Ita/438/2012 Of The Commissioner Of Income Tax v. Gulbarga Electricity Supply Company Ltd

IN THB HIGH COURT OF KARNATAKAKALABURAGI BENCH DATED THIS THE 22 DAY OF MARCH 2016 PRESENT THR HON’BLE MR.JUSTICK ASHOK B. HINCHIGERI AN THR HON’BLE MRS. JUSTICE S. SUJATHA I. T. A.NNo.438/201C/W I. T. A. Nos.441/2012, 443/2012, 447/2012,4448/2012, 454/2012, 4457/2012, 459/2014461/2012, 462/2012, 463/2012 & 464/201 I. T. A.NNo.438/201 BETWEEN: 1.The Commissioner of Income-TaxTDS, HMT Bhavan,Bellary Road, BangaloreTDS, HMT Bhavan,Bellary Road, Bangalore 2.The Income-lTlax OfficTDS Ward, Aayakar Bhavan,TDS Ward, Aayakar Bhavan, sedam Road,Gulbarga -— 585 10Gulbarga -— 585 10 .. Appellan (By Sri Ameet Kumar Deshpande., Advocate) AND: Gulbarga Electricity Supply Company Ltd..Corporate Office, Main Road, Gulbarga - 589 102) ... Respondent (By Sri A Shankar, Sri Chandrashekhar, Sri Lava M.& Sri Manjunath M. Shetty, Advocates) This Income Tax Appeal filed under Sec. 260-A of I.T,Act, 1961 arising out of order dated 31/08/2012 passed inITA No. 839/Bang/2011, tor the Assessment Year 2006-2007, praying to formulate the substantial question of lawstated therein, allow the appeal and set aside the orderdated 31/08/2012 passed by the ITAT, Bangalore in ITA No.839/Bang/2011 and confirm the order of the AppellateCommissioner and confirming the order passed by theIncome Tax Officer, TDS Ward, Gulbarga. I. T. A.No.441/2012 BETWEEN: 1.The Commissioner of Income-TaxTDS, HMT Bhavan,Bellary Road, Bangalore oDThe Income-Tax OfficerTDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109 .. Appellan (By Sri K.V.Aravind andSri Ameetkumar Deshpande, Advocates) AND: Gulbarga Electricity Supply Company Ltd.. Corporate Office, Main Road,Gulbarga - 589 102) ... Respondent (By Sri A Shankar, Sri Chandrashekhar, Sri M.Lava,& Sri Mallayya Shetty, Advocates) This Income Tax Appeal filed under Sec. 260-A of I.T,Act, 1961 arising out of order dated 31/08/2012 passed inITA No. 840/Bang/2011, tor the Assessment Year 2007-2008, praying to formulate the substantial questions of lawstated therein, allow the appeal and set aside the order dated31/08/2012 passed by the ITAT, Bangalore in ITA No.840/Bang/2011 and confirm the order of the AppellateCommissioner confirming the order passed by the IncomeTax Officer, TDS Ward, Gulbarga. I. T. A.NNo.443/201 BETWEEN: 1.The Commissioner of Income-TaxTDS, HMT Bhavan,Bellary Road, Bangalore 2.The Income-Tax OfficerTDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 105 .. Appellan (By Sri K.V.Aravind andori Ameetkumar Deshpande, Advocates) AND: Gulbarga Electricity Supply Company Ltd..Corporate Office, Main Road,Gulbarga - 585 102) ... Respondent (By Sri A. Shankar, Sri Chandrashekhar, Sri M.Lava,& Sri Mallayya Shetty, Advocates) This Income Tax Appeal filed under Sec. 260-A of I.T.Act, 1961 arising out of order dated 31/08/2012 passed inITA No. 841/Bang/2011, tor the Assessment Year 2008-2009, praying to formulate the substantial questions of lawstated therein, allow the appeal and set aside the order dated31/08/2012 passed by the ITAT, Bangalore in ITA No.841/Bang/2011 and confirm the order of the AppellateCommissioner confirming the order passed by the IncomeTax Officer, TDS Ward, Gulbarga. I. T. A.NNo.447/201 BETWEEN: 1. The Commissioner of Income-TlaxTDS, HMT Bhavan,Bellary Road, Bangalore 2.The Income-Tax OfficerTDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 105 .. Appellan (By Sri K.V.Aravind andori Ameetkumar Deshpande, Advocates) AND: Gulbarga Electricity Supply Company Ltd..Corporate Office, Main Road,Gulbarga - 589 102) ... Respondent (By Sri A. Shankar, Sri Chandrashekhar, Sri M.Lava,& Sri Mallayya Shetty, Advocates) This Income Tax Appeal filed under Sec. 260-A of I.T,Act, 1961 arising out of order dated 31/08/2012 passed inITA No. 842/Bang/2011, for the Assessment Year 2009- I. T. A.NNo.447/201 BETWEEN: 1. The Commissioner of Income-TlaxTDS, HMT Bhavan,Bellary Road, Bangalore 2.The Income-Tax OfficerTDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 105 .. Appellan (By Sri K.V.Aravind andori Ameetkumar Deshpande, Advocates) AND: Gulbarga Electricity Supply Company Ltd..Corporate Office, Main Road,Gulbarga - 589 102) ... Respondent (By Sri A. Shankar, Sri Chandrashekhar, Sri M.Lava,& Sri Mallayya Shetty, Advocates) This Income Tax Appeal filed under Sec. 260-A of I.T,Act, 1961 arising out of order dated 31/08/2012 passed inITA No. 842/Bang/2011, for the Assessment Year 2009- 2010, praying to formulate the substantial questions of lawstated therein, allow the appeal and set aside the order dated31/08/2012 passed by the ITAT, Bangalore in ITA No.842/Bang/2011 and confirm the order of the AppellateCommissioner confirming the order passed by the IncomeTax Officer, TDS Ward, Gulbarga. I. T. A.NNo.448 /20 BETWEEN: 1. The Commissioner of Income-TaxTDS, HMT Bhavan, Bellary Road,BangaloreTDS, HMT Bhavan, Bellary Road,Bangalore 2. The Income-lax OfficerTDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109TDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109 .. Appellan (By Sri K.V.Aravind andsri Ameetkumar Deshpande, Advocates) AND: Gulbarga Electricity Supply Company Ltd..Corporate Office, Main Road,Gulbarga - 589 102) ... Respondent (By Sri A Shankar, Sri Chandrashekhar, Sri M.Lava,& Sri Mallayya Shetty, Advocates) This Income Tax Appeal filed under Sec. 260-A of I.T,Act, 1961 arising out of order dated 31/08/2012 passed inITA No. 843/Bang/2011, for the Assessment Year 2010-2011, praying to formulate the substantial questions of lawstated therein, allow the appeal and set aside the order dated31/08/2012 passed by the ITAT, Bangalore in ITA No. 843/Bang/2011 and confirm the order of the AppellateCommissioner confirming the order passed by the IncomeTax Officer, TDS Ward, Gulbarga. I. T. A.NNo.454/201 BETWEEN: 1. The Commissioner of Income-TaxTDS, HMT Bhavan,Bellary Road, BangaloreTDS, HMT Bhavan,Bellary Road, Bangalore 2. The Income-lax OfficerTDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109 .. Appellan (By Sri K.V.Aravind andsri Ameetkumar Deshpande, Advocates) AND: Gulbarga Electricity Supply Company Ltd..Corporate Office, Main Road,Gulbarga - 589 102) ... Respondent (By Sri A. Shankar, Sri Chandrashekhar, Sri M.Lava,& Sri Mallayya Shetty, Advocates) This Income Tax Appeal filed under Sec. 260-A of I.T,Act, 1961 arising out of order dated 31/08/2012 passed inITA No. 844/Bang/2011, for the Assessment Year 2011-2012, praying to formulate the substantial questions of lawstated therein, allow the appeal and set aside the order dated31/08/2012 passed by the ITAT, Bangalore in ITA No.844/Bang/2011 and confirm the order of the AppellateCommissioner confirming the order passed by the IncomeTax Officer, TDS Ward, Gulbarga. I. T. A.NNo.457/201 BETWEEN: 1. The Commissioner of Income-TlaxTDS, HMT Bhavan,Bellary Road, BangaloreTDS, HMT Bhavan,Bellary Road, Bangalore 2. The Income-lax OfficerTDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109TDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109 .. Appellan (By Sri K.V.Aravind andsri Ameetkumar Deshpande, Advocates) AND: Gulbarga Electricity Supply Company Ltd..Corporate Office, Main Road,Gulbarga - 589 102) ... Respondent (By Sri A Shankar, Sri Chandrashekhar, Sri M.Lava,& Sri Mallayya Shetty, Advocates) I. T. A.NNo.457/201 BETWEEN: 1. The Commissioner of Income-TlaxTDS, HMT Bhavan,Bellary Road, BangaloreTDS, HMT Bhavan,Bellary Road, Bangalore 2. The Income-lax OfficerTDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109TDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109 .. Appellan (By Sri K.V.Aravind andsri Ameetkumar Deshpande, Advocates) AND: Gulbarga Electricity Supply Company Ltd..Corporate Office, Main Road,Gulbarga - 589 102) ... Respondent (By Sri A Shankar, Sri Chandrashekhar, Sri M.Lava,& Sri Mallayya Shetty, Advocates) This Income Tax Appeal filed under Sec. 260-A of I.T,Act, 1961 arising out of order dated 31/08/2012 passed inITA No. 874/Bang/2011, for the Assessment Year 2006-2007, praying to formulate the substantial questions of lawstated therein, allow the appeal and set aside the order dated31/08/2012 passed by the ITAT, Bangalore in ITA No.874/Bang/2011 confirming the order of the AppellateCommissioner and confirm the order passed by the IncomeTax Officer, TDS Ward, Gulbarga. I. T. A.NNo.459/201 BETWEEN: 1. The Commissioner of Income-TlaxTDS, HMT Bhavan,Bellary Road, BangaloreTDS, HMT Bhavan,Bellary Road, Bangalore 2. The Income-lax OfficerTDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109TDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109 .. Appellan (By Sri K.V.Aravind andsri Ameetkumar Deshpande, Advocates) AND: Gulbarga Electricity Supply Company Ltd..Corporate Office, Main Road,Gulbarga - 589 102) ... Respondent (By Sri A Shankar, Sri Chandrashekhar, Sri M.Lava,& Sri Mallayya Shetty, Advocates) This Income Tax Appeal filed under Sec. 260-A of I.T,Act, 1961 arising out of order dated 31/08/2012 passed inITA No. 875/Bang/2011, tor the Assessment Year 2007-2008, praying to formulate the substantial questions of lawstated therein, allow the appeal and set aside the order dated31/08/2012 passed by the ITAT, Bangalore in ITA No.875/Bang/2011 confirming the order of the AppellateCommissioner and confirm the order passed by the IncomeTax Officer, TDS Ward, Gulbarga. I. T. A.No.461/2012 BETWEEN: 1. The Commissioner of Income-TlaxTDS, HMT Bhavan,Bellary Road, BangaloreTDS, HMT Bhavan,Bellary Road, Bangalore 2. The Income-lax OfficerTDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109TDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109 .. Appellan (By Sri K.V.Aravind andsri Ameetkumar Deshpande, Advocates) AND: Gulbarga Electricity Supply Company Ltd..Corporate Office, Main Road,Gulbarga - 589 102) ... Respondent (By Sri A Shankar, Sri Chandrashekhar, Sri M.Lava,& Sri Mallayya Shetty, Advocates) This Income Tax Appeal filed under Sec. 260-A of I.T,Act, 1961 arising out of order dated 31/08/2012 passed inITA No. 876/Bang/2011, for the Assessment Year 2008-2009, praying to formulate the substantial questions of lawstated therein, allow the appeal and set aside the order dated31/08/2012 passed by the ITAT, Bangalore in ITA No.8760/Bang/2011 confirming the order of the AppellatCommissioner and confirm the order passed by the IncomeTax Officer, TDS Ward, Gulbarga. I. T. ANo.462/2012 BETWEEN: 1. The Commissioner of Income-TlaxTDS, HMT Bhavan, Bellary Road,BangaloreTDS, HMT Bhavan, Bellary Road,Bangalore 2. The Income-lax OfficerTDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109TDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109 .. Appellan (By Sri K.V.Aravind andsri Ameetkumar Deshpande, Advocates) AND: Gulbarga Electricity Supply Company Ltd..Corporate Office, Main Road,Gulbarga - 589 102) ... Respondent (By Sri A Shankar, Sri Chandrashekhar, Sri M.Lava,& Sri Mallayya Shetty, Advocates) I. T. ANo.462/2012 BETWEEN: 1. The Commissioner of Income-TlaxTDS, HMT Bhavan, Bellary Road,BangaloreTDS, HMT Bhavan, Bellary Road,Bangalore 2. The Income-lax OfficerTDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109TDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109 .. Appellan (By Sri K.V.Aravind andsri Ameetkumar Deshpande, Advocates) AND: Gulbarga Electricity Supply Company Ltd..Corporate Office, Main Road,Gulbarga - 589 102) ... Respondent (By Sri A Shankar, Sri Chandrashekhar, Sri M.Lava,& Sri Mallayya Shetty, Advocates) This Income Tax Appeal filed under Sec. 260-A of I.T,Act, 1961 arising out of order dated 31/08/2012 passed inITA No. 877/Bang/2011, for the Assessment Year 2009-2010, praying to formulate the substantial questions of lawstated therein, allow the appeal and set aside the order dated31/08/2012 passed by the ITAT, Bangalore in ITA No.87//Bang/2011 confirming the order of the AppellateCommissioner and confirm the order passed by the IncomeTax Officer, TDS Ward, Gulbarga. I. T. A.No.463/2012 BETWEEN: 1. The Commissioner of Income-TlaxTDS, HMT Bhavan,Bellary Road, BangaloreTDS, HMT Bhavan,Bellary Road, Bangalore 2. The Income-lax OfficerTDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109TDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109 .. Appellan (By Sri K.V.Aravind andsri Ameetkumar Deshpande, Advocates) AND: Gulbarga Electricity Supply Company Ltd..Corporate Office, Main Road,Gulbarga - 589 102) ... Respondent (By Sri A Shankar, Sri Chandrashekhar, Sri M.Lava,& Sri Mallayya Shetty, Advocates) This Income Tax Appeal filed under Sec. 260-A of I.T,Act, 1961 arising out of order dated 31/08/2012 passed inITA No. 878/Bang/2011, for the Assessment Year 2010-2011, praying to formulate the substantial questions of lawstated therein, allow the appeal and set aside the order dated31/08/2012 passed by the ITAT, Bangalore in ITA No.878/Bang/2011 confirming the order of the AppellateCommissioner and confirm the order passed by the IncomeTax Officer, TDS Ward, Gulbarga. I. T. A.No.464/2012 BETWEEN: 1. The Commissioner of Income-TlaxTDS, HMT Bhavan,Bellary Road, BangaloreTDS, HMT Bhavan,Bellary Road, Bangalore 2. The Income-lax OfficerTDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109TDS Ward, Aayakar Bhavan,sedam Road,Gulbarga — 985 109 .. Appellan (By Sri K.V.Aravind andsri Ameetkumar Deshpande, Advocates) AND: Gulbarga Electricity Supply Company Ltd..Corporate Office, Main Road,Gulbarga - 589 102) ... Respondent (By Sri A Shankar, Sri Chandrashekhar, Sri M.Lava,& Sri Mallayya Shetty, Advocates) This Income Tax Appeal filed under Sec. 260-A of I.T,Act, 1961 arising out of order dated 31/08/2012 passed inITA No. 879/Bang/2011, for the Assessment Year 2011-2012, praying to formulate the substantial questions of lawstated therein, allow the appeal and set aside the order dated31/08/2012 passed by the ITAT, Bangalore in ITA No.879/Bang/2011 confirming the order of the AppellateCommissioner and confirm the order passed by the IncomeTax Officer, TDS Ward, Gulbarga. These Appeals coming on for final hearing this day,S. SUJATHA J.,delivered the following: JUDGMENT All these appeals arise from the common judgmentpassed by the Income Tax Appellate Tribunal “A” Bench,Bangalore in ITA Nos.839 to 844/Bang/2011 relating tothe assessment years 2006-07 to 2011-12. Hence, allthese matters are clubbed, heard together and disposedof by this common judgment. ? These appeals are filed by the revenue undersection 260-A of the Income Tax Act, 1961 (the ‘Act’ forshort) raising the following substantial questions of law; These Appeals coming on for final hearing this day,S. SUJATHA J.,delivered the following: JUDGMENT All these appeals arise from the common judgmentpassed by the Income Tax Appellate Tribunal “A” Bench,Bangalore in ITA Nos.839 to 844/Bang/2011 relating tothe assessment years 2006-07 to 2011-12. Hence, allthese matters are clubbed, heard together and disposedof by this common judgment. ? These appeals are filed by the revenue undersection 260-A of the Income Tax Act, 1961 (the ‘Act’ forshort) raising the following substantial questions of law; 1.Whether the Tribunal was correct inholding that the analysis and distribution(SLDC) of electricity by KPICL fromgeneration point to the consumers of theASSESSEEinvolvingutilizationofsophisticated machineries, involvement oftechnical expertise, application of science,services of Engineers, engagement ofholding that the analysis and distribution(SLDC) of electricity by KPICL fromgeneration point to the consumers of theASSESSEEinvolvingutilizationofsophisticated machineries, involvement oftechnical expertise, application of science,services of Engineers, engagement of qualified technicians and trained, skilledpersonal/manpower does not amount totechnical services to attract provisions ofSection 194-J of the Act? ?)Whether the Tribunal committed an errorin not recording a finding regardingapplication of other provisions of TDSalter holding that the provisions ofSection194- JoT|theActare|notattracted?in not recording a finding regardingapplication of other provisions of TDSalter holding that the provisions ofSection194- JoT|theActare|notattracted? 3.Whether the Tribunal was correct indeleting the interest levied u/s.201(1A) ofthe Act, for non deduction of tax atsource as required u/s.194-J of the Act?deleting the interest levied u/s.201(1A) ofthe Act, for non deduction of tax atsource as required u/s.194-J of the Act? 3.Brietly stated the facts are: - that the assessee is the limited Companyengaged in the business of buying and selling ofelectricity. The assessee purchases electricity from thegenerators of electricity. The power from the generationpoint to the consumers is transmitted through thetransmission network of Karnataka Power Transmission Corporation Limited (for short ‘KPTCL’). The assesseehad made payments to the KPTCL towards State LoadDispatching Centre (for short “SLDC), the unit ofKPTCL. It appears during the course of surveyconducted under Section 133-A of the Act, it was foundby the authorities that the assessee has not deductedTDS on the amount paid to the KPTCL towards SLDCcharges. The Assessing Officer invoking the provisions|of Section 201(1) of the Act and Section 201(1A) of theAct, treated the assessee as an assessee in default fornot deducting the tax at source on the payments madeto the KPTCL. The assessing Officer held that thetransaction of transmission of electricity from thegeneration pointTO the.CONnSUMErSthrough(transmission network is in the nature of technicalservices attracting Section 194-J of the Act. Beingagerieved, the assessee preferred the appeals before theAppellate Commissioner. The Appellate Commissionerconfirmed the finding recorded by the Assessing Officer holding that the services rendered by the KPTCL to theassessee towards analysis and distribution of electricityamounts to technical services, attracts the provisions ofsection 194-J of the Act. Accordingly the appeals wererejected on this issue. 4Being aggrieved, the assessee carried thematters before the Income Tax Appellate Tribunal. TheTribunal after examining the transactions entered intobetween the KPTCL and the assessee held that the viewtaken by the authorities that the transmission ofelectricity through a transmission network of KPTCLattracts the provisions of Section 194-J of the Act istotally misconceived. Accordingly the appeals filed bythe assessee were allowed. Hence, these appeals by therevenue, challenging the common judgment passed bythe Tribunal. 5.Heard the learned counsel for the partiesand perused the material on record. 4Being aggrieved, the assessee carried thematters before the Income Tax Appellate Tribunal. TheTribunal after examining the transactions entered intobetween the KPTCL and the assessee held that the viewtaken by the authorities that the transmission ofelectricity through a transmission network of KPTCLattracts the provisions of Section 194-J of the Act istotally misconceived. Accordingly the appeals filed bythe assessee were allowed. Hence, these appeals by therevenue, challenging the common judgment passed bythe Tribunal. 5.Heard the learned counsel for the partiesand perused the material on record. 6.The learned counsel appearing for theassessee at the outset pointed out that the identicalsubstantial questions of law raised in the case of|TheCommissioner of Income Tax and another vs. HubltElectric Supply Company Ltd.,(ITA No.437/2012 andconnected matters dated 19.12.2015), this Court hasanswered the same against the revenue. Placingreliance on this judgment, the assessee seeks to answerthe substantial questions of law raised in these appealsagainst the revenue. T However,the|learnedcounsel {Ortheappellants-revenue though admits that the identicalsubstantialquestionsoT lawraised1nN"! !,($circumstances in the case of Hubli Electric Supply Company Ltd.,(Supra) is covered against the revenue,he makes an attempt to raise a new ground that thetransaction of transmission of electrical energy from thegeneration pointTO the.CONnSUMErSthrough( transmission network of KPTCL, if not to be treated astechnical services, attracting the provisions of Section194-J of the Act, it would be brought under theprovisions of Section 194-I of the Act as rent andcontends that the appeals are required to be allowed. 8.We are afraid that this stand of the revenueis not appreciable. In the scheme of the Act, theproceedings before the assessing officer constitute thebase, if the base is taken out/disturbed/replaced orsubstituted by any new material, the entire edifice of theproceedings will collapse. The points, which were notthe basis of the proceedings or the subject matter ofadjudication, cannot be raised for the first time in theappeal proceedings under Section 260-A of the Act. Thescheme of the Act contemplates mechanism to set rightthe error, if any committed by the Assessing Officer. WecannotSIVEOUTacceptabilityCO the.argumentsadvancedby the.TEVENUCcontraryTO the well established machinery provided under the Act. It is anattempt to deviate from the scheme of the Act, havingnoticed that the substantial questions of law raised inthese appeals are answered against the revenue inidentical cases referred to above i.e., nature of servicesor transaction entered into between the assessee andKPICL are not in the nature of technical services toattract the provisions of Section 194-J of the Act. It isnot a chance litigation to switch over to a differentprovision alien to proceedings initiated. It is alsodiscerned that this point was at no point of time raised,considered and examined by the authorities. Sections|194-J and 194-I are two independent provisions whichoperate in different fields. It is not possible to importthe existence or the consideration of any point notraised and adjudicated before the authorities or theTribunal, much against the principles of natural justiceand that too at this juncture in the appeal proceedingsunder the fiscal statute. The arguments advanced on behalf of the revenue deserve to be rejected andaccordingly they are rejected. QOThe judgment of|Hubli Electric SupplyCompany Ltd.,is squarely applicable to the facts of thepresent case. We do not see any reasons to differ fromthe view taken by the co-ordinate Bench of this Court inHubli Electric Supply Company Ltd.case (supra). Weare in agreement with the view taken by this Court andanswer the substantial questions of law raised againstthe revenue and in favour oft the assessee Accordingly the appeals are dismissed. Sd/-JUDGE Sd/-JUDGE