DCIT, Jaipur v. M/S JAIPUR VIDYUT VITRAN NIGAM LTD., Jaipur

ITA 224/JPR/2012 | 2008-2009
Pronouncement Date: 21-11-2014 | Result: Dismissed

Appeal Details

RSA Number 22423114 RSA 2012
Assessee PAN AABCJ6373K
Bench Jaipur
Appeal Number ITA 224/JPR/2012
Duration Of Justice 2 year(s) 8 month(s) 14 day(s)
Appellant DCIT, Jaipur
Respondent M/S JAIPUR VIDYUT VITRAN NIGAM LTD., Jaipur
Appeal Type Income Tax Appeal
Pronouncement Date 21-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 21-11-2014
Assessment Year 2008-2009
Appeal Filed On 07-03-2012
Judgment Text
IN THE INCOMETAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA) I.T.A. NO. 224/JP/2012 ASSTT. YEAR- 2008-09 PAN NO. AABCJ 6373 K THE D.C.I.T. M/S JAIPUR VIDYUT VITRAN NIGAM LTD. CIRCLE-6 JAIPUR. VRS. JANPATH JYOTI NAGAR JAIP UR. (APPELLANT) (RESPONDENT) DEPARTMENT BY :- SHRI A.K. KHANDELWAL. ASSESSEE BY :- SHRI P.C. PARWAL. DATE OF HEARING : 30/09/2014 DATE OF PRONOUNCEMENT : 21/11/2014 O R D E R PER: T.R. MEENA A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 08/12/2011 OF THE LEARNED C.I.T.(A)-II JAIPUR FOR T HE A.Y. 2008-09. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN: (I) DELETING ADDITION OF RS. 1 09 018/- MADE ON ACC OUNT OF DEPOSITING THE PF/ESI PAYMENT BEYOND THE PRESCRIBED TIME DESPITE THE FACT THAT AS PER SECTION 36(1)(VA) EMPLOYEES CONTRIBUTION SHOULD HAVE BEEN DEPOSITED I N TIME AS PRESCRIBED IN THE RELEVANT LAW. SECTION 43B PERMITS DELAYED PAYMENT IF PAID BEFORE FILING THE ROI ITA 224/JP/2012 DCIT VS. M/S JVVNL 2 AS PER SECTION 139(1) IN CASE OF EMPLOYERS CONTRIB UTION NOT IN THE CASE OF EMPLOYEES CONTRIBUTION. (II) HOLDING THAT PAYMENTS OF RS. 2 81 23 73 125/- ON ACCOUNT OF TRANSMISSION/WHEELING/SLDC CHARGES TO RRVPN WERE NOT FOR TECHNICAL SERVICES LIABLE FOR MAK ING TDS U/S 194J OF THE I.T. ACT AS SUCH PROVISION OF SECTION 40(A)(IA) ARE NOT APPLICABLE. (III) DELETING THE ADDITION OF RS. 1 73 07 800/- MA DE ON ACCOUNT OF FRONT END FEES PAID TO HUDCO FOR RAISING THE LOAN HOLDING IT TO BE REVENUE EXPENDITURE. 2. THE FIRST GROUND OF APPEAL IS AGAINST DELETING A DDITION OF RS. 1 09 018/- MADE ON ACCOUNT OF DEPOSITING THE PF/ES I PAYMENT BEYOND THE PRESCRIBED TIME DESPITE THE FACT THAT AS PER SE CTION 36(1)(VA) EMPLOYEES CONTRIBUTION SHOULD HAVE BEEN DEPOSITED I N TIME AS PRESCRIBED IN THE RELEVANT LAW. SECTION 43B PERMITS DELAYED PAY MENT IF PAID BEFORE FILING THE ROI AS PER SECTION 139(1) IN CASE OF EMP LOYERS CONTRIBUTION NOT IN THE CASE OF EMPLOYEES CONTRIBUTION. IN THIS CASE THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COMPANY IS ENGAG ED IN DISTRIBUTION AND SALE OF ELECTRICITY. THE ASSESSEE COMPANY E-FILED I TS RETURN OF INCOME ON 27/09/2008 DECLARING TOTAL LOSS OF RS. 1 43 75 48 7 37/-. THIS CASE WAS SCRUTINIZED U/S 143(3) OF THE INCOME TAX ACT 1961 ( HEREINAFTER REFERRED AS THE ACT). THE LEARNED ASSESSING OFFICER OBSERVED THAT AS PER ANNEXURE- ITA 224/JP/2012 DCIT VS. M/S JVVNL 3 C-3 OF TAX AUDIT REPORT THE ASSESSEE FAILED TO DEP OSIT EMPLOYEES ESI CONTRIBUTION IN FEW OF CASES AMOUNTING TO RS. 1 09 0 18/-. IN RESPECT OF VARIOUS UNITS/BRANCHES WITHIN THE PRESCRIBED TIME LI MIT AS PER PROVISIONS OF THE RELEVANT ACT AND ADDITION ON THIS ACCOUNT IS LI ABLE TO BE MADE. THE LEARNED ASSESSING OFFICER ADDED BACK THIS AMOUNT AS PER PROVISIONS OF SECTION 36(1)(VA) READ WITH SECTION 2(24)(X) OF THE ACT. 3. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASSE SSING OFFICER THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) W HO HAD ALLOWED THE APPEAL ON THE GROUND THAT THE ASSESSEE MADE PAYMENT BEFORE DUE DATE OF RETURN BY RELYING ON THE VARIOUS DECISIONS OF THE H ON'BLE HIGH COURT REFERRED ON PAGE 3 OF THE ASSESSMENT ORDER. 4. NOW THE REVENUE IS IN APPEAL BEFORE US AND THE LE ARNED DR RELIED UPON THE RECENT DECISION OF THE HONBLE GUJARAT HIG H COURT IN THE CASE OF CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION 366 ITR ITR 170 (GUJ) AND ARGUED THAT IT SHOULD BE PAID AS PER THE DATE P RESCRIBED IN THE RELEVANT ACT. THEREFORE THE SAME MAY BE REVERTED. 5. AT THE OUTSET THE LEARNED A.R. FOR THE ASSESSEE RELIED UPON THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. UDAIPUR DUGDH UDPADAK SAHKARI SANGH LTD. 366 ITR 163 (RAJ.) AND ARGUED THAT THE ASSESSEE HAS PAID EMPLOYEES CONTRI BUTION TOWARDS ESI ITA 224/JP/2012 DCIT VS. M/S JVVNL 4 PAID BEFORE DUE DATE OF RETURN THEREFORE IT IS AL LOWABLE. THE HONBLE JURISDICTIONAL HIGH COURT DECISION IS IN FAVOUR OF THE ASSESSEE AS THE ASSESSEE SHOULD HAVE PAID THIS AMOUNT BEFORE DUE DA TE OF RETURN IS ALLOWABLE U/S 43B OF THE ACT. WE CONFIRM THE ORDER O F THE LEARNED CIT(A). 6. THE SECOND GROUND OF APPEAL IS AGAINST PAYMENT OF RS. 281 23 73 125/- ON ACCOUNT OF TRANSMISSION/WHEELING /SLDC CHARGES TO RRVPN WERE NOT FOR TECHNICAL SERVICES LIABLE FOR MAK ING TDS U/S 194J OF THE ACT AND PROVISIONS OF SECTION 40(A)(IA) OF THE ACT IS NOT APPLICABLE. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD PA ID WHEELING CHARGES AND STATE LOAD AND DISPATCH CHARGES TO RRVPN AS UND ER:- SCHEDULE 18/PP28 2 73 22 73 125/- SLDC CHARGES 8 01 00 000/- THE ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE IN NOT DEDUCTING TDS U/S 194J OF THE ACT WHICH WAS REPLY VIDE ORDER DATED 01/12/2010. AFTER CONSIDERING THE ASSES SEES REPLY THE LEARNED ASSESSING OFFICER HELD THAT BASED ON THE ABOVE DISCUSSED GIST OF THE STATEMENT OF DEPUTY CHIEF ENGINEER AND AS PER THE DECISION OF HONBLE A PEX COURT IN THE CASE OF CIT VS. BHARTI CELLULAR LTD. AND OTHERS 220 CTR 258 (DELHI) AND AS PER THE DECISION OF LEARNED CIT(A) IN THE CA SE OF THE ASSESSEE COMPANY IT CAN BE CLEARLY CONCLUDED THAT H UMAN ITA 224/JP/2012 DCIT VS. M/S JVVNL 5 INTERVENTION IS CERTAINLY INVOLVED IN THE TRANSMISS ION SERVICES AND HENCE THE POWER TRANSMISSION SERVICE PROVIDED BY RVP N TO JVVNL IS A TECHNICAL SERVICE AS DECIDED BY THE HONBLE APEX COURT. FROM THE NATURE OF JOB CARRIED OUT BY THE TRANSMISSION AND WH EELING & SLDC IT CAN BE CLEARLY ENVISAGED THAT II WILL BE A VERY S MALLER AND LIGHTER TERM TO SAY THAT THE HUMAN PRESENCE IS REQUIRED WHER EAS WITHOUT COMPLETE INVOLVEMENT AND TECHNICAL KNOWLEDGE THE JO BS PERFORMED FOR ABOVE WORKS BY THE ABOVE AGENCIES CANNOT BE EVEN IMAGINED. IT IS INCORRECT ON THE PART OF THE ASSESSEE THE TRANSM ISSION OF THE ELECTRICITY TAKES PLACE AUTOMATICALLY AS THE ELECTR ICITY IS SUPPLIED CONTROLLED INCREASE/DECREASE OF LOAN STOPPING TH EREOF IS AT ALL NOT POSSIBLE WITHOUT COMPLETE INVOLVEMENT OF HIGH TECHNO CRATS. IT IS ALSO INCORRECT ON THE PART OF THE ASSESSEE TO COMPA RE SUCH A SENSITIVE ISSUE OF TRANSMISSION OF HIGH VOLTAGE ELE CTRICITY WITH A MEAGER OPERATION OF BUS/TRUCK/ENGINES ETC.. IT IS N OT APPLICABLE EVEN IF THESE VEHICLES ARE DRIVEN WITHOUT DRIVER I.E . AUTOMATICALLY RUN ENGINES WHICH ARE CONTROLLED VERY SENSIBLY AND RESPONSIBLY BY A HUGE FLEET OF TECHNICAL STAFF. EVEN IF THE ARGUMENT OF THE ASSESSEE IS ACCEPTED THEN WHY THE TDS IS DEDUCTED IN THE CASES O F TOUR OPERATORS WHEN THE BUSES RUN AUTOMATICALLY? IT IS AL SO INCORRECT ON THE PART OF THE ASSESSEE TO STATE THAT IT HAS A HIG H FLEET OF STAFF WHICH CONTROLS THE TRANSMISSION AND OTHER WORKS. IF I T IS SO THEN WHY THE SO MANY STAFF WITH TECHNICAL EXPERTISE REMAIN PR ESENT IN THE TRANSMISSION SYSTEM/SLDC TO CONTROL THE ENTIRE SYST EM INCLUDING TRANSMISSION? THIS FACT IS FURTHER STRENGTHENED FROM THE STATEMENTS OF THE DY. CHIEF ENGINEER TAKEN DURING THE COURSE OF ASSESSMENT ITA 224/JP/2012 DCIT VS. M/S JVVNL 6 PROCEEDINGS WHEREIN HE HAD CATEGORICALLY CONFIRMED THE HUGE AND COMPREHENSIVE INVOLVEMENT OF HUMAN BEING WITH COMPLE TE TECHNICAL KNOWLEDGE. THE SAID ISSUE HAS BEEN EXAMINED IN DETAIL BY ITO TDS -2 JAIPUR AS WELL AS IN ASSESSMENT ORDER FOR THE A.Y. 2006-07 AND 2007-08. THE DEPARTMENT HAS FILED AN APPEAL BEFORE THE HONBLE R AJASTHAN HIGH COURT AGAINST THE ORDER OF THE HONBLE ITAT JAIPUR BENCH JAIPUR. THUS THE ORDER PASSED BY HONBLE ITAT IS NOT FINAL. IN VIEW OF THE DETAILED DISCUSSION IN THE ASSESSMENT ORDER FOR THE A.Y. 2006-07 AND 2007-08 I AM OF THE VIEW THAT TRANSMISSION CHA RGES/WHEELING CHARGES/SLDC CHARGES ARE SUBJECT TO DEDUCTION OF TA X AT SOURCE U/S 194J OF THE ACT. THE ASSESSEE HAS NOT DEDUCTED TAX A T SOURCE ON THE AFORESAID PAYMENT. THE PAYMENT MADE TOWARDS THESE CHARGES AMOUNTING TO RS. 2 81 23 73 125/- IS LIABLE FOR DIS ALLOWANCE U/S 40(A)(IA). ACCORDINGLY A SUM OF RS. 2 81 23 73 125 /- IS ADDED TO THE RETURNED INCOME OF THE ASSESSEE. 7. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASSE SSING OFFICER THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A) WHO HAD ALLOWED THE APPEAL OBSERVING THAT IN A.Y. 2006-07 IDENTICAL ISSUE WAS DECIDED BY THE HONBLE ITAT IN ITA NO. 132/JP/2009 DATED 30/4/2 009. EVEN IN THE TDS PROCEEDING IN A.Y. 2005-06 TO 2009-10 IT WAS HEL D BY THE DEPARTMENT THAT THERE WAS A LIABILITY TO DEDUCT TDS O N PAYMENT OF ITA 224/JP/2012 DCIT VS. M/S JVVNL 7 TRANSMISSION/WHEELING CHARGES/SLDC CHARGES U/S 194J OF THE ACT. HOWEVER THE HONBLE JAIPUR ITAT VIDE ITS ORDER IN IT A NO. 127 TO 131/JP/2009 FOR A.Y. 2005-06 TO 2009-10 HELD THAT P AYMENT OF TRANSMISSION CHARGES/WHEELING CHARGES WAS ONLY A REI MBURSEMENT OF ACTUAL EXPENSES AND THEREFORE PROVISIONS OF SECTIO N 194J OF THE ACT OR FOR THAT MATTER SECTION 190C OF THE ACT HAS NOT APPLICA BLE IN THE PRESENT CASE. THE LEARNED ASSESSING OFFICER RELIED UPON THE DECISI ON OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. BHARTI CELLULAR LTD. 3 30 ITR 239. THIS DECISION WAS RENDERED IN THE CONTEXT OF APPLICABILIT Y OF TDS PROVISION ON SERVICES OF INTER CONNECTION/PORT ACCESS FACILITY. WHEREIN IT HAS HELD THAT CELLULAR PROVIDER HAD RENDERED TECHNICAL SERVICES A ND HAD TO DEDUCT TAX AT SOURCE OR NOT WOULD DEPEND ON WHETHER THE CHARGES WER E FOR TECHNICAL SERVICES OR NOT. THIS INVOLVED DETERMINATION OF THE FACT WHETHER ANY HUMAN INTERVENTION WAS INVOLVED WHICH COULD NOT BE D ETERMINED WITHOUT TECHNICAL ASSISTANCE. THEREFORE IT DIRECTED THAT TE CHNICAL PERSON BE EXAMINED TO DECIDE THIS ISSUE. IN THE PRESENT CASE THE ISSUE WAS OF TRANSMISSION SERVICES AND NOT OF SERVICES OF INTERC ONNECTION/PORT ACCESS FACILITY. THEREFORE THIS DECISION IS NOT APPLICABLE . THE A.O. ALSO RECODED STATEMENT OF CHIEF ENGINEER SHRI ARUN KUMAR SHARMA TO EXAMINE THE ISSUE OF HUMAN INTERFACE IN THE TRANSMISSION OF THE ELECTRICITY BY RVPNL TO ITA 224/JP/2012 DCIT VS. M/S JVVNL 8 JVVNL. HE HAD PERUSED HIS STATEMENT AND IT IS SEEN THAT HE HAS NOWHERE STATED THAT ANY HUMAN INTERVENTION WAS INVOLVED WHEN THE ELECTRICITY WAS TRANSMITTED THROUGH THE TRANSMISSION LINES TO RVPNL TO THE GRID STATION OF THE ASSESSEE. HOWEVER HE IN REPLY TO QUESTION NO. 5 TO 10 OF HIS STATEMENT ONLY EXPLAINED THE FUNCTIONING OF STATE LOAD DISPATCH CENTRE (SLDC). FROM REPLIES TO THESE QUESTIONS IT WAS EVID ENT THAT SLDC HAD ITS OWN STAFF WHICH MONITORED THE FLOW OF ELECTRICITY FRO M GENERATING STATION TO THE DISTRIBUTING STATION AS A REGULATORY BODY T HROUGH ITS OWN TECHNICAL PERSON. IN RESPONSE TO QUESTION NO. 5 IT WAS FURTHE R STATED THAT IT CASE ANY GENERATING STATION WAS TO BE SHUT DOWN FOR MAINTE NANCE OR OTHERWISE THE PERMISSION FOR THE SAME WAS GIVEN BY SLDC. SIMIL ARLY IF THERE WAS ANY SUDDEN REDUCTION IN THE LOAD THEN DISCOM REQUIR ED SLDC TO DIRECT THE GENERATING STATION TO PRODUCE LESSER ELECTRICITY. TH IS ADDITIONAL FUNCTIONING OF SLDC DID NOT INVOLVE ANY HUMAN INTERFERENCE AS F AR AS TRANSMISSION OF THE ELECTRICITY FROM GENERATING STATION TO THE GRID STATION OF THE ASSESSEE WAS CONCERNED. THUS EVEN AS PER STATEMENT OF SHRI ARU N KUMAR SHARMA AND IN VIEW OF THE VARIOUS DECISION RELIED BY THE H ONBLE ITAT IN DECIDING THE APPEAL FOR A.Y. 2006-07 IT IS CLEAR THAT SECTI ON 194J IS NOT APPLICABLE ON THE TRANSMISSION/WHEELING/SLDC CHARGES PAID BY T HE ASSESSEE. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS AND FACTS OF THE PRESENT CASE ITA 224/JP/2012 DCIT VS. M/S JVVNL 9 HE DIRECT THE A.O. TO DELETE THE ADDITION OF RS. 2 81 23 73 125/- MADE BY HIM. THIS GROUND OF APPEAL IS ALLOWED. 8. NOW THE REVENUE IS IN APPEAL BEFORE US. 9. THE LEARNED CIT DR VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER WHEREAS THE LEARNED AR FOR THE AS SESSEE SUBMITTED THAT THIS ISSUE IS COVERED UNDER BOTH THE WAYS I.E. U/S 4 0(A)(IA)/194J OF THE ACT AND UNDER TDS PROCEEDING. THE PAYEE HAD DISCLOSED THI S INCOME IN RETURN OF INCOME. THE AR FILED COPY OF RETURN ALONGWITH REPL Y THEREFORE CONSIDERING THE INSERTION OF PROVISO TO SECTION 40( A)(IA) OF THE FINANCE ACT 2012 W.E.F. 01/04/2013 ACCORDING TO WHICH WHERE THE PAYEE HAS FURNISHED HIS RETURN OF INCOME HAD TAKEN INTO ACCO UNT SUCH SUM FOR COMPUTING INCOME AND HAS PAID THE TAX DUE ON THE IN COME DECLARED BY HIM IN RETURN THEN IT WILL BE DEEMED THAT DEDUCTOR H AD DEDUCTED AND PAID THE TAX ON SUCH INCOME AND NO DISALLOWANCE U/S 40(A) (IA) CAN BE MADE. THE SECOND PROVISO HAS RETROSPECTIVE EFFECT AS HAS B EEN HELD IN THE FOLLOWING CASE LAWS:- (I) BHARTI AUTO PRODUCTS VS. CIT (2013) 92 DTR 345/ 145 ITD 1 (RAJKOT) (SB) (TRIB) (II) RAJEEV KUMAR AGARWAL VS. ACIT (2014) 149 ITD 3 63 (AGRA) (TRIB.). ITA 224/JP/2012 DCIT VS. M/S JVVNL 10 (III) ITO VS. JAIDEEP KUMAR SHARMA (2014) 34 ITR (TR IB) 565 (DELHI) DATED 25/07/2014. (IV) DCIT VS. ANANDA MARAKALA (2014) 150 ITD 323 (B ANG.) DATED 13/09/2013. THEREFORE HE PRAYED TO CONFIRM THE ORDER OF THE LEA RNED CIT(A). 10. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE ISSUE IS I DENTICAL TO A.Y. 2006-07 AND THE COORDINATE BENCH HAD DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND HELD THAT PROVISIONS OF SECTION 40(A)(IA) OF TH E ACT IS NOT APPLICABLE ON THE PRESENT FACT OF THE CASE IN ITA NO. 132/JP/2009 ORDER DATED 30/4/2009 WHICH IS REPRODUCED AS UNDER:- 9. CONSIDERING THE SUBMISSION OF THE PARTIES ON TH E ISSUES AS TO WHAT IS THE NATURE OF PAYMENT OF WHEELING/TRANSMISSI ON/SLDC CHARGES ON THE BASIS OF DOCUMENTS ON RECORDS AND TH E FACTS EXPLAINED AND THE NATURE OF SUCH PAYMENTS AS WELL AS FACTS ON RECORDS WHETHER THE SAME IS LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER THE INCOME TAX ACT 1961 SPECIFICALLY U/S 194J WHICH PROVIDES FOR DEDUCTION OF TAX AT SOURCES ON PAYMENT OF FEES FOR PROFESSIONAL OR TECHNICAL SERVICES AND WHETHER SECT ION 40(A)(IA) IS APPLICABLE ON THE PRESENT FACTS OF THE CASE. ITA 224/JP/2012 DCIT VS. M/S JVVNL 11 9.1 ON GOING THROUGH THE VARIOUS CLAUSES OF TRANSM ISSION SERVICE AGREEMENT WE FIND THAT AS PER CLAUSE 3 OF THE AGREEM ENT ASSESSEE IS ALLOWED THE USER OF THE TRANSMISSION SYSTEM. CLAU SE 5 PROVIDES FOR OPEN ACCESS TRANSMISSION CAPACITY WHERE BY ANY OT HER CUSTOMER IS ALSO ALLOWED TO USE THE TRANSMISSION LIN ES FOR LONG TERM OPEN ACCESS AND SHORT TERM OPEN ACCESS. CLAUSE 8 PROVIDES FOR COMPLIANCE OF GRID CODE AS APPROVED BY THE COMM ISSION BOTH BY RVPN AND ASSESSEE AND FURTHER PROVIDES THAT ALL THE PARTIES SHALL COMPLY WITH THE DIRECTION OF SLDC FOR ENSURING INTEG RATED GRID OPERATION FOR ACHIEVING THE MAXIMUM ECONOMY AND EFF ICIENCY IN THE OPERATION OF POWER SYSTEM IN THE STATE. AS PER CLAUS E 10 AND 12 THE TARIFF FOR TRANSMISSION AND WHEELING AND SLDC CHARGE S IS TO BE AS APPROVED BY THE REGULATORY COMMISSION. FROM ALL THE SE CLAUSES IT IS CLEAR THAT ALL THE PARTIES INVOLVED WITH GENERATI ON TRANSMISSION AND DISTRIBUTION OF ELECTRICITY ARE TO COMPLY WITH T HE DIRECTION OF STATE LOAD DISPATCH CENTER AND THE REGULATORY COMMI SSION FOR ACHIEVING THE ECONOMY AND EFFICIENCY IN THE OPERATI ON OF POWER SYSTEM AND THEREFORE QUESTION OF ANY PERSON RENDERI NG SERVICE TO ANOTHER DOES NOT ARISE. THE OPERATION AND MAINTENANC E OF TRANSMISSION LINES BY RVPNL AND THE USER OF THESE L INES BY ASSESSEE FOR TRANSMITTING ENERGY DOES NOT RESULT INTO ANY TE CHNICAL SERVICES BEING RENDERED TO THE ASSESSEE. THE TECHNICAL STAFF OF RVPN BY OPERATING AND MAINTAINING ITS GRID STATION AND TRAN SMISSION LINES SIMPLY DISCHARGE THEREON FUNCTIONING. THEY DO NOT RE NDER ANY TECHNICAL SERVICE TO THE ASSESSEE. ITA 224/JP/2012 DCIT VS. M/S JVVNL 12 BY RESPECTFULLY FOLLOWING THE DECISION OF THE COORD INATE BENCH ON IDENTICAL ISSUE WE UPHOLD THE ORDER OF THE LEARNED CIT(A). 11. THE THIRD GROUND OF APPEAL IS AGAINST DELETING T HE ADDITION OF RS. 1 73 07 800/- MADE ON ACCOUNT OF FRONT END FEES PAI D TO HUDCO FOR RAISING THE LOAN HOLDING THAT IT IS A REVENUE EXPEN DITURE. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD CLAIMED DEDU CTION IN RESPECT OF DEFERRED REVENUE EXPENDITURE OF RS. 1 73 07 800/-. THE ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE WHICH WAS REPLIED BY THE ASSESSEE VIDE LETTER DATED 06/12/201 0. AFTER CONSIDERING THE ASSESSEES REPLY AND VARIOUS CASE LAWS CITED BY THE ASSESSEE THE ASSESSING OFFICER HELD AS UNDER:- I HAVE GONE THROUGH THE SUBMISSION OF THE ASSESSEE WHICH IS NOT FOUND SATISFACTORY. THE ASSESSEE HAS MADE PAYMENT OF RS. 17307800/- TO HUDCO FOR RAISING LOAN OF RS. 300 CRO RES FOR IMPROVEMENT OF TRANSMISSION NETWORK AND INFRASTRUCTU RE. THE LOANS SO RAISED ARE FOR CAPITAL PURPOSE. FURTHER T HE ASSESSEE HIMSELF NOT DEBITED THE SAID AMOUNT IN P&L ACCOUNT RATHER SPREAD OVER THE SAID PAYMENT IN FIVE YEARS. IF THE ASSESSE E COMPANY IS CLAIMING THESE EXPENSE AS REVENUE EXPENDITURE THEN THE TOTAL AMOUNT SHOULD HAVE BEEN CLAIMED ONE TIME RATHER THA N SPREADING IT OVER IN A TIME PERIOD OF FIVE YEARS. THIS ACT SI GNIFIES THAT THE ASSESSEE ITSELF IS NOT SURE OF THE NATURE OF THESE EXPENSES WHETHER ITA 224/JP/2012 DCIT VS. M/S JVVNL 13 OF CAPITAL OR OF REVENUE NATURE. THIS IS REDUCED IN COMPUTATION RATHER THAN DEBITING IN THE P&L ACCOUNT. THUS THE A SSESSEE ITSELF IS TREATING THE SAID AMOUNT AS CAPITAL EXPENDITURE. CLAIM OF CAPITAL EXPENDITURE CANNOT BE ALLOWED U/S 37(1) AS WELL AS U/ S 36(1)(III) OF THE INCOME TAX ACT 1961. ACCORDINGLY THE PAYMEN TS SO MADE ARE OF A CAPITAL EXPENDITURE AND SAME IS DISALLOWED. 12. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASS ESSING OFFICER THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A) WHO HAD ALLOWED THE APPEAL BY OBSERVING THAT THE APPELLANT HAD RAIS ED LOAN OF RS. 300 CRORES AT 11% PER ANNUM FROM HUDCO FOR IMPROVEMENT OF INFRASTRUCTURE FOR POWER TRANSMISSION AND DISTRIBUTION LINES . IN A DDITION TO INTEREST THE ASSESSEE WAS PAID ONE TIME FRONT END FEES @ .5 PLUS S ERVICES TAX. THE AMOUNT SO PAID WAS NEITHER REFUNDABLE NOR ADJUSTABL E AGAINST THE SUBSEQUENT INTEREST PAYMENT. IT WAS TO BE PAID IN AD VANCE BEFORE RELEASE FIRST LOAN INSTALLMENT ACCORDINGLY THE APPELLANT HAD MADE PAYMENT OF RS. 1 73 07 800/- TO HUDCO TOWARDS FRONT END FEES. THE A PPELLANT IN ITS BOOKS OF ACCOUNT CLAIMED DEDUCTION OF THIS AMOUNT O VER A PERIOD OF FIVE YEARS. HOWEVER IN THE COMPUTATION OF INCOME THE EN TIRE AMOUNT OF RS. 1 73 07 800/- WAS CLAIMED AS DEDUCTION AS REVENUE EX PENDITURE. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE LOAN S O RAISED WAS FOR CAPITAL ITA 224/JP/2012 DCIT VS. M/S JVVNL 14 PURPOSE AND FURTHER THE ASSESSEE HAD ITSELF NOT DEB ITED THE ENTIRE AMOUNT IN THE P&L ACCOUNT BUT SPREAD OVER THIS PAYMENT FO R FIVE YEARS AS DIFFERED REVENUE EXPENDITURE. THUS THE ASSESSEE ITSELF WAS NO T SURE OF THE NATURE OF THIS EXPENDITURE WHETHER IT WAS CAPITAL OR REVENUE IN NATURE. THUS THE ASSESSING OFFICER MADE ADDITION OF ABOVE EXPENSES I N THE INCOME OF THE ASSESSEE BUT AFTER CONSIDERING THE ASSESSEES SUBM ISSION THE LEARNED CIT(A) HELD THAT FRONT END FEES HAD BEEN PAID TO HUD CO IN CONNECTION WITH THE MONEY BORROWED. THERE WAS NO EXTENSION OF THE EXISTING BUSINESS THEREFORE PROVISO TO SECTION 36(I)(III) OF THE ACT IS NOT APPLICABLE. THE REVENUE EXPENDITURE WHICH WAS INCURRE D WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS COULD BE AL LOWED IN ITS ENTIRETY IN THE YEAR IN WHICH IT WAS INCURRED. IT COULD NOT BE SP READ OVER IN NUMBER OF YEARS EVEN IF THE ASSESSEE HAD WRITTEN IT OFF IN HIS BOOKS OVER A PERIOD OF YEARS. HE RELIED UPON THE DECISION IN THE CASE O F MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD. VS. CIT (225 ITR 802) AC IT VS. JAI PARABOLIC SPRINGS LTD. (2009 TIOL 524 ITAT DELHI) DCIT VS. COR E HEALTHCARE LTD. (221 CTR 580) (GUJ. HIGH COURT) AND THE DECISION OF HONBLE HYDERABAD ITAT IN THE CASE OF AMAR RAJA BATTERIES LTD. VS. ACI T (91 ITD 280) THEREFORE HE DELETED THE ADDITION MADE BY THE ASSE SSING OFFICER. ITA 224/JP/2012 DCIT VS. M/S JVVNL 15 13. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LEARN ED CIT DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER WHEREAS THE LEARNED AR FOR THE ASSESSEE CONTENDED THAT THIS ISSUE IS COVERED IN FA VOUR OF THE ASSESSEE IN CASE OF CIT VS. SUPER SPINNING MILLS LTD. 296 ITR 16 8 (MAD.) (HC). WHEREIN ON TERM LOAN THE ASSESSEE INCURRED FRONT E ND FEES PAYMENT AT THE RATE OF 1% ON THE LOAN AMOUNT. WITHOUT THIS PAY MENT IDBI WOULD NOT HAVE SANCTIONED THE LOAN. THE AMOUNT IS PAID ONLY FO R OBTAINING THE LOAN AND THE SAME DOES NOT BRING INTO EXISTENCE ANY ASSE T OF ENDURING NATURE. IT IS THE CONDITION PRECEDENT FOR OBTAINING THE LOA N AND IS IN THE NATURE OF PROCESSING FEES PAID TO THE BANK TO RELEASE THE LOA N. HENCE FRONT END FEES PAYMENT IS REVENUE EXPENDITURE. IN CASE OF BOR OSIL GLASS WORK LTD. VS. ADDL. CIT 3 SOT 940 (MUM) (TRIB) HAD ALLOWED THIS EXPENDITURE AS REVENUE EXPENDITURE. THEREFORE HE PRAYED TO CONFIRM THE ORDER OF THE LEARNED CIT(A) 14. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE ASSESSEE H AS RAISED LOAN OF RS. 300 CRORES FOR IMPROVEMENT IN TRANSMISSION NETWORK AND INFRASTRUCTURE. THE ASSESSEE PAID THIS AMOUNT TO HUDCO WHICH WAS PRE- DECIDED CONDITION ON THE LOAN SANCTIONED. THE LEARNED CIT DR HAS NOT CONTROVERTED THE FINDINGS BY THE LEARNED CIT(A) IN H IS ORDER. FURTHER THE ITA 224/JP/2012 DCIT VS. M/S JVVNL 16 CASE LAWS RELIED UPON BY THE AR FOR THE ASSESSEE ARE SQUARELY APPLICABLE ON IT BEING IDENTICAL ISSUE THEREFORE WE UPHOLD THE ORDER OF THE LEARNED CIT(A). 15. IN THE RESULT APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/11/2014. SD/- SD/- (R.P. TOLANI) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED : 21 ST NOVEMBER 2014 * RANJAN COPY FORWARDED TO :- 1. THE DCIT CIRCLE-6 JAIPUR. 2. M M/S JAIPUR VIDYUT VITRAN NIGAM LTD. JAIPUR. 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (I.T.A. NO. 224/JP/2012) BY ORDER AR ITAT JAIPUR.