ITO (TDS) (OSD) 3(2), MUMBAI v. THE TATA POWER CO. LTD, MUMBAI

ITA 7386/MUM/2010 | 2007-2008
Pronouncement Date: 19-11-2014 | Result: Dismissed

Appeal Details

RSA Number 738619914 RSA 2010
Assessee PAN AAACT0054A
Bench Mumbai
Appeal Number ITA 7386/MUM/2010
Duration Of Justice 4 year(s) 22 day(s)
Appellant ITO (TDS) (OSD) 3(2), MUMBAI
Respondent THE TATA POWER CO. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted J
Tribunal Order Date 19-11-2014
Date Of Final Hearing 13-11-2014
Next Hearing Date 13-11-2014
Assessment Year 2007-2008
Appeal Filed On 28-10-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH MUMBAI BEFORE : SHRI R.C.SHARMA A M & SHRI SANJAY GARG J M ITA NO S . 7384 TO 7386 / MUM/20 1 0 ( ASSESSMENT YEAR S : 200 5 - 06 2006 - 07 & 2007 - 08 ) ITO(TDS)(OSD) - 3(2) MUMBAI VS. M/S THE TATA POWER CO.LTD. CORPORATE TAX DEPARTMENT CORPORATE CENTRE BLOCK - B 34 SANT TUKARAM ROAD CARNAC BUNDER MUMBAI - 400 009 PAN/GIR NO. : A A ACT 00 5 4 A ( APPELLANT ) .. ( RESPONDENT ) AND ITA NO S . 2914 & 2915/ MUM/20 10 ( ASSESSMENT YEAR :2007 - 08 & 2008 - 09 ) M/S THE TATA POWER CO.LTD. CORPO RATE TAX DEPARTMENT CORPORATE CENTRE BLOCK - B 34 SANT TUKARAM ROAD CARNAC BUNDER MUMBAI - 400 009 VS. ITO(TDS)(OSD) - 3(2) MUMBAI PAN/GIR NO. : A AACT 0054 A ( APPELLANT ) .. ( RESPONDENT ) AND NO. 64 & 65 /MUM/20 1 2 (ARISING OUT OF ITA NO. 2914 & 2915/MUM/2010 ) ( ASSESSMENT YEAR : 2007 - 08 & 200 8 - 0 9 ) ACIT (TDS)(OSD) - 3( 1 ) MUMBAI VS. M/S THE TATA POWER CO.LTD. CORPORATE TAX DEPARTMENT CORPORATE CENTRE BLOCK - B 34 SAN T TUKARAM ROAD CARNAC BUNDER MUMBAI - 400 009 PAN/GIR NO. : A AACT 0054 A ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : SHRI AKHILENDRA P. YADAV /ASSESSEE BY : SHRI DINESH VYAS ITA NO. 7384 TO 7386 /1 0 ITA NOS.2914&2915/10 & CO NOS. 64&65/12 2 DATE OF HEARING : 13 TH NOV 201 4 DATE OF PRONOUNCEMENT : 19 TH NOV. 201 4 O R D E R PER BENCH : TH E REVENUE HAS FILED APPEALS FOR THE ASSESSMENT YEARS 2005 - 06 TO 2007 - 08 AND T HE ASSESSEE HAS FILED APPEALS FOR THE ASSESSMENT YEAR 2007 - 08 & 2008 - 09 WHEREAS THE REVENUE HAS FILED CROSS OBJECTIONS FOR THE ASSESSMENT YEARS 2007 - 08 & 2008 - 09. 2 . SINCE COMMON GROUNDS ARE INVOLVED IN ALL THESE APPEALS THEREFORE ALL THE APPEALS HAVE BEEN HEARD ANALOGOUSLY AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. 3 . IN ALL THE YEARS UNDER CONSIDERATION COMMON ISSUE INVOLVED RELATES TO ASSESSES LIABILITY FOR DEDUCTION OF TAX U/S.194I FROM TRANSMISSION CHARGES PAID TO MSETCS(POOL) ACCOUNT. THE PRECISE GROUND TAKEN BY THE ASSESSEE FOR A.Y.2007 - 08 WHICH IS SIMILAR TO OTHER GROUNDS READS AS UNDER : - THE APPELLANT OBJECTS TO THE ORDER DATED 28TH JANUARY 2010 PASSED BY THE COMMISSIONER OF INCOME - TAX (APPEALS) 14 MUMBAI (HEREINAFTER REFERRED T O AS THE CIT(A)) FOR THE AFORESAID ASSESSMENT YEAR ON THE FOLLOWING GROUNDS : - 1. THE CIT(APPEALS) FAILED TO APPRECIATE THAT SECTION 1941 IS APPLICABLE TO RENTING OF PLANT OR EQUIPMENT W.E.F. 13 - 7 - 2006 AND HENCE IS NOT APPLICABLE TO THE PERIOD EXTENDING FROM 1 - 4 - 2006 TO 12 - 7 - 2006. 2. WITHOUT PREJUDICE TO (1) ABOVE THE CIT(A) ERRED IN HOLDING THAT TAX IS DEDUCTIBLE AT SOURCE UNDER SECTION 1941 FROM TRANSMISSION CHARGES PAID TO MSETCL (POOL) ACCOUNT HAVING FAILED TO APPRECIATE THAT - ITA NO. 7384 TO 7386 /1 0 ITA NOS.2914&2915/10 & CO NOS. 64&65/12 3 A. THE TRANSMISSI ON NETWORK IS NOT IN THE PHYSICAL POSSESSION OR CONTROL OF THE COMPANY AS A TRANSMISSION SERVICE USER. ACCORDINGLY THE PAYMENT IS NOT IN THE NATURE OF RENT OR ROYALTY FOR USE OF THE TRANSMISSION NETWORK UNDER THE PROVISIONS OF SECTION 1941; B. THE POOL ING - OF THE TRANSMISSION NETWORK IS AN ARRANGEMENT PRESCRIBED BY THE REGULATOR I.E. MERC TO SHARE THE REVENUE FROM THE TRANSMISSION BUSINESS AND NOT TO HIRE THE TRANSMISSION LINES FROM MSETCL. 3. THE CIT(A) FAILED TO APPRECIATE THAT TAX DEDUCTION AT SOURC E MECHANISM CANNOT BE PUT INTO PRACTICE SINCE THE IDENTITY OF THE PERSON IN WHOSE HANDS TRANSMISSION CHARGES ARE ULTIMATELY INCLUDIBLE AS INCOME IS NOT KNOWN AT THE TIME OF CONTRIBUTING TO THE MSETCL - STU - POOL ACCOUNT. 4 . RIVAL CONTENTIONS HAVE BEEN HEA RD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT ASSESSEE COMPANY IS ENGAGED IN POWER SECTOR AND ALSO ENGAGED IN DISTRIBUTION OF POWER/ELECTRICITY. DURING THE COURSE OF SURVEY U/S.133A IT WAS FOUND THAT ASSESSEE COMPANY HAS PAID WHEELING CHARGES/TRANSMISSIO N CHARGES BUT HAS FAILED TO DEDUCT TAX AT SOURCE. ACCORDINGLY THE AO HELD THAT ASSESSEE IS DEFAULT U/S.201 OF THE ACT. 5 . BY THE IMPUGNED ORDER THE CIT(A) CONFIRMED THE ACTION OF THE AO AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6 . AT THE O UTSET IT WAS SUBMITTED BY THE LEARNED AR THAT THE VERY SOLITARY ISSUE RAISED IN THE APPEALS ARE COVERED BY THE ORDER OF THE COORDINATE BENCH IN THE CASE OF M/S RELIANCE INFRASTRUCTURE LIMITED ITA NOS.2814 TO 2819/MUM/2013 DATED 20 - 8 - 2014 WHEREIN IT WA S HELD THAT ASSESSEE WAS NOT LIABLE TO DEDUCT TDS EITHER U/S.194 - I OR U/S.194 - J ON THE WHEELING AND TRANSMISSION CHARGES PAID BY THE ASSESSEE. 7 . WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE ORDER OF THE TRIBUNAL IN TH E CASE OF M/S RELIANCE ITA NO. 7384 TO 7386 /1 0 ITA NOS.2914&2915/10 & CO NOS. 64&65/12 4 INFRASTRUCTURE LIMITED (SUPRA) . THE PRECISE OBSERVATION OF THE TRIBUNAL WAS AS UNDER : - 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES. A PERUSAL OF THE ABOVE REPRODUCED OBSERVATIONS MADE BY TH E LD.CIT(A) WHILE ACCEPTING THE APPEAL OF THE ASSESSEE REVEALS THAT THE LD. CIT(A) HAS FOLLOWED THE VARIOUS DECISIONS OF THE CO - ORDINATE BENCHES OF THE TRIBUNAL TO HOLD THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS EITHER UNDER SECTION 194 - I OR SECTION 19 4J ON THE WHEELING AND TRANSMISSION CHARGES PAID BY THE ASSESSEE IN CASE OF WHICH PROVISIONS OF ELECTRICITY ACT 2003 WERE APPLICABLE. THE LD. D.R. COULD NOT PRODUCE ANY CONTRARY DECISION WHICH MAY JUSTIFY DEPARTURE FROM THE ALMOST WELL SETTLED POSITION OF LAW ON THE ABOVE ISSUE. HENCE RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCHES OF THE TRIBUNAL I.E. MAHARASHTRA STATE ELECTRICITY DISTRIBUTION CO. LTD. VS. DCIT (TDS) RANGE - 2 ITA NO.2872/MUM/2010 FOR A.Y.2009 - 10 AND THE OTHER DECISIONS AS REFERRED BY THE LD. CIT(A) IN HIS ORDER THE ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE AND THE APPEALS OF THE REVENUE ARE HEREBY DISMISSED. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR S UNDER CONSIDERATION ARE PARI MATERIA RESPECTFULL Y FOLLOWING THE ORDER OF THE TRIBUNAL AS REPRODUCED ABOVE WE DO NOT FIND ANY MERIT IN THE ACTION OF THE LOWER AUTHORITIES FOR HOLDING THAT ASSESSEE WAS IN DEFAULT FOR NON - DEDUCTION OF TAX ON WHEELING/TRANSMISSION CHARGES PAID BY THE ASSESSEE. 8 . IT WAS ALSO ARGUED BY THE LEARNED AR THAT THE ISSUE IS ALSO COVERED BY THE ORDER OF HON BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD. 293 ITR 226 (SC) WHEREIN IT WAS HELD THAT WHERE PAYEE HAS ALREADY PAID TAX DUE ON THE PAYMENT RECEI VED BY IT THE TAX COULD NOT BE RECOVERED ONCE AGAIN FROM THE DEDUCTOR - ASSESSEE. ACCORDINGLY IT WAS HELD THAT ASSESSEE WAS NOT IN DEFAULT U/S.201 OF THE IT ACT. ITA NO. 7384 TO 7386 /1 0 ITA NOS.2914&2915/10 & CO NOS. 64&65/12 5 9 . OUR ATTENTION WAS ALSO INVITED BY THE LEARNED AR TO PAGE 16 OF THE CIT(A)S ORDER WHEREIN COMPLETE DETAIL OF TRANSMISSION CHARGES PAID TO MSETCL (POOL) ACCOUNT BY THE ASSESSEE COMPANY WAS CLASSIFIED. IT WAS FURTHER EMPHASIZE THAT THE AMOUNT RECEIVED BY THE ASSESSEE WAS FAR IN EXCESS OF THE AMOUNT PAID IN EACH YEAR AND THAT AMOUNT RECEIVED WAS I NCLUDED IN PBT HENCE TAXABLE INCOME OF ASSESSEE HAS ALREADY BEEN COMPUTED ON THE AMOUNT SO RECEIVED. 10 . PRINCIPALLY THERE IS NO DISPUTE TO THE PROPOSITION THAT ONCE THE AMOUNT ON WHICH THE TAX SHOULD BE REQUIRED TO BE DEDUCTED AT SOURCE HAVE ALREADY BEEN INCLUDED BY THE RECIPIENT IN HIS TOTAL INCOME AND DUE TAX ES HAS BEEN PAID THEREON THE DEDUCTOR CANNOT BE MADE ONCE AGAIN MADE LIABLE FOR NON - DEDUCTION OF TAX AT SOURCE ON SUCH PAYMENTS WHICH AMOUNTS TO DOUBLE TAXATION OF THE VERY SAME INCOME. HOWEVE R THERE IS NO SUCH FINDING EITHER BY THE AO OR BY THE CIT(A) IN THIS REGARD IN THE INSTANT APPEAL S BEFORE US THEREFORE WE ARE NOT IN A POSITION TO APPLY THE PROPOSITION SO LAID DOWN BY THE HONBLE SUPREME COURT TO THE INSTANT APPEAL S BEFORE US. 10 . IN VIEW OF THE ABOVE DISCUSSION RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL AS DISCUSSED ABOVE WE DO NOT FIND ANY MERIT IN THE ACTION OF THE AO FOR HOLDING THAT ASSESSEE WAS IN DEFAULT FOR NON - DEDUCTION OF TAX ON WHEELING/TRANSMISSION CHARGES PAID BY I T IN VARIOUS YEARS UNDER CONSIDERATION. ITA NO. 7384 TO 7386 /1 0 ITA NOS.2914&2915/10 & CO NOS. 64&65/12 6 11 . IN THE RESULT APPEAL S OF THE ASSESSEE (ITA NOS.2914&2915/MUM/1200) ARE ALLOWED AND APPEAL S OF THE REVENUE (ITA NOS.7384 TO 7386/MUM/2010) ARE DISMISSED WHEREAS THE CROSS OBJECTION FILED BY THE REVENUE (CO NOS.64&65/MUM/2012) HAVE BECOME INFRUCTUOUS THEREFOR E THE SAME ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 /11/ 201 4 . /1 1 / 2014 SD/ - SD/ - ( ) ( SANJAY GARG ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 19 / 11 /2014 /PKM PS COPY OF THE ORDER FORWARDE D TO : / BY ORDER ( ASSTT. REGISTRAR) / ITAT MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) MUMBAI. 4. / CIT 5. / DR ITAT MUMBAI 6. GUARD FILE. // TRUE COPY//