 I THAT THE ASSET FOR THE USE OF WHICH THE PAYMENT IN QUESTION IS MADE SHOULD HAVE SOME ELEMENT OF ITS CONTROL BY THE ASSESSEE. HERE IS A CASE IN WH ICH THE ASSESSEE HAS NO CONTROL OVER THE OPERATIONS OF THE TRANSMISSION LINES AND ALL THAT HE GETS FROM THE ARRANGEMENTS IS THAT HE CAN DRAW T HE ELECTRICAL POWER PURCHASED FROM PGCILS TRANSMISSION LINES IN AN AGR EED MANNER. 16. WHILE ON THE ISSUE OF DISTINCTION BETWEEN USE OF AN ASSET AND BENEFIT FROM AN ASSET WE MAY USEFULLY REFER TO THE FOLLOWI NG DISTINCTION BROUGHT OUT BY THE KARNATAKA HIGH COURT BETWEEN LEASING OUT OF EQUIPMENT AND THE USE OF EQUIPMENT BY ITS CUSTOMER. THIS WAS DONE IN THE CASE OF LAKSHMI AUDIO VISUAL INC. VS. ASSTT. COMMR. OF COMMERCIAL TAXES ( 124 STC 426) WHICH HAS BEEN FOLLOWED BY HONBLE DELHI HIGH COURT IN THE CA SE OF ASIA SATELLITE TELECOMMUNICATIONS LTD (332 ITR 340) IN THE FOLLOW ING TERMS : '9. THUS IF THE TRANSACTION IS ONE OF LEASING/HIRIN G/LETTING SIMPLICITER UNDER WHICH THE POSSESSION OF THE GOODS I.E. EFFE CTIVE AND GENERAL CONTROL OF THE GOODS IS TO BE GIVEN TO THE CUSTOMER AND THE CUSTOMER HAS THE FREEDOM AND CHOICE OF SELECTING THE MANNER TIM E AND NATURE OF USE AND ENJOYMENT THOUGH WITHIN THE FRAMEWORK OF THE A GREEMENT THEN IT WOULD BE A TRANSFER OF THE RIGHT TO USE THE GOODS A ND FALL UNDER THE EXTENDED DEFINITION OF 'SALE'. ON THE OTHER HAND I F THE CUSTOMER ENTRUSTS TO THE ASSESSEE THE WORK OF ACHIEVING A CERTAIN DES IRED RESULT AND THAT INVOLVES THE USE OF GOODS BELONGING TO THE ASSESSEE AND RENDERING OF SEVERAL OTHER SERVICES AND THE GOODS USED BY THE AS SESSEE TO ACHIEVE THE DESIRED RESULT CONTINUE TO BE IN THE EFFECTIVE AND GENERAL CONTROL OF THE ASSESSEE THEN THE TRANSACTION WILL NOT BE A TRANS FER OF THE RIGHT TO USE PAGE 13 OF 17 GOODS FALLING WITHIN THE EXTENDED DEFINITION OF 'SA LE'. LET ME NOW CLARIFY THE POSITION FURTHER WITH AN ILLUSTRATION WHICH IS A VARIATION OF THE ILLUSTRATION USED BY THE ANDHRA PRADESH HIGH COURT IN THE CASE OF RASHTRIYA ISPAT NIGAM LTD. VS. CTO. (I) A CUSTOMER ENGAGES A CARRIER (TRANSPORT OPERATO R) TO TRANSPORT ONE CONSIGNMENT (A FULL LORRY LOAD) FROM PLACE A TO B FOR AN AGREED CONSIDERATION WHICH IS CALLED FREIGHT CHARGES OR LO RRY HIRE. THE CARRIER SENDS ITS LORRY TO THE CUSTOMERS DEPOT PICKS UP T HE CONSIGNMENT AND PROCEEDS TO THE DESTINATION FOR DELIVERY OF THE CON SIGNMENT. THE LORRY IS USED EXCLUSIVELY FOR THE CUSTOMERS CONSIGNMENT FRO M THE TIME OF LOADING TO THE TIME OF UNLOADING AT DESTINATION. C AN IT BE SAID THAT RIGHT TO USE OF THE LORRY HAS BEEN TRANSFERRED BY T HE CARRIER TO THE CUSTOMER ? THE ANSWER IS OBVIOUSLY IN THE NEGATIVE AS THERE IS NO TRANSFER OF THE 'USE OF THE LORRY' FOR THE FOLLOWIN G REASONS : (I) THE LORRY IS NEVER IN THE CONTROL LET ALONE EFFECTIVE CONTRO L OF THE CUSTOMER; (II) THE CARRIER DECIDES HOW WHEN AND WHERE THE LORRY M OVES TO THE DESTINATION AND CONTINUES TO BE IN EFFECTIVE CONTR OL OF THE LORRY; (III) THE CARRIER CAN AT ANY POINT (OF TIME OR PLACE) TRA NSFER THE CONSIGNMENT IN THE LORRY TO ANOTHER LORRY; OR THE CARRIER MAY U NLOAD THE CONSIGNMENT EN ROUTE IN ANY OF HIS GODOWNS TO BE P ICKED UP LATER BY SOME OTHER LORRY ASSIGNED BY THE CARRIER FOR FURTHE R TRANSPORTATION AND DELIVERY AT DESTINATION. (II) ON THE OTHER HAND LET US CONSIDER THE CASE OF A CUSTOMER (SAY A FACTORY) ENTERING INTO A CONTRACT WITH THE TRANSPOR T OPERATOR UNDER WHICH THE TRANSPORT OPERATOR HAS TO PROVIDE A LORRY TO THE CUSTOMER BETWEEN THE HOURS 8 A.M. TO 8 P.M. AT THE CUSTOMER S FACTORY FOR ITS USE AT A FIXED HIRE PER DAY OR HIRE PER KM. SUBJECT TO AN ASSURED MINIMUM FOR A PERIOD OF ONE MONTH OR ONE WEEK OR EVEN ONE D AY; AND UNDER THE CONTRACT THE TRANSPORT OPERATOR IS RESPONSIBLE FOR MAKING REPAIRS APART FROM PROVIDING A DRIVER TO DRIVE THE LORRY AND FILL ING THE VEHICLE WITH DIESEL FOR RUNNING THE LORRY. THE TRANSACTION INVOL VES AN IDENTIFIED VEHICLE BELONGING TO THE TRANSPORT OPERATOR BEING D ELIVERED TO THE CUSTOMER AND THE CUSTOMER IS GIVEN THE EXCLUSIVE A ND EFFECTIVE CONTROL OF THE VEHICLE TO BE USED IN ANY MANNER AS IT DEEMS FIT; AND DURING THE PERIOD WHEN THE LORRY IS WITH THE CUSTOMER THE TRA NSPORT OPERATOR HAS NO CONTROL OVER IT. THE TRANSPORT OPERATOR RENDERS NO OTHER SERVICE TO THE CUSTOMER. .' 17. IT IS THUS CLEAR THAT IN A SITUATION IN WHICH T HE PAYMENT IN MADE FOR THE USE OF AN ASSET SIMPLICITER WHETHER WITH C ONTROL AND POSSESSION IN ITS LEGAL SENSE OR NOT THE PAYMENT C OULD BE SAID TO BE FOR THE USE OF AN ASSET. HOWEVER IN A SITUATION IN WHICH THE PAYMENT IS MADE ONLY FOR THE PURPOSE A SPECIFIC ACT I.E. POWE R TRANSMISSION IN THIS CASE AND EVEN IF AN ASSET IS USED IN THE SAID PROCESS THE PAYMENT PAGE 14 OF 17 CANNOT BE SAID TO BE FOR THE USE OF AN ASSET. WHEN CONTROL OF THE ASSET (TRANSMISSION LINES IN THE PRESENT CASE) ALWAYS REM AINS WITH THE PGCIL ANY PAYMENT MADE TO THE PGCIL FOR TRANSMISSI ON OF POWER ON THE TRANSMISSION LINES AND INFRASTRUCTURE OWNED CON TROLLED AND IN PHYSICAL POSSESSION OF PGCIL CAN BE SAID TO HAVE BE EN MADE FOR THE USE OF THESE TRANSMISSION LINES OR OTHER RELATED I NFRASTRUCTURE. VIEWED IN THIS PERSPECTIVE SECTION 194 I HAS NO AP PLICATION SO FAR AS THE IMPUGNED PAYMENTS FOR TRANSMISSION OF ELECTRICI TY IS CONCERNED. FOR THIS SHORT REASON ALONE THE IMPUGNED DEMANDS MU ST BE HELD TO UNSUSTAINABLE IN LAW. 18. WE HAVE TAKEN NOTE OF LEARNED DEPARTMENTAL REPR ESENTATIVES RELIANCE ON HONBLE DELHI HIGH COURTS JUDGMENT IN THE CASE OF DCIT VS JAPAN AIRLINES (325 ITR 298) WHICH IN TURN FOLLO WS ITS EARLIER DECISION IN THE CASE OF UNITED AIRLINES VS CIT (287 ITR 281) IN SUPPORT OF THE PROPOSITION THAT EVEN IN A SITUATION IN WHICH LANDI NG AND PARKING CHARGES ARE PAID BY AIRLINES TO THE AIRPORT AUTHORI TY AND WHEN SUCH CHARGES ARE NOT IN RESPECT OF THE SPECIFIC AREA OF LAND THE PROVISIONS OF SECTION 194 I COME INTO PLAY. BY THE SAME LOGIC ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE TRANSMISSION C HARGES ARE PAID BY THE ASSESSEE EVEN THOUGH THE SAME MAY NOT PERTAIN TO SPECIFIC TRANSMISSION LINES WHICH MAY BE SIMULTANEOUSLY USED BY MORE THAN ONE PERSONS THE PROVISIONS FOR TAX DEDUCTION AT SOURCE FROM RENT UNDER SECTION 194 I BE HELD TO BE APPLICABLE. WE ARE UNA BLE TO SEE ANY MERITS IN THIS SUBMISSION. WHEN AN AIRCRAFT IS PARKED IN A PORTION OF LAND IN THE AIRPORT SUCH A PORTION OF LAND COULD STILL BE VIEWED AS BEING EFFECTIVELY USED BY THE AIRLINES OWNING THE AIRCRAF T AND THE SAME IS THE POSITION WITH REGARD TO THE LANDING STRIP. LEARNED DEPARTMENTAL REPRESENTATIVE HAS ALSO REFERRED TO THE DECISION OF HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF KRISHNA OBEROI V S UNION OF INDIA PAGE 15 OF 17 (257 ITR 105) BUT WE SEE NO MERITS IN THIS DEFENC E EITHER. THIS CASE ONLY DEALS WITH THE QUESTION WHETHER PAYMENT FOR HO TEL ROOMS WILL BE COVERED BY THE DEFINITION OF RENT BUT THEN IT WAS NOT AND COULD NOT HAVE BEEN IN DISPUTE THAT THE PAYMENT FOR HOTEL RO OM CONSTITUTES PAYMENT FOR THE USE OF AN ASSET THE PRECISE POI NT OF CONTROVERSY IN THE PRESENT DECISION. CLEARLY A HOTEL CUSTOMER PA YS FOR THE USE OF OR THE RIGHT TO THE USE OF THE HOTEL ROOM. IT IS FOR THE SAME DISTINGUISHING FEATURE THAT DECISIONS IN THE CASES OF JC BANSAL VS TRO (123 ITD 245) AND CIT VS REBOOK INDIA CO (163 TAXMA N 61) ARE NOT RELEVANT IN THE PRESENT CONTEXT. 19. IT IS ALSO IMPORTANT TO BEAR IN MIND THE FACT THAT BY THE VIRTUE OF INSERTION OF EXPLANATION TO SECTION 191 WITH EFF ECT FROM 1 ST JUNE 2003 A PERSON CAN BE TREATED AS AN ASSESSEE IN DEF AULT UNDER SECTION 201(1) ONLY WHEN THERE IS LAPSE IN DEDUCTION OF TAX AT SOURCE ON HIS PART AND IN ADDITION TO THIS LAPSE THE RECIPIENT OF INCOME HAS ALSO FAILED TO PAY SUCH TAX DIRECTLY. THE REASONS ARE N OT DIFFICULT TO FATHOM. PROCEEDINGS UNDER SECTION 201(1) ARE NOT PENAL PROC EEDINGS. THESE ARE VICARIOUS PROCEEDINGS TO MAKE GOOD THE SHORTFALL IN TAX COLLECTION AND WHEN THE TAX LIABILITY IS DULY DISCHARGED BY THE RE CIPIENT OF INCOME EMBEDDED IN THE PAYMENT SUCH A VICARIOUS LIABILITY CANNOT BE INVOKED. THE LAPSE OF NON DEDUCTION OR SHORT DEDUCTION OF TA X AT SOURCE IS TO BE VISITED WITH SEVERAL CONSEQUENCES. THE FIRST AND FO REMOST CONSEQUENCE IS THAT THE TAX DEDUCTOR HAS TO MAKE GOOD THE SHORT FALL IN TAX DEDUCTION AND THE TAX DEDUCTOR ALSO HAS TO COMPENSATE THE REV ENUE BY WAY OF INTEREST FOR THE PERIOD OF LATE REALIZATION OF THIS TAX TO THE REVENUE AUTHORITIES. THESE PROVISIONS CONTAINED IN S. 201( 1) AND 201(1A) ARE SET OUT IN CHAPTER XVII-B TITLED AS COLLECTION AND RECOVERY OF TAX. THE NEXT SET OF CONSEQUENCES ARE CONTAINED IN S. 271C A ND S. 276B COVERED BY CHAPTER XXIPENALTIES IMPOSABLE AND CHAPTER XX IIOFFENCES AND PROSECUTIONS RESPECTIVELY. SEC. 276B AS IT STANDS NOW IS NOT APPLICABLE PAGE 16 OF 17 ON THE FACTS OF THIS CASE WHICH COMES TO THE PLAY O NLY WHEN THE ASSESSEE HAS DEDUCTED THE TAX AT SOURCE BUT HE DOES NOT PAY OR DOES NOT PAY IN TIME THE TAXES SO DEDUCTED AT SOURCE. SEC. 271C DEALS WITH LEVY OF PENALTY FOR TOTAL OR PARTIAL FAILURE TO DEDUCT T AX AT SOURCE I.E. FOR NON-DEDUCTION AND SHORT-DEDUCTION OF TAX AT SOURCE. THIS PROVISION IS CLEARLY A PENALTY PROVISION WHICH IS APPLICABLE FOR THE CASES OF TAX DEDUCTORS NOT DISCHARGING WHOLLY OR PARTIALLY ST ATUTORY OBLIGATIONS OF DEDUCTING TAXES AT SOURCE BUT THEN CONSIDERATIONS WHICH ARE RELEVANT FOR EXAMINING A CASE HAVING BEEN MADE OUT FOR IMPOS ITION OF PENALTY ARE AS IS THE SETTLED LEGAL POSITION ALTOGETHER D IFFERENT AND THE DIFFERENT YARDSTICKS FOR SUCH A CASE APPLY. HOWEVE R UNLIKE SECTION 271 C SECTION 201 (1) IS NOT OF THE PENALTY NATURE AN D THEREFORE THE CORE CONSIDERATION FOR INVOKING SECTION 201(1) IS NOT TH E LAPSE ON THE PART OF THE TAX DEDUCTOR BUT LOSS OF REVENUE TO THE EXC HEQUER. AS LONG AS TAXES PAYABLE BY THE RECIPIENT OF INCOME ARE PAID THE PROVISIONS OF SECTION 201(1) CANNOT BE PRESSED INTO SERVICE. THE AUTHORITIES BELOW WERE THUS QUITE UNJUSTIFIED IN BRUSHING ASIDE THE A SSESSEES CONTENTIONS TO THE EFFECT THAT SINCE PGCIL HAS ALRE ADY DISCHARGED ALL HIS INCOME TAX OBLIGATIONS DEMANDS UNDER SECTION 2 01 (1) CANNOT BE RAISED AT ALL. HOWEVER NOW THAT WE HAVE HELD ON M ERITS THAT PAYMENTS MADE FOR TRANSMISSION OF ELECTRICITY BY THE TRANSMI SSION LINES OWNED BY PGCIL DONOT CONSTITUTE PAYMENT FOR RENT UNDER SECTI ON 194 I IT IS NOT REALLY NECESSARY TO GO INTO THIS ASPECT OF THE MATT ER. THE QUESTION AS TO WHETHER THE DEFINITION OF EXPRESSION RENT INT RODUCED IN SECTION 194 I WITH EFFECT FROM JULY 2006 IS PROSPECTIVE OR CLA RIFICATORY IS ALSO GIVEN OUR FINDINGS THAT EVEN ON THE TOUCHSTONE OF THE DEFINITION OF RENT UNDER THE AFORESAID PROVISION THE PAYMENT FOR TRAN SMISSION OF POWER WILL NOT CONSTITUTE RENT NOT REALLY RELEVANT IN THE PRESENT CONTEXT AND WE SEE NO NEED TO DEAL WITH THE SAME EITHER. 20. IN VIEW OF THE ABOVE DISCUSSIONS AND BEARING I N MIND ENTIRETY OF PAGE 17 OF 17 THE CASE WE ARE OF THE CONSIDERED VIEW THAT THE PR OVISIONS OF SECTION 194 I CANNOT APPLY IN RESPECT OF PAYMENTS MADE FOR TRANSMISSION OF POWER BY THE PGCIL ON THE FACTS OF THE CASE BEFORE US. ACCORDINGLY THE IMPUGNED DEMANDS RAISED UNDER SECTIONS 201(1) R.W.S . 194 I AND 201(1A) R.W.S. 201(1A) ARE CANCELLED. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 21. IN THE RESULT THE APPEALS ARE ALLOWED. PRONOU NCED IN THE OPEN COURT TODAY ON 30 TH DAY OF NOVEMBER 2011. SD/- SD/- (VIJAY PAL RAO ) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; 30 TH DAY OF NOVEMBER 2011 . FIT FOR PUBLICATION (VIJAY PAL RAO ) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER