DCIT, Hisar v. Dakshin Haryana Bijli Vitran Nigam Ltd., Hisar

ITA 4606/DEL/2011 | 2008-2009
Pronouncement Date: 10-02-2012 | Result: Dismissed

Appeal Details

RSA Number 460620114 RSA 2011
Bench Delhi
Appeal Number ITA 4606/DEL/2011
Duration Of Justice 3 month(s) 23 day(s)
Appellant DCIT, Hisar
Respondent Dakshin Haryana Bijli Vitran Nigam Ltd., Hisar
Appeal Type Income Tax Appeal
Pronouncement Date 10-02-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 10-02-2012
Assessment Year 2008-2009
Appeal Filed On 18-10-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B DELHI) BEFORE SHRI A.D. JAIN AND SHRI A.N. PAHUJA ITA NO. 4606(DEL)2011 ASSESSMENT YEAR: 2008-09 DY. COMMISSIONER OF INCOME TAX THE DAKSHIN HARY ANA BIJLI HISAR. V.VITRAN NIGAM LTD. HISAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI KRISHNA CIT/DR RESPONDENT BY: S/SHRI K. SAMPATH ADV./V.RAJ KUMAR ADV. ORDER PER A.D. JAIN J.M . THIS IS DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 200 8-09 TAKING THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F ` 1 53 97 80 054/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NON-REALIZATION OF PROVISIONS OF SURCHAR GE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F ` 2 44 55 32 835/- MADE U/S 40(A)(IA) ON ACCOUNT OF PAYMENT MADE ON ACCOUNT OF SLDL & WHEELING CHARGES WHICH ARE MADE IN THE WORK OF PROVIDING TECHNICAL SERVICES WITHOUT DEDUCTING TDS AS PROVID ED UNDER SECTION 194 J OF THE INCOME TAX ACT 1961. ITA 4606(DEL)2011 2 2. APROPOS GROUND NO.1 THE AO OBSERVED THAT AS PER NOTES TO SCHEDULE 10 OF THE AUDITED REPORT A SUM OF ` 153.97 CRORES BEING SURCHARGE ASSESSED BUT NOT REALIZED HAD BEEN WITHD RAWN FROM GH 62.240 (INCOME FROM SUR-CHARGE) AND ADJUSTED AGAINS T GH 23.934 (SUR-CHARGE LEVIED BUT NOT REALIZED). ON QUERY T HE ASSESSEE SUBMITTED THAT THE ASSESSEE NIGAM WAS ACCOUNTING FO R INCOME OF SURCHARGE ON DELAYED PAYMENT ON REALIZATION BASIS I N PURSUANCE OF THE DECISION OF THE AUDIT COMMITTEE OF THE NIGAM W HICH WAS IN CONFORMITY WITH THE ACCOUNTING STANDARDS 1&9 AND T HE SAME HAD BEEN RECOGNIZED JUDICIALLY OBSERVING THAT INCOME I S REQUIRED TO BE COMPUTED IN TERMS OF THE ACCOUNTING STANDARDS PRESC RIBED BY THE ICAI; THAT DURING ASSESSMENT YEARS 2006-07 AND 2007 -08 SIMILAR ADDITIONS HAD BEEN MADE WHICH WERE CHALLENGED BEF ORE THE LD. CIT(A) AND THE LD. CIT(A) VIDE ORDER DATED 6.11.20 09 FOR ASSESSMENT YEAR 2006-07 HAD DECIDED THE ISSUE IN F AVOUR OF THE AO; THAT SO FAR AS REGARDS ASSESSMENT YEAR 2007-08 THE ORDER OF THE LD. CIT(A) WAS AWAITED; AND THAT THE AMOUNT OF SURCHA RGE WAS BILLED FOR ` 1 74 45 62 158/- AGAINST WHICH ONLY ` 20 47 82 104/- HAD BEEN REALIZED WHICH HAD BEEN TAKEN AS INCOME DURIN G THE YEAR. THE AO OBSERVED THAT THE ASSESSEE WAS FOLLOWING THE MERCANTILE ITA 4606(DEL)2011 3 SYSTEM OF ACCOUNTING AND WHENEVER THE RIGHT TO RECE IVE MONEY IN THE COURSE OF A TRADING TRANSACTION ACCRUES OR ARISES EVEN THOUGH INCOME IS NOT REALIZED INCOME EMBEDDED IN THE RECEIPT IS DEEMED TO ACCRUE OR ARISE; THAT DURING THE YEAR HOWEVER THE INCOME OF SURCHARGE LEVIED ON DELAYED PAYMENTS WAS BEING ACCOUNTED FOR ON THE BASIS OF ITS ACTUAL REALIZATION/COLLECTIONS WHICH WAS INCON SISTENT WITH THE MERCANTILE SYSTEM OF ACCOUNTING AND SO NOT ALLOWAB LE; THAT AS SOON AS THE SURCHARGE IS LEVIED ON THE DELAYED PAYMENT THE ASSESSEE HAS A RIGHT TO RECEIVE MONEY FROM THE CUSTOMERS EVEN T HOUGH THE INCOME HAS NOT BEEN REALIZED FROM THE CUSTOMERS; TH AT DURING THE YEAR AN AMOUNT OF ` 153.98 CRORES HAD BEEN TRANSFERRED TO PROVISION FOR SURCHARGE NOT REALIZED; AND THAT TH IS INCOME HAD BEEN REDUCED FROM THE TOTAL INCOME IN THE PROFIT AND LOS S ACCOUNT AND ALSO REDUCED FROM THE DEBTORS OF THE ASSESSEE COMPANY. THE AO PLACED RELIANCE ON THE FOLLOWING CASE LAWS:- 1. CIT VS. GOVIND PRASAD PRABHU NATH 171 ITR 147(ALL); 2. CIT V. BHARAT PETROLEUM CORPORATION LTD. 202 ITR 492(CAL); 3. MORVI INDUSTRIES LTD. V. CIT 82 ITR 835(SC); AND 4. CAG IT V. RAJA RAJESWARI NARIKELLY ESTATE 199 ITR 383(KER). ITA 4606(DEL)2011 4 3. THE AO FURTHER OBSERVED THAT THE ASSESSEES SUBM ISSION WAS ALSO NOT ACCEPTABLE WHEN IT HAD BEEN CONTENDED THAT THE INCOME BY WAY OF SURCHARGE WAS A HYPOTHETICAL INCOME SINCE THIS WAS NOT BORNE OUT FROM THE FACTS ON RECORD; THAT A PART OF THE SURCHA RGE LEVIED BY THE ASSESSEE DURING THE YEAR HAD BEEN REALIZED AND ACCO UNTED FOR AS INCOME AMOUNTING TO ` 20.48 CRORES; THAT THE CONSUMERS SUBJECTED TO LEVY OF SURCHARGE HAD ACCEPTED THE SURCHARGE IN PRINCIPLE; THAT MERELY SINCE THE SAME HAD NOT BEEN DEPOSITED BY THE CONSUMERS WITH T HE ASSESSEE COMPANY DURING THE YEAR COULD NOT DEFEAT THE RIGHT OF THE ASSESSEE TO REALIZE THE SURCHARGE LEVIED; THAT THE SURCHARGE AM OUNT WAS ALSO REFLECTED IN THE DEBTORS OF THE ASSESSEE COMPANY WH ICH HAD SUBSEQUENTLY BEEN REDUCED FROM THE DEBTORS ON ACCOU NT OF NON- REALIZATION THEREOF DURING THE YEAR AS GIVEN IN TH E ANNUAL REPORT OF THE ASSESSEE COMPANY; THAT THIS POSITION STOOD ALSO REF LECTED IN THE DETAILS OF THE DEBTORS SUBMITTED DURING THE ASSESSMENT PROC EEDINGS; AND THAT THEREFORE THE ASSESSEE HAD ITSELF ADMITTED EXISTEN CE OF ITS LEGAL RIGHT TO COLLECT THE SURCHARGE ON ACCOUNT OF DELAYED PAYMENT S FROM THE DEFAULTING CONSUMERS AND ITS MERE FAILURE TO REALIZ E THE SURCHARGE DURING THE YEAR DID NOT AT ALL AFFECT THE EXISTENCE OF SUCH LEGAL ENTITLEMENT OF THE ASSESSEE TO RECEIVE THE SURCHARG E. ITA 4606(DEL)2011 5 4. IN THIS MANNER THE AO MADE ADDITION OF ` 1 53 97 80 054/- CRORES ON ACCOUNT OF PROVISION ON SURCHARGE LEVIED BUT NOT REALIZED. 5. BY VIRTUE OF THE IMPUGNED ORDER THE LD. CIT(A) DELETED THE ADDITION ACCEPTING THE ASSESSEES CONTENTION THAT FOR ASSESSMENT YEAR 2006-07 ON SIMILAR FACTS THE LD. CIT(A) VIDE ORD ER DATED 6.11.09 HAD GRANTED RELIEF TO THE ASSESSEE. 6. BEFORE US THE LD. DR HAS CONTENDED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION CORRECTLY MADE BY TH E AO ON ACCOUNT OF NON-REALIZATION OF THE PROVISION OF SURCHARGE ERRO NEOUSLY IGNORING THAT THE PRINCIPLE OF RES JUDICATA IS NOT APPLICABLE TO INCOME TAX PROCEEDINGS; THAT THE LD. CIT(A) HAS FAILED TO CONS IDER THAT THE ASSESSEE HAD ITSELF ADMITTED THAT IT HAD THE RIGHT TO COLLECT THE SURCHARGE ON ACCOUNT OF DELAYED PAYMENT FROM THE DEFAULTING CONS UMERS; THAT THE LD. CIT(A) ALSO FAILED TO CONSIDER THAT MERELY BECAUSE THE ASSESSEE HAD FAILED TO REALIZE THE SURCHARGE DURING THE YEAR IT DID NOT AFFECT THE EXISTENCE OF THE SAID LEGAL RIGHT OF THE ASSESSEE T O RECEIVE THE SURCHARGE PARTICULARLY SINCE THE ASSESSEE WAS FOLLOWING THE M ERCANTILE SYSTEM OF ACCOUNTING AS PER WHICH WHENEVER THE RIGHT TO REC EIVE MONEY IN THE COURSE OF A TRADING TRANSACTION ACCRUES OR ARISES THE INCOME EMBEDDED ITA 4606(DEL)2011 6 IN THE RECEIPT IS DEEMED TO ACCRUE OR ARISE NOTWIT HSTANDING THE FACTUM OF THE INCOME HAVING NOT BEEN REALIZED. 7. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND HAS CONTENDED THAT IT MIGHT BE THAT RES JUDICATA IS NOT APPLICABLE TO INCOME TAX PROCEEDINGS BUT CONSISTENCY AS IS WELL SETTLE D HAS TO BE FOLLOWED IN ORDER TO AVOID CHAOS; THAT THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 IN ITA NO. 250(DEL)2010 I N THE DEPARTMENTS APPEAL AGAINST THE CIT(A)S ORDER VID E ORDER DATED 30.11.2011 (COPY PLACED ON RECORD) HAS SUSTAINED TH E LD. CIT(A)S FINDINGS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSE E. 8. WE HAVE HEARD THE PARTIES ON THE ISSUE AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD WITH REGARD THERETO. AS PER THE STATEMENT OF FACTS FILED BEFORE THE LD. CIT(A) THE ASSESSEE IS A GOVERNMENT UNDERTAKING CARRYING ON THE BUSINESS OF DISTRIBUTI ON OF ELECTRICITY IN SOUTHERN HARYANA. IT IS LEVYING SURCHARGE ON THE B ILLS ISSUED BY IT IF THE PAYMENT IS NOT MADE WITHIN THE TIME ALLOWED. H OWEVER THERE IS A GENERAL PRACTICE WHEREBY MOST OF THE RURAL AREA C ONSUMERS OF DOMESTIC AND AGRICULTURAL CATEGORIES DO NOT MAKE THE PAYMENT OF EVEN THE ITA 4606(DEL)2011 7 ORIGINAL BILL MUCH LESS OF SURCHARGE. THE GOVER NMENT FREQUENTLY ANNOUNCES WAIVER SCHEMES OF SURCHARGE TO REDUCE THE DEBTORS. THEREBY IT BECOMES EXTREMELY DIFFICULT TO RECOVER THE AMOUNT OR TO START LEGAL PROCEEDINGS AGAINST THE DEFAULTERS. D URING THE YEAR THE SURCHARGE REALIZED WAS OF ` 20.48 CRORES. THIS WAS BOOKED AS INCOME AS AGAINST THE SURCHARGE LEVY OF ` 174.46 CRORES. THE AO MADE ADDITION BY DISALLOWANCE OF ` 153.98 CRORES REPRESENTING SURCHARGE LEVIED BUT NOT REALIZED WHICH WAS DELETED BY THE L D. CIT(A). 9. THE ASSESSEE MAINTAINS THAT SPECIFIC NOTES IN TH IS REGARD WERE GIVEN IN THE BALANCE SHEET AND THE NOTES TO ACCOUNT S. IT HAS BEEN SUBMITTED THAT THIS ACTION WAS TAKEN ON THE BASIS O F THE ADVICE OF STATUTORY AUDITORS IN KEEPING WITH THE ACCOUNTING S TANDARDS. THIS SYSTEM IT IS SEEN HAS STARTED BEING FOLLOWED FROM ASSESSMENT YEAR 2004-05. THE STATUTORY AUDITORS OF THE ASSESSEE N IGAM HAD IN THEIR AUDIT REPORT ON THE ACCOUNTS FOR THE YEAR ENDING 31 .3.2003 POINTED OUT THAT THE RECOGNITION OF INCOME BY CHARGING SURCHARG E ON DELAYED PAYMENTS WAS IN CONTRAVENTION OF THE BASIC ACCOUNTI NG OF ASSUMPTION OF PURCHASE AS CONTAINED IN ASI-1 ON DISCLOSURE OF AC COUNTING POLICIES AND WITHOUT ANY CERTAINTY AS TO ITS RECOGNITION AS PROVIDED IN AS-9 ON REVENUE RECOGNITION ISSUED BY THE INSTITUTE OF CHA RTERED ACCOUNTANTS ITA 4606(DEL)2011 8 OF INDIA. IT WAS ON CONSIDERING THE SAID OBJECTION OF THE AUDITORS THAT THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF TH E ASSESSEE DECIDED IN ITS SECOND MEETING HELD ON 21.3.2003 TO ACCOUN T FOR THE DELAYED PAYMENT OF SURCHARGE ON RECEIPT BASIS THEREAFTER. IT WAS IN ACCORDANCE WITH THIS DECISION THAT THE INCOME FROM SURCHARGE O N DELAYED PAYMENT STARTED BEING ACCOUNTED FOR ON THE BASIS OF COLLECT ION. FOR ASSESSMENT YEAR 2006-07 THE ITAT VIDE ITS AFORESAID ORDER DA TED 30.11.2011 HAS UPHELD THE ACTION OF THE CIT(A) IN DELETING THE DIS ALLOWANCE. THE ITAT HAS HELD AS FOLLOWS:- 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE ENTIRE MATERIAL AVAILABLE ON RECORD. FOLLOWING FACT S EMERGE FROM THE RECORD: (I) ASSESSEE MAINTAINS ITS METHOD ON ACCOUNTING AS MERC ANTILE SYSTEM. (II) PRIOR TO A.Y. 2004-05 THE ASSESSEE USED TO OFFER S URCHARGE CALCULATED IN THE BILLS. (III) VIDE AUDIT COMMITTEE OF BOARD OF DIRECTORS MEETING DATED 21-2-2003 (SUPRA) ON THE BASIS OF PRUDENCE NORMS T HE METHOD OF ACCOUNTANCY WAS CHANGE AND THE SUR-CHARGE WAS HELD TO BE ACCOUNTABLE ON THE BASIS OF ACTUAL R ECEIPT. 5.1. DEPARTMENT HAS ACCEPTED THE METHOD OF ACCOUNTING IN A.Y. 2004-05 AND 2005-06 WHICH IS NO T DISPUTED. THIS CLEARLY ESTABLISHES THAT NEITHER ACT ION U/S 148 NOR U/S 263 IS PROPOSED BY THE DEPARTMENT AGAINST A.Y. 2004-05 AND 2005-0 COMPLETED ASSESSMENTS WHICH HAV E ITA 4606(DEL)2011 9 BECOME FINAL. 5.2. COMING TO THE MERITS THE ASSESSEE IS A STATE PSU AND THE ELECTRICITY POLICY OF THE ELECTRICITY BOARD HAS BEEN SUBJECT TO MANY EXIGENCIES DEPENDING ON PUBLIC POL ICY. IT HAS NOT BEEN DISPUTED THAT THOUGH THE ASSESSEES RU LES PROVIDE LEVY OF SUR-CHARGE ON BELATED PAYMENT OF BI LLS BUT AT THE SAME TIME PAYMENT OF SURCHARGE IS SUBJECT TO PR OTEST/ WAIVER AND IS NOT MANDATORILY ENFORCEABLE BY ASSES SEE AT THE TIME OF PAYMENT OF BILL. THE SUR-CHARGE EXIST I N THE RULE AND IS PRINTED IN THE BILL BUT IT HAS NOT BEEN DISP UTED THAT THE ASSESSEE HAS REGULAR MECHANISM TO ACCEPT THE BILLS WITHOUT PAYMENT OF SUR-CHARGE. THE SAME IS DEFERRED TILL T HE CONSUMER DISPUTE IS SETTLED BY THE APPROPRIATE M EANS WHICH MAY BE PROVIDED BY THE INSTRUCTIONS OF THE DE CLARED POLICY OF THE GOVERNMENT. 5.3. IN VIEW OF THESE FACTS COUPLED WITH THE FACT THAT ASSESSEE CHANGED ITS METHOD OF ACCOUNTING AFTER SEE KING NECESSARY APPROVAL OF CAG SHOWS THAT AS FAR AS THE ASSESSEE IS CONCERNED THE COLLECTION OF SUR-CHARGE WAS CONTINGENT AND DID NOT ACCRUE DUE TO ASSESSEE. THE LIABILITY WILL ACCRUE ON THE BASIS OF CRYSTALLIZATION I.E. TH E PAYMENT OF THE SURCHARGE OR PASSING OF A SUITABLE ORDER BY THE APPROPRIATE AUTHORITY ON THE DISPUTE RAISED BY THE CUSTOMER. 5.4. COMING TO THE CASE LAWS HONBLE SUPREME COURT IN THE CASE OF SHOORJI VALLABH DAS & CO. (SUPRA) HA D TO DEAL WITH AN ISSUE OF MANAGING AGENCY COMMISSION TRANSFE RRED BY THE ASSESSEE TO TWO OTHER COMPANIES. SUBSEQUENT AGREEMENT AFTER THE END OF ACCOUNTING YEAR RESULTE D IN ASSESSEES RECEIVING LESSER COMMISSION THOUGH BOOK ENTRIES OF HIGHER AMOUNT WERE MADE. REVENUE SOUGHT TO TAX T HE HIGHER INCOME HONBLE COURT HELD THAT ASSESSEE CA NNOT BE TAXED ON THE BASIS OF HYPOTHETICAL INCOME. IN OUR V IEW THIS JUDGMENT IS APPLICABLE TO THE FACTS OF ASSESSEES C ASE KEEPING IN MIND FOLLOWING PREPOSITIONS: (I) ASSESSEES METHOD OF ACCOUNTING HAS BEEN ACCEPTED B Y THE ITA 4606(DEL)2011 10 DEPARTMENT. (II) SINCE THE ASSESSEE COULD DEFER THE PAYMENT OF SUR-C HARGE UNDER CONSUMER PROTEST THE TAXING OF SUCH CONTINGE NT RECEIPT IS A HYPOTHETICAL INCOME. 5.5. IN CASE OF UCO BANK (SUPRA) IN CASE OF STICKY ADVANCES THE INTEREST INCOME THOUGH PROVIDED IN TH E BOOKS OF ACCOUNTS WERE NOT ASSESSABLE. 5.6. IN CASE OF GODHARA ELECTRICITY CO. LTD. (SUPRA ) THOUGH THE TARIFF WAS REVISED AND WAS ENFORCEABLE B Y RULES ITS DEFERMENT BY STATE OF GUJARAT WAS HELD TO BE RE SULTING INTO NON-ACCRUAL OF DEFERRED PORTION ON THE BASIS O F REAL INCOME CONCEPT. 5.7. IN THE CASE OF POONA ELECTRIC SUPPLY CO. (SUPR A) ALSO THE HONBLE SUPREME COURT HELD THAT PORTION EX CEEDS OVER CLEAR PROFITS RETURNED AS REBATE TO THE CONSUM ERS WAS NOT PART OF TAXABLE INCOME OF THE ASSESSEE. THUS T HOUGH THE AMOUNT FROM CONSUMERS ACCRUED TO THE ASSESSEE DUE TO THE RETURN ON ACCOUNT OF STIPULATION PROVIDED REBATE W AS HELD TO BE NON-TAXABLE REBATE. 5.8. IN CASE OF MODI RUBBER LTD. (SUPRA) THE HONB LE DELHI HIGH COURT AFFIRMED THE ORDER OF ITAT HOLDING THAT MERE UNILATERAL ACT OF THE ASSESSEE DEBITING THE BO OKS OF ACCOUNT WITH THE AMOUNT OF INTEREST WHICH WAS DISP UTED BY THE DEBTOR DID NOT AMOUNT TO ACCRUAL OF INCOME TO THE ASSESSEE. 5.9. THERE IS NO DISPUTE ON THE ISSUE RAISED BY THE LEARNED DR THAT PRINCIPLES OF RES-JUDICATA ARE NOT APPLICABLE TO INCOME-TAX PROCEEDINGS. HOWEVER IN VIEW OF HON BLE SUPREME COURT JUDGMENT IN THE CASE OF RADHA SWAMI SATSANG (SUPRA) HAS LAID DOWN RULE OF CONSISTENCY WHICH HAS BEEN FOLLOWED IN FACTS OF VARIOUS CASES IN SUBS EQUENT JUDGMENTS. BY NOW IT IS A SETTLED PRINCIPLE THAT UN LESS FACTS AND CIRCUMSTANCES HAVE DRASTICALLY CHANGED THE PRI NCIPLE OF ITA 4606(DEL)2011 11 CONSISTENCY IS TO BE MAINTAINED IN DEPARTMENTAL ACT ION. IN VIEW THEREOF WE ARE OF THE VIEW THAT DEPARTMENT HA VING ACCEPTED A CLEAR CUT AMENDMENT OF METHOD OF ACCOUNT ING AS PER THE PROVISIONS OF INCOME-TAX ACT IN THE ABOVE MENTIONED FACTS IT WILL NOT BE DESIROUS THAT THE COURSE OF A CTION ACCEPTED BY THE DEPARTMENT IS SUBJECT TO VARIATION BY ADOPTING DIFFERENT INTERPRETATION ON ANY SETTLED I SSUE. 5.10. IN OUR VIEW THE WOODWARD GOVERNOR CASE (SUPR A) RELIED ON BY LD. D.R. IS OF NO AVAIL TO REVENUE AS ITSELF LAYS DOWN THAT PROFITS AND GAINS OF ANY PREVIOUS YEAR AR E REQUIRED TO BE COMPUTED IN ACCORDANCE WITH RELEVANT ACCOUNTING STANDARDS. SIMILARLY THE CASE OF G.R. KARTHIKEYAN (SUPRA) ALSO WILL NOT BENEFIT THE REVEN UE AS IT DID NOT DECIDE ANY CONTROVERSY OF ACCRUAL OR MERCAN TILE SYSTEM OF ACCOUNTING. THE JUDGMENT DEALS WITH WINNI NG FROM GAMBLING AND BATTING INCOME THERE IS NO ISSUE ABOU T ACCOUNTS OR ACCRUAL IN THIS CASE. 5.11. COMING TO LEARNED DR RELIANCE ON THE CASE OF TUTICORIN ALKALI CHEMICALS (SUPRA) THE SAME DEALS WITH THE RECEIPTS BEING IN THE NATURE OF CAPITAL OR REVENUE. THE FACTUM OF RECEIPT WAS NOT DISPUTED AND WHETHER THE RECEIPT WAS CAPITAL OR REVENUE HONBLE SUPREME COURT HELD THAT WHILE DECIDING THE QUESTION THE SAME HAS TO BE ON THE BASIS OF PRINCIPLE OF LAW AND NOT IN ACCORDANCE WITH THE ACCOUNTANCY PRACTICE. IN OUR VIE THE CASE BEFORE US PAUSES A PICTURE ON DIFFERENT FACTS WHICH HAVE BEEN MENTIONE D IN DETAIL ABOVE. 5.12. IN OUR CONSIDERED OPINION ALL THE ABOVE JUDG MENTS CLEARLY FAVOUR THE STAND TAKEN BY THE ASSESSEE. WE MAY HASTEN TO MENTION THAT LOOKING AT THE INTRICACIES THE FACTS MAY VARY THEREFORE BASIC PRINCIPLES OF ACCRUAL OR MERCANTILE SYSTEM AS LAID DOWN BY VARIOUS AUTHORITI ES ARE TO BE APPLIED IN A CAREFUL MANNER. THE ASSESSEE BEING A STATE PSU; THE SUR-CHARGE ON DELAYED PAYMENT BEING DISPUT ABLE ITEM; WAS NOT MANDATORILY PAYABLE AT THE TIME OF PA YMENT OF ELECTRICITY CONSUMPTION BILL; WAS NOT AN ACCRUED RE CEIPT IN ITA 4606(DEL)2011 12 VIEW OF THE ACCOUNTING POLICY ACCEPTED BY THE REVE NUE. THEREFORE SUCH AMOUNT OF SURCHARGE CANNOT BE HELD TO BE TAXABLE AS IT IS NOT THE REAL INCOME OF THE ASSESSE E AND IS HYPOTHETICAL BY NATURE IN GIVEN FACTS AND CIRCUMSTA NCES. 5.13. IN VIEW OF THE FOREGOINGS WE ARE OF THE VIEW THAT THE AMOUNT OF SUR-CHARGE NOT REALIZED BY THE ASSESS EE DOES NOT AMOUNT TO ACCRUED OF RECEIPT TAXABLE AS INCOME. CIT(A) HAS RIGHTLY DELETED THE ADDITION WHICH WE UPHOLD. 10. THE FACTS FOR THE YEAR UNDER CONSIDERATION ARE IN PARI MATERIA AND EXACTLY SIMILAR TO THOSE IN ASSESSMENT YEAR 200 6-07. THEREFORE FOLLOWING THE PRINCIPLE OF CONSISTENCY IN KEEPING WITH THE AFORESAID TRIBUNAL ORDER IN THE ASSESSEES OWN CASE FOR ASSES SMENT YEAR 2006-07 THE ORDER OF THE LD. CIT(A) IN THIS REGARD IS UPHEL D AND GROUND NO.1 RAISED BY THE DEPARTMENT IS REJECTED. 11. COMING TO GROUND NO.2 THE AO ASKED THE ASSESSE E TO SHOW CAUSE AS TO WHY WHEELING/TRANSMISSION CHARGES OF ` 2 83 97 19 975/- BILLED BY HVPN LTD. AND STATE LOAD DISPATCH CENTRE (SLDC) AT ` 4 55 10 855/- ALSO BILLED BY HVPN LTD. AFTER TAKI NG INTO ACCOUNT THE REBATE AMOUNTING TO ` 46 96 97 994/- ALLOWED BY HVPNL THE NET TRANSMISSION CHARGES AND SLDC CHARGES AMOUNTING TO ` 2 41 55 32 835/- PAID TO HVPNL BE NOT ADDED TO THE INCOME OF THE ASSESSEE BEING DISALLOWABLE U/S 40(A)(IA) OF THE I NCOME TAX ACT THERE ITA 4606(DEL)2011 13 BEING NON-DEDUCTION OF TAX U/S 194 J OF THE ACT ON THESE PAYMENTS. THE ASSESSEE CONTENDED THAT THE TRIBUNAL IN THE AS SESSEES OWN CASE FOR ASSESSMENT YEARS 2006-07 TO 2008-09 HAD HELD THAT WHEELING CHARGES DID NOT FALL UNDER THE CATEGORY OF TECHNICAL SERVIC ES SINCE THESE CHARGES WERE NOT LIABLE TO DEDUCTION U/S 194 J OF THE ACT SECTION 194 J OF THE ACT WOULD BE APPLICABLE ONLY WHEN THE KNOWLEDGE OF TECHNOLOGY IS MADE AVAILABLE AND NOT WHERE BY USING A TECHNICAL S YSTEM THE SERVICES ARE RENDERED RENDERING OF SERVICES BY ALLOWING USE OF A TECHNICAL SYSTEM IS DIFFERENT FROM CHARGING FEE FOR RENDERING TECHNICAL SERVICES SECTION 194 J WOULD COME INTO PLAY ONLY WHEN MAKING PAYMENT OF FEE FOR TECHNICAL SERVICES AND THE ASSESSEE ACQUIRES C ERTAIN SKILL/KNOWLEDGE/INTELLECT BY USE OF MACHINES/ROBOT OR WHERE SOPHISTICATED EQUIPMENTS ARE INSTALLED AND OPERATED . 12. THE AO HOWEVER REJECTED THE CONTENTION OF THE ASSESSEE. IT WAS HELD THAT THE ASSESSEE HAD ACCEPTED THAT IT HA D MADE PAYMENT ON ACCOUNT OF WHEELING CHARGES AND SLDC CHARGES OF ` 2 37 00 21 981/- AND ` 4 55 10 855/- RESPECTIVELY TO HVPN LTD ; THAT HVP NL HAD PROVIDED TECHNICAL SERVICES FOR WHICH THE ASSESS EE WAS PAYING THE WHEELING CHARGES AND SLDC CHARGES; THAT HOWEVER TH E ASSESSEE HAD FAILED TO DEDUCT TAX UNDER THE PROVISIONS OF SECTIO N 194 J OF THE ACT; AND ITA 4606(DEL)2011 14 THAT THEREFORE THE ASSESSEE WAS LIABLE FOR NON-DE DUCTION OF TAX ON THE TOTAL AMOUNT OF ` 2 41 55 32 835/- MADE TO HVPNL AND THESE EXPENSES WERE DISALLOWABLE U/S 40(A)(IA) OF THE I.T. ACT. 13. THE LD. CIT(A) DELETED THIS DISALLOWANCE ALSO TAKING INTO CONSIDERATION THE ASSESSEES CONTENTION THAT THE TR IBUNAL VIDE ITS ORDER DATED 23.10.2009 IN THE ASSESSEES OWN CASE FOR AS SESSMENT YEARS 2006-07 TO 2008-09 HAD HELD THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE WITHIN SECTION 194 J OF THE AC T IN RESPECT OF THE PAYMENTS BY WAY OF WHEELING CHARGES AND SLDC CHARGE S. 14. THE LD. DR IN THIS REGARD HAS CONTENDED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION CORRECTLY MADE U /S 40(A)(IA) OF THE ACT; THAT THE PAYMENTS WERE MADE FOR THE WORK OF PR OVIDING TECHNICAL SERVICES WITH TDS AS PROVIDED U/S 194 J OF THE ACT; AND THAT THE LD. CIT(A) HAS FAILED TO CONSIDER THAT THE ASSESSEE HAD ITSELF ACCEPTED THE FACTUM OF THE MAKING OF THE PAYMENT BUT NOT HAVING DEDUCTED THE TAX THEREON. 15. THE LEARNED COUNSEL FOR THE ASSESSEE PER CONTR A HAS CONTENDED THAT THE LD. CIT(A) HAS CORRECTLY FOLLOWED THE TRIB UNAL ORDER DATED 23.10.2009 IN THE ASSESSEES OWN CASE FOR ASSESSMEN T YEARS 2006-07 TO ITA 4606(DEL)2011 15 2008-09; THAT AS HELD THEREIN THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE ON THE PAYMENTS MADE. 16. QUA THIS ISSUE IT IS SEEN THE TRIBUNAL IN TH E ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2006-07 TO 2008-09 VIDE ORDER DATED 23.10.2009 (COPY PLACED ON RECORD) HAS OBSERVED IN TER ALIA AS FOLLOWS:- AT THE TIME OF HEARING BOTH THE COUNSELS AGREED T HAT IDENTICAL ISSUE AROSE BEFORE ITAT JAIPUR BENCH IN THE CASE OF JAIPU R VIDYUT VITRAN NIGAM LTD. V. ITO IN ITA NOS. 127 TO 131/JP/2009 DA TED 30.4.2009. IN THE SAID CASE ALSO THE ASSESSEE WAS TREATED AS A SSESSEE IN DEFAULT WITHIN THE MEANING OF SECTION 201(1) OF THE ACT FOR FAILURE TO DEDUCT TAX AT SOURCE AS REQUIRED U/S 194 J OF THE ACT IN R ESPECT OF PAYMENT OF WHEELING CHARGES (TRANSMISSION CHARGES) AND STEA TE LOAD DISPATCH CENTRE CHARGES (SLDC) CHARGES. THE TRIBU NAL IN THE SAID ORDER HELD AS UNDER:- 9. CONSIDERING THE SUBMISSION OF THE PARTIES ON THE IS SUE AS TO WHAT IS THE NATURE OF PAYMENT OF WHEELING/TRANSMISSION/SLDC CHARGES ON THE BASIS OF DOCUMENTS ON RECORDS AND THE FACTS EXPLAINED AND TH E NATURE OF SUCH PAYMENTS AS WELL AS FACTS ON RECORDS WHETHER THE SAME IS LIABLE FOR DEDUCTION OF TAX AT SOURCE U NDER THE IT ACT 1961 SPECIFICALLY UNDER SECTION 194J WHICH PRO VIDES FOR DEDUCTION OF TAX AT SOURCE 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. 9.1 . ON GOING THROUGH THE VARIOUS CLAUSES OF TRANSMISS ION SERVICE AGREEMENT WE FIND THAT AS PER CLAUSE 3 OF T HE AGREEMENT ASSESSEE IS ALLOWED THE USER OF THE TRANS MISSION SYSTEM. CLAUSE 5 PROVIDES FOR OPEN ACCESS TRANSMISS ION CAPACITY WHEREBY ANY OTHER CUSTOMER IS ALSO ALLOWED TO USE THE TRANSMISSION LINES FOR LONG-TERM OPEN ACCESS AN D SHORT- TERM OPEN ACCESS. CLAUSE 8 PROVIDES FOR COMPLIANCE OF GRID CODE AS APPROVED BY THE COMMISSION BOTH BY RVPN AND ITA 4606(DEL)2011 16 ASSESSEE AND FURTHER PROVIDES THAT ALL THE PARTIES SHALL COMPLY WITH THE DIRECTION OF SLDC FOR ENSURING INTE GRATED GRID OPERATION FOR ACHIEVING THE' MAXIMUM ECONOMY A ND EFFICIENCY IN THE OPERATION OF POWER SYSTEM IN THE STATE. AS PER CLAUSES 10 AND 12 THE TARIFF FOR TRANSMISSION A ND WHEELING AND SLDC CHARGES IS TO BE AS APPROVED BY T HE REGULATORY COMMISSION. FROM ALL THESE CLAUSES IT IS CLEAR THAT ALL THE PARTIES INVOLVED WITH GENERATION TRAN SMISSION AND DISTRIBUTION OF ELECTRICITY ARE TO COMPLY WITH THE DIRECTION OF STATE LOAD DISPATCH CENTRE AND THE REG ULATORY COMMISSION FOR ACHIEVING THE ECONOMY AND EFFICIENCY IN THE OPERATION OF POWER SYSTEM AND THEREFORE QUESTION OF ANY PERSON RENDERING SERVICE TO ANOTHER DOES NOT ARISE. THE OPERATION AND MAINTENANCE OF TRANSMISSION LINES BY RVPNL AND THE USE OF THESE LINES BY ASSESSEE FOR TRANSMIT TING ENERGY DOES NOT RESULT INTO ANY TECHNICAL SERVICE BEING RE NDERED TO THE ASSESSEE. THE TECHNICAL STAFF OF RVPN BY OPERAT ING AND MAINTAINING ITS GRID STATION AND TRANSMISSION LINES SIMPLY DISCHARGE THEIR FUNCTION. THEY DO NOT RENDER ANY TE CHNICAL SERVICE TO THE ASSESSEE. 9.2 . IN ABOVE CONNECTION IT IS RELEVANT TO EXTRACT THE RELEVANT PROVISIONS OF SECTION 194J WHICH ARE AS FOLLOWS : 194J. FEES FOR PROFESSIONAL OR TECHNICAL SERVICES. (1) ANY PERSON NOT BEING AN INDIVIDUAL OR AN HUF WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY SUM BY WAY OF (A) FEES FOR PROFESSIONAL SERVICES OR (B) FEES FOR TECHNICAL SERVICES OR (C) ROYALTY OR (D) ANY SUM REFERRED TO IN CLAUSE (VA) OF SECTION 2 8. SHALL AT THE TIME OF CREDIT OF SUCH SUM TO THE ACC OUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF IN C ASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MO DE WHICHEVER IS EARLIER DEDUCT AN AMOUNT EQUAL TO TEN PER CENT OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THEREIN : PROVIDED THAT NO DEDUCTION SHALL BE MADE UNDER THIS SECTION ITA 4606(DEL)2011 17 (A) .. (B) .. (2) () (3) () EXPLANATION : FOR THE PURPOSES OF THIS SECTION (B) 'FEES FOR TECHNICAL SERVICES' SHALL HAVE THE SA ME MEANING AS IN EXPLN. 2 TO CLAUSE (VII) OF SUB-SECTI ON (1) OF SECTION 9;' (C) THE EXPRESSION 'FEES FOR TECHNICAL SERVICES' HAS NO T BEEN DEFINED UNDER SECTION 194J OF THE ACT BUT EXPLN. (B ) TO SECTION 194J OF THE ACT PROVIDES THAT THE SAID EXP RESSION SHALL HAVE THE SAME MEANING AS IN EXPLN. 2 TO CLAUS E (VII) OF SUB-SECTION (1) OF SECTION 9. THE SAID SECTION IS R EPRODUCED HEREINBELOW FOR READY REFERENCE '9. INCOME DEEMED TO ACCRUE OR ARISE IN INDIA.(1) THE FOLLOWING INCOMES SHALL BE DEEMED TO ACCRUE OR ARIS E IN INDIA : (VII)INCOME BY WAY OF FEES FOR TECHNICAL SERVICES P AYABLE BY EXPLANATION 2 : FOR THE PURPOSES OF THIS CLAUSE 'F EES FOR TECHNICAL SERVICES' MEANS ANY CONSIDERATION (INCLUD ING ANY LUMP SUM CONSIDERATION) FOR THE RENDERING OF ANY MANAGERIAL TECHNICAL OR CONSULTANCY SERVICES (INCL UDING THE PROVISION OF SERVICES OF TECHNICAL OR OTHER PERSONN EL) BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION ASSEMBLY MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME OF THE RECIP IENT CHARGEABLE UNDER THE HEAD 'SALARIES'. 9.3. THE EXPRESSION 'FEES FOR TECHNICAL SERVICE' AS USED IN SECTION 194J OF THE ACT HAS BEEN EXHAUSTIVELY EXAMI NED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF BHARTI CELLULAR LTD. ( SUPRA) AND THE OBSERVATIONS ARE REPRODUCED A S UNDER : '13. WE HAVE ALREADY POINTED OUT THAT THE EXPRESSIO N 'FEES FOR TECHNICAL SERVICES' AS APPEARING IN SECTION 194 J OF THE SAID ACT HAS THE SAME MEANING AS GIVEN TO THE EXPRE SSION IN EXPLN. 2 TO SECTION 9(L)( VII) OF THE SAID ACT. IN THE SAID EXPLANATION THE EXPRESSION 'FEES FOR TECHNICAL SERV ICES' ITA 4606(DEL)2011 18 MEANS ANY CONSIDERATION FOR RENDERING OF ANY 'MANAG ERIAL TECHNICAL OR CONSULTANCY SERVICES'. THE WORD 'TECHN ICAL' IS PRECEDED BY THE WORD 'MANAGERIAL' AND SUCCEEDED BY THE WORD 'CONSULTANCY'. SINCE THE EXPRESSION 'TECHNICAL SERVICES' IS IN DOUBT AND IS UNCLEAR THE RULE OF NOSCITUR A SOCIIS IS CLEARLY APPLICABLE. THE SAID RULE IS EXPLAINED IN M AXWELL ON THE INTERPRETATION OF STATUTES (TWELFTH EDITION) IN THE FOLLOWING WORDS : WHERE TWO OR MORE WORDS WHICH ARE SUSCEPTIBLE OF ANALOGOUS MEANING ARE COUPLED TOGETHER NOSCITUR A SOCIIS THEY ARE UNDERSTOOD TO BE USED IN THEIR COGNATE SEN SE. THEY TAKE AS IT WERE THEIR COLOUR FROM EACH OTHER THE MEANING OF THE MORE GENERAL BEING RESTRICTED TO A SENSE ANALOG OUS TO THAT OF THE LESS GENERAL. THIS WOULD MEAN THAT THE WORD 'TECHNICAL' WOULD TAK E COLOUR FROM THE WORDS 'MANAGERIAL' AND 'CONSULTANCY' BETWE EN WHICH IT IS SANDWICHED. THE WORD 'MANAGERIAL' HAS B EEN DEFINED IN THE SHORTER OXFORD ENGLISH DICTIONARY F IFTH EDITION AS : OF PERTAINING TO OR CHARACTERISTIC OF A MANAGER OF OR WITHIN AN ORGANIZATION BUSINESS ESTABLISHMENT ETC. THE WORD 'MANAGER' HAS BEEN DEFINED INTER ALIA AS : A PERSON WHOSE OFFICE IT IS TO MANAGE AN ORGANIZATI ON BUSINESS ESTABLISHMENT OR PUBLIC INSTITUTION OR P ART OF ONE; A PERSON WITH THE PRIMARILY EXECUTIVE OR SUPERVISOR Y FUNCTION WITHIN AN ORGANIZATION ETC.; A PERSON CONT ROLLING THE ACTIVITIES OF A PERSON OR TEAM IN SPORTS ENTER TAINMENT ETC. IT IS THEREFORE CLEAR THAT A MANAGERIAL SERVICE WO ULD BE ONE WHICH PERTAINS TO OR HAS THE CHARACTERISTIC OF A MA NAGER. IT IS OBVIOUS THAT THE EXPRESSION 'MANAGER' AND CONSEQ UENTLY 'MANAGERIAL SERVICE' HAS A DEFINITE HUMAN ELEMENT A TTACHED TO IT. TO PUT IT BLUNTLY A MACHINE CANNOT BE A MAN AGER. 14. SIMILARLY THE WORD 'CONSULTANCY' HAS BEEN DEFI NED IN THE SAID DICTIONARY AS 'THE WORK OR POSITION OF A CONSU LTANT; A DEPARTMENT OF CONSULTANTS'. 'CONSULTANT' ITSELF HAS BEEN DEFINED INTER ALIA AS 'A PERSON WHO GIVES PROFESS IONAL ADVICE OR SERVICES IN A SPECIALIZED FIELD'. IT IS O BVIOUS THAT ITA 4606(DEL)2011 19 THE WORD 'CONSULTANT' IS A DERIVATIVE OF THE WORD ' CONSULT' WHICH ENTAILS DELIBERATIONS CONSIDERATION CONFERR ING WITH SOMEONE CONFERRING ABOUT OR UPON A MATTER. CONSULT HAS ALSO BEEN DEFINED IN THE SAID DICTIONARY AS 'ASK AD VICE FOR SEEK COUNSEL OR A PROFESSIONAL OPINION FROM; REFER TO (A SOURCE OF INFORMATION); SEEK PERMISSION OR APPROVAL FROM FOR A PROPOSED ACTION'. IT IS OBVIOUS THAT THE SERV ICE ALSO NECESSARILY ENTAILS HUMAN INTERVENTION. THE CONSULT ANT WHO PROVIDES THE CONSULTANCY SERVICE HAS TO BE A HUMAN BEING. A MACHINE CANNOT BE REGARDED AS A CONSULTANT. 15. FROM THE ABOVE DISCUSSION IT IS APPARENT THAT BOTH THE WORDS 'MANAGERIAL' AND 'CONSULTANCY' INVOLVE A HUMA N ELEMENT. AND BOTH MANAGERIAL SERVICE AND CONSULTA NCY SERVICE ARE PROVIDED BY HUMANS. CONSEQUENTLY APPL YING THE RULE OF NOSCITUR A SOCIIS THE WORD 'TECHNICAL' AS APPEARING IN EXPLN. 2 TO SECTION 9(1)(VII) WOULD AL SO HAVE TO BE CONSTRUED AS INVOLVING A HUMAN ELEMENT. BUT THE FACILITY PROVIDED BY MTNL/OTHER COMPANIES FOR INTERCONNECTION/PORT ACCESS IS ONE WHICH IS PROVIDE D AUTOMATICALLY BY MACHINES. IT IS INDEPENDENTLY PROV IDED BY THE USE OF TECHNOLOGY AND THAT TOO SOPHISTICATED T ECHNOLOGY BUT THAT DOES NOT MEAN THAT MTNL/OTHER COMPANIES WH ICH PROVIDE SUCH FACILITIES ARE RENDERING ANY TECHNICAL SERVICES AS CONTEMPLATED IN EXPLN. 2 TO SECTION 9(1)(VII) OF THE SAID ACT. THIS IS SO BECAUSE THE EXPRESSION 'TECHNICAL S ERVICES' TAKES COLOUR FROM THE EXPRESSIONS 'MANAGERIAL SERVI CES' AND 'CONSULTANCY SERVICES' WHICH NECESSARILY INVOLVE A HUMAN ELEMENT OR WHAT IS NOW A DAYS FASHIONABLY CALLED HUMAN INTERFACE. IN THE FACTS OF THE PRESENT APPEALS THE SERVICES RENDERED QUA INTERCONNECTION/PORT ACCESS DO NOT INV OLVE ANY HUMAN INTERFACE AND THEREFORE THE SAME CANNOT BE REGARDED AS 'TECHNICAL SERVICES' AS CONTEMPLATED UN DER SECTION 194J OF THE SAID ACT. 20. BEFORE CONCLUDING WE WOULD ALSO LIKE TO POINT O UT THAT THE INTERCONNECTION/PORT ACCESS FACILITY IS ONLY A FACILITY TO USE THE GATEWAY AND THE NETWORK OF MTNL/OTHER COMPA NIES. MTNL OR OTHER COMPANIES DO NOT PROVIDE ANY ASSISTAN CE OR AID OR HELP TO THE RESPONDENTS/ASSESSEE IN MANAGING OPERATING SETTING UP THEIR INFRASTRUCTURE AND NETW ORKS. NO ITA 4606(DEL)2011 20 DOUBT THE FACILITY OF INTERCONNECTION AND PORT ACC ESS PROVIDED BY MTNL/OTHER COMPANIES IS 'TECHNICAL' IN THE SENSE THAT IT INVOLVES SOPHISTICATED TECHNOLOGY. TH E FACILITY MAY EVEN BE CONSTRUED AS A 'SERVICE' IN THE BROADER SENSE SUCH AS A 'COMMUNICATION SERVICE'. BUT WHEN WE ARE REQUIRED TO INTERPRET THE EXPRESSION 'TECHNICAL SER VICE' THE INDIVIDUAL MEANING OF THE WORDS 'TECHNICAL' AND 'SE RVICE' HAVE TO BE SHED. AND ONLY ONE MEANING OF THE WHOLE EXPRESSION 'TECHNICAL SERVICES' HAS TO BE SEEN. MOR EOVER THE EXPRESSION 'TECHNICAL SERVICE' IS NOT TO BE CONSTRU ED IN THE ABSTRACT AND GENERAL SENSE BUT IN THE NARROWER SENS E AS CIRCUMSCRIBED BY THE EXPRESSIONS 'MANAGERIAL SERVIC E' AND 'CONSULTANCY SERVICE' AS APPEARING IN EXPLN. 2 TO S ECTION 9(1)(VII) OF THE SAID ACT. CONSIDERED IN THIS LIGHT THE EXPRESSION 'TECHNICAL SERVICE' COULD HAVE REFERENCE TO ONLY TECHNICAL SERVICE RENDERED BY A HUMAN. IT WOULD NOT INCLUDE ANY SERVICE PROVIDED BY MACHINES OR ROBOTS.' 9.4. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF SKYCEL L COMMUNICATIONS LTD. (SUPRA) HAS HELD AS UNDER : '4. 'FEES FOR TECHNICAL SERVICES' IS NOT DEFINED IN SECTION 194J. EXPLANATION (B) IN THAT SECTION PROVIDES THAT EXPRESSION SHALL HAVE THE SAME MEANING AS IN EXPLN. 2 TO CLAUSE (VII) OF SUB-S.(L) OF SECTION 9. THAT EXPLN. 2 IN SECTION 9(1)(VII) READS THUS : 'FOR THE PURPOSES OF THIS CLAUSE 'FEES FOR TECHNIC AL SERVICES' MEANS ANY CONSIDERATION (INCLUDING ANY LUMP SUM CONSIDERATION) FOR RENDERING OF ANY MANAGERIAL TEC HNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SE RVICES OF TECHNICAL OR OTHER PERSONNEL) BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION ASSEMBLY MININ G OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATIO N WHICH WOULD BE INCOME OF THE RECIPIENT CHARGEABLE UNDER T HE HEAD 'SALARIES'.' THIS DEFINITION SHOWS THAT CONSIDERATION PAID FOR T HE RENDERING OF ANY MANAGERIAL TECHNICAL OR CONSULTAN CY SERVICE AS ALSO THE CONSIDERATION PAID FOR THE PRO VISION OF SERVICES OF TECHNICAL OR OTHER PERSONNEL WOULD BE REGARDED AS FEES PAID FOR 'TECHNICAL SERVICES'. THE DEFINITI ON EXCLUDES FROM ITS AMBIT CONSIDERATION PAID FOR CONSTRUCTION ITA 4606(DEL)2011 21 ASSEMBLY OR MINING OR LIKE PROJECT UNDERTAKEN BY T HE RECIPIENT AS ALSO CONSIDERATION WHICH WOULD CONSTI TUTE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD ' SALARIES'. THUS WHILE STATING THAT 'TECHNICAL SERVICE' WOULD I NCLUDE MANAGERIAL AND CONSULTANCY SERVICE THE LEGISLATURE HAS NOT SET OUT WITH PRECISION AS TO WHAT WOULD CONSTITUTE TECHNICAL' SERVICE TO RENDER IT 'TECHNICAL SERVICE'. THE MEANING OF THE WORD 'TECHNICAL' AS GIVEN IN THE NEW OXFORD DICTIONARY IS ADJECTIVE 1 OF OR RELATING TO A PARTICULAR SUBJECT ART OR CRAFT OR ITS TECHNIQUES; TECHNICAL TERMS (ESPECIALLY OF A BOOK OR ARTICLE) REQUIRING S PECIAL KNOWLEDGE TO BE UNDERSTOOD; A TECHNICAL REPORT 2 O F INVOLVING OR CONCERNED WITH APPLIED AND INDUSTRIAL SCIENCES: AN IMPORTANT TECHNICAL ACHIEVEMENT 3. RE SULTING FROM MECHANICAL FAILURE: A TECHNICAL FAULT 4. ACCO RDING TO A STRICT APPLICATION OR INTERPRETATION OF THE LAW OR THE RULES : THE ARREST WAS A TECHNICAL VIOLATION OF THE TREATY. HAVING REGARD TO THE FACT THAT THE TERM IS REQUIRED TO BE UNDERSTOOD IN THE CONTEXT IN WHICH IT IS USED 'FEE FOR TECHNICAL SERVICES' COULD ONLY BE MEANT TO COVER SU CH THINGS TECHNICAL AS ARE CAPABLE OF BEING PROVIDED BY WAY O F SERVICE FOR A FEE. THE POPULAR MEANING ASSOCIATED WITH 'TEC HNICAL' IS 'INVOLVING OR CONCERNING APPLIED AND INDUSTRIAL SCI ENCE'. 5. IN THE MODERN DAY WORLD ALMOST EVERY FACET OF O NE'S LIFE IS LINKED TO SCIENCE AND TECHNOLOGY INASMUCH AS NUM EROUS THINGS USED OR RELIED UPON IN EVERYDAY LIFE IS THE RESULT OF SCIENTIFIC AND TECHNOLOGICAL DEVELOPMENT. EVERY INS TRUMENT OR GADGET THAT IS USED TO MAKE LIFE EASIER IS THE R ESULT OF SCIENTIFIC INVENTION OR DEVELOPMENT AND INVOLVES TH E USE OF TECHNOLOGY. ON THAT SCORE EVERY PROVIDER OF EVERY INSTRUMENT OR FACILITY USED BY A PERSON CANNOT BE R EGARDED AS PROVIDING TECHNICAL SERVICE. WHEN A PERSON HIRES A TAXI TO MOVE FROM ONE PLACE T O ANOTHER HE USES A PRODUCT OF SCIENCE AND TECHNOLOG Y VIZ. AN AUTOMOBILE. IT CANNOT ON THAT GROUND BE SAID THA T THE TAXI DRIVER WHO CONTROLS THE VEHICLE ARID MONITORS ITS MOVEMENT IS RENDERING A TECHNICAL SERVICE TO THE PERSON WHO USES THE AUTOMOBILE. SIMILARLY WHEN A PERSON TRAVELS BY TRA IN OR IN AN AEROPLANE IT CANNOT BE SAID THAT THE RAILWAYS O R AIRLINES ITA 4606(DEL)2011 22 IS RENDERING A TECHNICAL SERVICE TO THE PASSENGER A ND THEREFORE THE PASSENGER IS UNDER AN OBLIGATION TO DEDUCT TAX AT SOURCE ON THE PAYMENTS MADE TO THE RAILWAY OR TH E AIRLINE FOR HAVING USED IT FOR TRAVELLING FROM ONE DESTINAT ION TO ANOTHER. WHEN A PERSON TRAVELS BY BUS IT CANNOT BE SAID THAT THE UNDERTAKING WHICH OWNS THE BUS SERVICE IS RENDE RING TECHNICAL SERVICE TO THE PASSENGER AND THEREFORE THE PASSENGER MUST DEDUCT TAX AT SOURCE ON THE PAYMENT MADE TO THE BUS SERVICE PROVIDER FOR HAVING USED THE BUS. THE ELECTRICITY SUPPLIED TO A CONSUMER CANNOT ON THE G ROUND THAT GENERATORS ARE USED TO GENERATE ELECTRICITY TRANSMISSION LINES TO CARRY THE POWER TRANSFORMERS TO REGULATE THE FLOW OF CURRENT METERS TO MEASURE THA T CONSUMPTION BE REGARDED AS AMOUNTING TO PROVISION OF TECHNICAL SERVICES TO THE CONSUMER RESULTING IN THE CONSUMER HAVING TO DEDUCT TAX AT SOURCE ON THE PAYMENT MADE FOR THE POWER CONSUMED AND REMIT THE SAME TO THE REVENUE. SATELLITE TELEVISION HAS BECOME UBIQUITOUS AND IS SPREADING ITS AREA AND COVERAGE AND COVERS MILLIONS OF HOMES . WHEN A PERSON RECEIVES SUCH TRANSMISSION OF TELEVISION SIG NALS THROUGH THE CABLE PROVIDED BY THE CABLE OPERATOR I T CANNOT BE SAID THAT THE HOME OWNER WHO HAS SUCH A CABLE CONNECTION IS RECEIVING A TECHNICAL SERVICE FOR WHI CH HE IS REQUIRED TO DEDUCT TAX AT SOURCE ON THE PAYMENTS MA DE TO THE CABLE OPERATOR. INSTALLATION AND OPERATION OF SOPHISTICATED EQUIPME NTS WITH A VIEW TO EARN INCOME BY ALLOWING CUSTOMERS TO AVAI L OF THE BENEFIT OF THE USER OF SUCH EQUIPMENT DOES NOT RESU LT IN THE PROVISION TO TECHNICAL SERVICE TO THE CUSTOMERS FOR A FEE. 6. WHEN A PERSON DECIDES TO SUBSCRIBE TO A CELLULAR TELEPHONE SERVICE IN ORDER TO HAVE THE FACILITY OF BEING ABLE TO COMMUNICATE WITH OTHERS HE DOES NOT CONTRACT TO RECEIVE A TECHNICAL SERVICE. WHAT HE DOES AGREE TO IS TO PA Y FOR THE USE OF THE AIRTIME FOR WHICH HE PAYS A CHARGE. THAT FACT THAT THE TELEPHONE SERVICE PROVIDER HAS INSTALLED SOPHIS TICATED TECHNICAL EQUIPMENT IN THE EXCHANGE TO ENSURE CONNE CTIVITY TO ITS SUBSCRIBER DOES NOT ON THAT SCORE MAKE IT PROVISION OF A TECHNICAL SERVICE TO THE SUBSCRIBER. THE SUBSCRIB ER IS NOT CONCERNED WITH THE COMPLEXITY OF THE EQUIPMENT INST ALLED IN ITA 4606(DEL)2011 23 THE EXCHANGE' OR THE LOCATION OF THE BASE STATION. ALL THAT HE WANTS IS THE FACILITY OF USING THE TELEPHONE WHEN H E WISHES TO AND BEING ABLE TO GET CONNECTED TO THE PERSON A T THE NUMBER TO WHICH HE DESIRES TO BE CONNECTED. WHAT AP PLIES TO CELLULAR MOBILE TELEPHONE IS ALSO APPLICABLE IN FIX ED TELEPHONE SERVICE. NEITHER SERVICE CAN BE REGARDED AS 'TECHNICAL SERVICE' FOR THE PURPOSE OF SECTION 194J OF THE ACT. 7. THE USE OF THE INTERNET AND THE WORLD WIDE WEB I S INCREASING BY LEAPS AND BOUNDS AND THERE ARE HUNDR EDS OF THOUSANDS IF NOT MILLIONS OF SUBSCRIBERS TO THAT FACILITY. THE INTERNET IS VERY MUCH A PRODUCT OF TECHNOLOGY AND WITHOUT THE SOPHISTICATED EQUIPMENT INSTALLED BY THE INTERN ET SERVICE PROVIDERS AND THE USE OF THE TELEPHONE FIXED OR MOB ILE THROUGH WHICH THE CONNECTION IS ESTABLISHED THE SE RVICE CANNOT BE PROVIDED. HOWEVER ON THAT SCORE EVERY SUBSCRIBER OF THE INTERNET SERVICE PROVIDER CANNOT BE REGARDED AS HAVING ENTERED INTO A CONTRACT FOR AVAI LING OF TECHNICAL SERVICES FROM THE PROVIDER OF THE INTERNE T SERVICE AND SUCH SUBSCRIBER REGARDED AS BEING OBLIGED TO DE DUCT TAX AT SOURCE ON THE PAYMENT MADE TO THE INTERNET SERVI CE PROVIDER. 8. AT THE TIME THE IT ACT WAS ENACTED IN THE YEAR 1 961 AS ALSO AT THE TIME WHEN EXPLN. 2 TO SECTION 9(1)(V II) WAS INTRODUCED BY THE FINANCE (NO. 2) ACT W.E.F. 1 ST APRIL 1977 THE PRODUCTS OF TECHNOLOGY HAD NOT BEE N IN SUCH WIDE USE AS THEY ARE TODAY. ANY CONSTRUCTION O F THE PROVISIONS OF THE ACT MUST BE IN THE BACKGROUND OF THE REALITIES OF DAY-TO-DAY LIFE IN WHICH THE PRODUCTS OF TECHNOLOGY PLAY AN IMPORTANT ROLE IN MAKING LIFE SMOOTHER AND MORE CONVENIENT. SEC. 194J AS ALSO EXPLN. 2 IN SECTION 9(1)(VII) OF THE ACT WERE NOT INTENDED TO COVER THE CHARGES PAID BY THE AVERAGE HOUSEHOLDER OR CONSUMER FOR UTILIZING THE PRODUCTS OF MODERN TECHNOLOGY SUCH AS USE OF THE TELEPHONE FI XED OR MOBILE THE CABLE TV THE INTERNET THE AUTOMOBI LE THE RAILWAY THE AEROPLANE CONSUMPTION OF ELECTRIC AL ENERGY ETC. SUCH FACILITIES WHICH WHEN USED BY INDIVIDUALS ARE NOT CAPABLE OF BEING REGARDED AS TECHNICAL SERVICE CANNOT BECOME SO WHEN USED BY FIR MS ITA 4606(DEL)2011 24 AND COMPANIES. THE FACILITY REMAINS THE SAME WHOEVE R THE SUBSCRIBER MAY BE INDIVIDUAL FIRM OR COMPANY. 9. TECHNICAL SERVICE' REFERRED IN SECTION 9(1)(VII) CONTEMPLATES RENDERING OF A 'SERVICE' TO THE PAYER OF THE FEE. MERE COLLECTION OF A 'FEE' FOR USE OF A STANDA RD FACILITY PROVIDED TO ALL THOSE WILLING TO PAY FOR IT DOES NO T AMOUNT TO THE FEE HAVING BEEN RECEIVED FROM TECHNICAL SERV ICES.' THUS HON'BLE COURT WHILE DEALING WITH THE CASE OF 'TRANSMISSION OF VOICE' HAS EQUATED THE SAME WITH T HE 'TRANSMISSION OF THE ELECTRICITY' AND HELD THAT THE SAME DOES NOT AMOUNT TO PROVIDING THE TECHNICAL SERVICE. 9.5 . IN CASE OF PARASRAMPURIA SYNTHETICS LTD. (SUPRA) IT WAS HELD AS UNDER : 'THERE MAY BE USE OF SERVICES OF TECHNICALLY QUALIF IED PERSON TO RENDER THE SERVICES BUT THAT ITSELF DO NO T BRING THE AMOUNT PAID AS 'FEES FOR TECHNICAL SERVICES' WI THIN THE MEANING OF EXPLN 2 TO SECTION 9(1)(VII). THE AMOUN T PAID ARE TOWARDS ANNUAL MAINTENANCE CONTRACT OF CERTAIN MACHINERY OR FOR CONVERTING PARTIALLY ORIENTED YARD (POY) INTO TEXTURISED/TWISTED YARN. THE TECHNOLOGY OR TEC HNICAL KNOWLEDGE OF PERSONS IS NOT MADE AVAILABLE TO THE A SSESSEE BUT ONLY BY USING SUCH TECHNICAL KNOWLEDGE SERVICES ARE RENDERED TO THE ASSESSEE. IN SUCH A CASE IT CANNOT BE SAID THAT THE AMOUNT IS PAID AS 'FEES FOR TECHNICAL SERV ICES'. RENDERING SERVICES BY USING TECHNICAL KNOWLEDGE OR SKILL IS DIFFERENT THAN CHARGING FEES FOR TECHNICAL SERVICES ! IN THE LATER CASE THE TECHNICAL SERVICES ARE MADE AVAILABL E DUE TO WHICH ASSESSEE ACQUIRED CERTAIN RIGHT WHICH CAN BE FURTHER USED. ACCORDINGLY WHERE THE PERSONS RENDERING CERTA IN SERVICES HAS ONLY MAINTAINED MACHINERY OR CONVERTED YARN BUT THAT KNOWLEDGE IS NOT VESTED WITH THE ASSESSEE BY WHICH ITSELF IT CAN DO RESEARCH WORK THE AMOUNT PAID CAN NOT BE CONSIDERED AS FEES FOR TECHNICAL SERVICES WITHIN TH E MEANING OF SECTION 194J OF THE ACT.' 9.6. AN ANALYSIS OF ABOVE CASES LAYS DOWN THE PROPOSITIO N THAT SECTION 194J WOULD HAVE APPLICATION ONLY WHEN THE TECHNOLOGY OR TECHNICAL KNOWLEDGE OF A PERSON IS MA DE AVAILABLE TO OTHERS AND NOT WHERE BY USING TECHNICA L SYSTEMS SERVICES ARE RENDERED TO OTHERS. RENDERING OF ITA 4606(DEL)2011 25 SERVICES BY ALLOWING USE OF TECHNICAL SYSTEM IS DIF FERENT THAN CHARGING FEES FOR RENDERING TECHNICAL SERVICES . THE APPLICABILITY OF SECTION 194J WOULD COME INTO EFFEC T ONLY WHEN BY MAKING PAYMENT OF FEE FOR TECHNICAL SERVICE S ASSESSEE ACQUIRED CERTAIN SKILL/KNOWLEDGE/INTELLECT WHICH CAN BE FURTHER USED BY HIM FOR ITS OWN PURPOSE/RESE ARCH. WHERE FACILITY IS PROVIDED BY USE OF MACHINE/ROBOT OR WHERE SOPHISTICATED EQUIPMENTS ARE INSTALLED AND OP ERATED WITH A VIEW TO EARN INCOME BY ALLOWING THE CUSTOMER S TO AVAIL OF THE BENEFIT BY USER OF SUCH EQUIPMENT THE SAME DOES NOT RESULT IN THE PROVISION OF TECHNICAL SERVI CE TO THE CUSTOMER FOR A FEE. SIMILAR IS THE PROPOSITION LAID DOWN IN OTHER CASES RELIED BY THE LEARNED AUTHORIZED REPRESENTATIVE SUPRA. 9.7. THE ARGUMENTS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT HUMAN ELEMENT IS INVOLVED IN PROVIDING SUCH SERVICE MAKING THE PAYMENT OF WHEELING/SLDC CHARGES LIABLE FOR DEDUCTION OF TAX A T SOURCE AS TECHNICAL SERVICE HAS NO MERIT AS THE TEC HNICAL SERVICE IS NOT PROVIDED TO THE PERSONNEL OF THE ASS ESSEE. WE ARE ALSO UNABLE TO PURSUE (SIC) OURSELF WITH THE CO NTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT OTH ER PERSONS ARE MAKING DEDUCTION AT SOURCE ON SUCH PAYM ENT UNDER SECTION 194C/194J/194H. ON GOING THROUGH THE PAPERS-FILED AT PP. 34 TO 41 OF THE PAPER BOOK FILE D BY THE DEPARTMENT WE NOTE THAT AS PER THOSE PAPERS ONLY SO ME REPORT/LETTERS HAS BEEN ISSUED BY THE TDS OFFICER R EQUIRING THE DEDUCTION OF TAX AT SOURCE ON SUCH PAYMENT. SIM ILARLY M/S HINDUSTAN ZINC LTD. IS DEDUCTING THE TAX AT SOU RCE UNDER SECTION 194C IN RESPECT OF PAYMENT OF TRANSMI SSION CHARGES TO RVPN CANNOT LAY DOWN THE LAW. THE CIT(A) HAS GIVEN A FINDING ON P. 54 OF HIS ORDER THAT THESE PA YMENTS ARE NOT COVERED UNDER SECTION 194C AGAINST WHICH NO APPEAL IS FILED BY THE DEPARTMENT THOUGH WE ARE OTH ERWISE CONVINCED WITH THE ARGUMENT OF LEARNED AUTHORISED REPRESENTATIVE THAT SECTION 194C IS NOT APPLICABLE ON THIS PAYMENT IN VIEW OF THE DETAILED SUBMISSION MADE IN THIS REGARD AT PAPER BOOK PP. A-23 TO A-27. ITA 4606(DEL)2011 26 9.8. THE DECISION RELIED BY THE AO IN THE CASE OF OBEROI HOTELS ( INDIA) ( P) LTD. (SUPRA) CIRCULAR NO. 187 DT. 23RD DEC 1975 AND IN THE CASE OF CONTINENTAL CONSTRUCTI ON LTD. ( SUPRA) THOUGH RELATES TO SECTION 80-O OF THE IT A CT SUPPORTS THE CASE OF THE ASSESSEE THAT A TECHNICAL SERVICE IS INVOLVED WHERE 'INFORMATION CONCERNING INDUSTRIAL COMMERCIAL OR SCIENTIFIC KNOWLEDGE EXPERIENCE OR S KILL IS MADE AVAILABLE'. IN THE PRESENT CASE NO SCIENTIFIC KNOWLEDGE EXPERIENCE OR SKILL IS MADE AVAILABLE/RE NDERED BY THE RVPN TO THE ASSESSEE. THE ASSESSEE ITSELF HA S ITS OWN ENGINEERS AND TECHNICIANS WHO CONSISTENTLY MONI TOR AND SUPERVISE THE FLOW OF THE ELECTRICITY TO ITS SY STEM AND ULTIMATELY SUPPLIES TO ITS CUSTOMER. THE FUNCTION O F STATE LOAD DISPATCH CENTRE AS REGULATOR AND CONTROLLER FO R OPTIMUM SCHEDULING AND DISPATCH OF ELECTRICITY AND SUPERVISION OVER THE INTRA-STATE TRANSMISSION SYSTE M IS STATUTORY FUNCTION WHICH IS ALSO ENTRUSTED TO RVPN AND THEREFORE RVPN BY DISCHARGING SUCH STATUTORY FUNCT ION DOES NOT PROVIDE ANY TECHNICAL SERVICE. 9.9. WE HAVE ALSO CONSIDERED THE OTHER DECISIONS RELIED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE WHICH ARE C LEARLY DISTINGUISHABLE ON FACTS. IN CASE OF SINGAPORE AIRL INES LTD. ( SUPRA) THE NAVIGATION CHARGES PAID WAS FOR GETTIN G THE TECHNICAL SERVICE LIKE WEATHER REPORT INSTRUCTION OVERFLIGHTS TO FLY OVER TECHNICAL TERRITORIES AND S UCH OTHER TECHNICAL SERVICES WHICH ARE NEEDED TO FLY THE AIRC RAFT ON THE INDIAN TERRITORY. BY GIVING THESE INSTRUCTIONS AND TECHNICAL SERVICES TO FLY THE AIRCRAFT THE TECHNICA L KNOWLEDGE OF A PERSON WAS MADE AVAILABLE TO THE ASS ESSEE AND THEREFORE IT WAS HELD TO BE A PAYMENT FOR TECHN ICAL SERVICES WHICH IS NOT THE FACTS OF THE PRESENT CASE . THE CASE OF CANARA BANK ( SUPRA) IN RESPECT OF PAYMENT OF MI CR CHARGES TO SBI WHICH INVOLVED HUMAN SKILL AND COMPUTERISED MACHINE AND NOT SIMPLY MAKING AVAILABL E THE TECHNICAL EQUIPMENT WORKING ON ITS OWN AND THER EFORE HELD TO BE A PAYMENT TOWARDS MANAGERIAL SERVICES. T HE CASE DR. HUTAREW & PARTNER ( INDIA) ( P) LTD. (SUPR A) IS WITH REFERENCE TO SECTION 195 AND NOT SECTION 194J. IN THIS CASE ALSO THE NON-RESIDENT TO WHOM PAYMENT WAS MADE WAS NOT MAINTAINING ANY SERVER FOR EVERYBODY THAT A NYONE ITA 4606(DEL)2011 27 CAN FEED THE DATA AND GET THE SOLUTIONS. THE SOLUTI ONS WERE PROVIDED ON THE SPECIFIC NEEDS OF THE CUSTOMERS. TH E INFORMATION SUPPLIED IS SPECIFIC WHICH HELP THE ASS ESSEE IN FINALIZING ITS DESIGN. THE INFORMATION SUPPLIED TO THE ASSESSEE WAS A TECHNICAL INFORMATION WHICH HAS BEEN USED IN FURTHER GENERATING THE PRODUCT OF THE ASSESSEE. THEREFORE SUCH SPECIFIC CLIENT BASED INFORMATION W AS HELD NOT EQUATABLE WITH THE STANDARD SERVICES PROVIDED B Y TELECOMMUNICATION COMPANY. THUS THESE DECISIONS ARE QUITE DISTINGUISHABLE AND NOT APPLICABLE ON THE FAC TS OF THE PRESENT CASE. WE THEREFORE HOLD THAT THERE IS NO LI ABILITY TO DEDUCT TAX AT SOURCE ON PAYMENT OF TRANSMISSION/WHEELING/SLDC CHARGES UNDER SECTION 19 4J OR FOR THAT MATTER UNDER SECTION 194C. 9.10. WE ALSO FIND FORCE IN ALTERNATE ARGUMENT OF THE LEARNED AUTHORISED REPRESENTATIVE THAT THE OF TRANSMISSION/WHEELING/SLDC CHARGES IS REIMBURSEMENT OF THE COST. THEREFORE THE PROVISIONS OF CHAPTER XVII- B ARE NOT APPLICABLE SINCE THERE IS NO PAYMENT OF INCOME/ REVENUE BY THE ASSESSEE. WE FIND THAT THE TARIFF IS FIXED B Y AN INDEPENDENT REGULATORY BODY I.E. RAJASTHAN ELECTRI CITY REGULATORY COMMISSION. THE TRANSMISSION COMPANY IS NOT ALLOWED ANY RETURN ON ITS CAPITAL; THE TARIFF IS DE TERMINED ON THE PRINCIPLE OF NO PROFIT NO LOSS. FROM THE TAR IFF ORDER (PAPER BOOK 90-93) WE FIND THAT TARIFF IS FIXED BY ESTIMATING THE ACTUAL COST OF OPERATION OF RVPN. IN CASE ON THE BASIS OF SUCH TARIFF ANY SURPLUS IS LEFT WI TH THE RVPN THEY GIVE CREDIT OF THE SAME TO THE ASSESSEE AS EVIDENT FROM THE EXTRACT OF THE MINUTES OF THE BOAR D AND THE COPY OF THE JOURNAL VOUCHER BY WHICH SUCH CREDIT IS GIVEN TO THE ASSESSEE (PAPER BOOK 136-138). THUS WHEN NO INCOME IS PAID BY ASSESSEE TO TRANSMISSION COMPANY THE QUESTION OF DEDUCTION OF TAX AT SOURCE DO NOT OTHER WISE ARISE EVEN WHEN UNDER CERTAIN SECTION OF CHAPTER XV II-B LIABILITY OF TDS IS ON PAYMENT OF ANY SUM AND UNDER CERTAIN SECTIONS IT IS ON PAYMENT OF INCOME AS ULTI MATELY THE TAX IS ON THE INCOME AND DEDUCTION OF TAX AT SO URCE IS ONLY ONE OF THE MODES OF COLLECTION AND RECOVERY OF THE TAX. ON ACTUAL REIMBURSEMENT PROVISION OF DEDUCTION OF TAX AT SOURCE WOULD NOT APPLY AS HELD IN CASE OF DR. WILLM AR ITA 4606(DEL)2011 28 SCHWABE INDIA (P) LTD. (SUPRA ) (PAPER BOOK 124-12 5) HEADNOTE OF WHICH READS AS UNDER : 'AS AGREED BY AND BETWEEN THE ASSESSEE COMPANY AND ITCL A VEHICLE WAS TO BE PROVIDED BY THE ASSESSEE COMPANY TO THE SAID CONSULTANT FOR ATTENDING TO ITS WORK AND THUS THE ASSESSEE COMPANY WAS TO BEAR THE VEHI CLE EXPENSES ACTUALLY INCURRED BY THE SAID PARTY. BILLS FOR SUCH EXPENSES INCURRED BY THE SAID CONSULTANT WERE SEPAR ATELY RAISED BY THEM ON THE ASSESSEE COMPANY IN ADDITION TO BILLS FOR FEES PAYABLE ON ACCOUNT OF TECHNICAL SERVICES A ND SINCE THE AMOUNT OF BILLS SO RAISED WAS TOWARDS THE ACTUA L EXPENSES INCURRED BY THEM THERE WAS NO ELEMENT OF ANY PROFIT INVOLVED IN THE SAID BILLS. IT WAS THUS A CL EAR CASE OF REIMBURSEMENT OF ACTUAL EXPENSES INCURRED BY THE AS SESSEE AND THE SAME THEREFORE WAS NOT OF THE NATURE OF P AYMENT COVERED BY S 194J REQUIRING THE ASSESSEE TO DEDUC T TAX AT SOURCE THEREFROM. THE CBDT CIRCULAR NO. 715 DT. 8T H AUG. 1995 [(1995) 127 CTR (ST) 13] RELIED UPON BY THE AO IN SUPPORT OF HIS CASE ON THIS ISSUE WAS APPLICA BLE ONLY IN THE CASES WHERE BILLS ARE RAISED FOR THE GROSS A MOUNT INCLUSIVE OF PROFESSIONAL FEES AS WELL AS REIMBURSE MENT OF ACTUAL EXPENSES AND THE SAME THEREFORE WAS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE WHERE B ILLS WERE RAISED SEPARATELY BY THE CONSULTANTS FOR REIMBURSEM ENT OF ACTUAL EXPENSES INCURRED BY THEM. AS SUCH CONSIDER ING ALL THE FACTS OF THE CASE THE PROVISIONS OF SECTION 19 4J WERE NOT APPLICABLE TO THE REIMBURSEMENT OF ACTUAL EXPEN SES AND THE ASSESSEE COMPANY WAS NOT LIABLE TO DEDUCT T AX AT SOURCE FROM SUCH REIMBURSEMENT.' UNDER THESE CIRCUMSTANCES WE HOLD THAT THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE IS LIABLE FOR DEDUCTION OF TAX AT SOURCE ON THE PAY MENT OF TRANSMISSION/SLDC CHARGES TO RVPN. WE THUS SET ASID E THE ORDER OF THE LOWER AUTHORITIES AND ALLOW THE GR OUND OF THE ASSESSEE. THE GROUND NO.1 IS THUS ALLOWED. 17. THE FACTS BEFORE US FOR THE YEAR UNDER CONSI DERATION HAVE NOT BEEN SHOWN TO BE ANY DIFFERENT FROM THOSE BEFORE TH E TRIBUNAL IN ITA 4606(DEL)2011 29 ASSESSMENT YEARS 2006-07 TO 2008-09. THEREIN THE TRIBUNAL HAS FOLLOWED THE DECISION DATED 30.4.09 IN THE CASE OF JAIPUR VIDYUT VITRAN NIGAM LTD. V. ITO 123 WHEREIN ALSO THE ISSUE WAS EXACTLY THE SAME I.E. CORRECTNESS OR OTHERWISE OF ADDITION U/S 40(A )(IA) OF THE ACT ON ACCOUNT OF PAYMENT MADE AS WHEELING CHARGES AND SLD C CHARGES FOR NON-DEDUCTION OF TDS AS PER SECTION 194 J OF THE AC T. IN ITS DETAILED ORDER REPRODUCED AS ABOVE THE JAIPUR TRIBUNAL HAS CONSIDERED ALL THE ASPECTS TOUCHING THE ISSUE AND HAS THEREAFTER HELD THE ASSESSEE NOT LIABLE TO DEDUCT TAX ON THE PAYMENTS MADE THE PROVISIONS OF SECTION 194 J OF THE ACT BEING NOT ATTRACTED. THE JAIPUR TRIBUNAL DECISION HAS BEEN FOLLOWED BY THE DELHI TRIBUNAL IN THE ASSESSEES CA SE FOR ASSESSMENT YEARS 2006-07 TO 2008-09. THE REVENUE HAS NOT BEE N ABLE TO MAKE OUT AS TO WHY THIS DECISION IS NOT APPLICABLE FOR THE Y EAR UNDER CONSIDERATION BEFORE US. THEREFORE FOLLOWING THE TRIBUNAL ORDE R IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2006-07 TO 2008-09 GROUN D NO.2 IS ALSO REJECTED UPHOLDING THE CIT(A)S ORDER FOR THIS ISS UE ALSO. 18. IN THE RESULT THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.02.2012. SD/- SD/- (A.N. PAHUJA) (A.D. JAIN) ACCOUNTANT MEMBER J UDICIAL MEMBER ITA 4606(DEL)2011 30 DATED: 10.02.2012 *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR