On 02.02.2015 Notice Of Motion Was Issued For Consideration Ofquestions No. (Ii) (Iii) And (Iv). Question No.(I) Was Answered Against Therevenue In View Of The v. Dakshin Haryana Bijli Vitran Nigamltd. Hisar, Decided On 11.10.2014

-|- IN THERE HIGH COURT OR PUNJAB AND HARYANAAT CHANDIGARH ITA No. 369 of 2014 (O&M)Date of Decision: 09.10.2018 The Commissioner of Income Tax, Hisar ....... Appellant +$,'-' Dakshin Haryana Bijli Vitran Nigam Ltd., Hisar ...... Respondent CORAM: HON'’BLE MR. JUSTICE AJAY KUMAR MITTAL, JUDGEHON'BLE MR. JUSTICE AVNEESH JHINGAN, JUDGE Present:Mr. Yogesh Putney, Senior Standing counselfor the appellant, Mr. K.L. Goyal, Senior Advocate with|Mr. Umang Goyal, Advocate for the respondent. 2222 AVNEESH JHINGAL, J. The revenue has filed the present appeal under Section 260A ofthe Income Tax Act, 1961 (for brevity ‘the Act’) against the order dated27.06.2012 of the Income Tax Appellate Tribunal, Delhi Bench '‘'B,New Delhi (for short ‘the Tribunal’) passed in ITA No. 1388/Del/2011. Theassessment year involved is 2007-08. ?DFollowing substantial questions of law arise for consideration in the present appeal: (1) Whether on the facts and in the circumstances of thecase, the Hon'ble ITAT was right in law in upholding theorder of the Id. CIT (A) Rohtak, whereby the addition madeby the AO treating the surcharge accrued during the yearamounting Rs.89.66 crore on account of delayed payment ofelectricity bills by the consumers as income had beendeleted, ignoring the facts and circumstances of the caseincluding the fact that the assessee has been followingmercantile system of accounting? (ii) Whether on the facts and in the circumstances of thecase, the Hon'ble ITAT was right in law in upholding the -). order of the ld. CIT(A) Rohtak, whereby the disallowanceu/s 40(a)(ia) made by the AO on account of non-deductionof tax on the payment of wheeling/transmission charges ofRs.1,52,53,40,469/- to M/s HVPN Ltd. has been deleted? (411) Whether the learned Tribunal has misread andmisconstrued the statutory provisions of Income Tax Act,while making a mention of explanation 2 to section 9(1)(vill) of I.T.Act, regarding term "technical service" by using!the word "human" in violation of principle of interpretation poft statutes (iv)Wehther on the facts and circumstances of the case,the learned ITAT was right in law in holding that thepayments made by the assessee in form _.transmission/wheeling & SLDC charges were not liable fordeduction of tax at source under section 194J of the IncomeTax Act? On 02.02.2015 notice of motion was issued for consideration ofquestions No. (ii) (iii) and (iv). Question No.(i) was answered against therevenue in view of the decision of this Court in ITA No. 209 of 2014 titled TheCommissioner of Income Tax, Hisar, Vs. Dakshin Haryana Bijli Vitran NigamLtd. Hisar, decided on 11.10.2014 3,The brief facts necessary for adjudication of the controversyinvolved relating to questions No. (41) to (iv) are that respondent-M/s DakshinHaryana Bijli Vitran Nigam Ltd. is a company under the Companies Act, 1956,is engaged in the distribution of power in the State of Haryana. It purchaseselectricity from M/s Haryana Power Generation Corporation Limited,Panchkula (HPGCL) and distributes the same to the consumers. The electricityfrom the source i.e. generation point to the consumers is transmitted through the transmission network of Haryana Vidyut Prasaran Nigam Ltd. (HVPNL),The rates of purchase and supply of electricity are fixed by the HaryanaREEMA SAINI2018.10.22 10:51Fdectricity Regulatory Commission (HERC). Thus, the electricity purchasedI attest to the accuracy andauthenticity of this documentHigh Court, Chandigarh ITA No. 369 of 2014 (O&M) -3- the transmission network of Haryana Vidyut Prasaran Nigam Ltd. (HVPNL),The rates of purchase and supply of electricity are fixed by the HaryanaREEMA SAINI2018.10.22 10:51Fdectricity Regulatory Commission (HERC). Thus, the electricity purchasedI attest to the accuracy andauthenticity of this documentHigh Court, Chandigarh ITA No. 369 of 2014 (O&M) -3- from HPGCL is transmitted through the distribution points of HVPNL,Respondent makes payment for transmission of electricity to HVPNL on therates fixed by the HERC. The respondent is thus rendering "technical services"and is earning income within the meaning of Section 9(1) (vii) of the Act andas such duty bound to deduct tax at source. The assessee is making payment toHVPNL on account of transmission charges called ‘wheeling charges' and StateLoad Dispatch Centre charges (SLDC). According to the Assessing officer, theassessee Should have deducted TDS on wheeling charges and SLDC paid by itto HVPNL. Since the assessee had not deducted TDS from the payments madeby it to HVPNL, the Assessing Officer passed order dated 24.12.2009; dis-allowing expenses claimed by the respondent-assessee for wheeling and SLDCcharges paid to HVPNL for the assessment year 2007-08. Aggrieved of theassessment order, the respondent filed appeal betore the Commissioner ofIncome Tax (Appeals) [|CIT(A)]. Vide order dated 03.01.2011 the appeal waallowed. 4The revenue assailed order of CIT(A) before the Tribunal. TheTribunal vide order dated 27.06.2012 tollowing the earlier orders in the case ofassessee for the assessment years 2006-07 and 2008-09 and relying upondecision of Jaipur Bench of the Tribunal in the case ofJaipur Vidyut VitranNigam Limited Vs. ITOin ITA Nos.127 to 131/JP/2009 dated 30.04.2009,dismissed the appeal. It was held that there was no liability of the respondent todeduct at source on transmission/wheeling charges and SLDC charges undersection 194-J of the Act. Hence, the present appeal by the revenue, 5Learned counsel for the revenue submitted that identical question has been decided by this Court in ITA No. 652 of 2010 decided on 08.05.2014,In the said ITA, the orders of the lower authorities were set aside and the ITA No. 369 of 2014 (O&M) light of the observation of the Supreme Court in the case ofCIT, Delhi Vs.Bharti Cellular Limited(2011) 330 ITR 239. The relevant portion of the order 1S extracted below: 7. After giving our thoughtful consideration to therespective submissions of learned counsel for the parties,we are of the opinion that the issue arising in these appealsrequires to be re-adjudicated by the Assessing Officerkeeping in view the principles of law enunciated by theApex Court 1nBharti Cellular Limited's case (supra).The Apex Court while discussing the scope of “technicalservice’ had recorded as under:- has been decided by this Court in ITA No. 652 of 2010 decided on 08.05.2014,In the said ITA, the orders of the lower authorities were set aside and the ITA No. 369 of 2014 (O&M) light of the observation of the Supreme Court in the case ofCIT, Delhi Vs.Bharti Cellular Limited(2011) 330 ITR 239. The relevant portion of the order 1S extracted below: 7. After giving our thoughtful consideration to therespective submissions of learned counsel for the parties,we are of the opinion that the issue arising in these appealsrequires to be re-adjudicated by the Assessing Officerkeeping in view the principles of law enunciated by theApex Court 1nBharti Cellular Limited's case (supra).The Apex Court while discussing the scope of “technicalservice’ had recorded as under:- “7. The problem which arises in these cases 1s thatthere 1S no expert evidence from the side of theDepartment to show how human intervention takesplace, particularly, during the process when callstake place, let us say, from Delhi to Nainital andvice versa. If, let us say, BSNL has no network inNainital whereas it has a network in Delhi, theInterconnect Agreement enables M/s. Bharti CellularLimited to access the network of BSNL 1n Nainitaland the same situation can arise vice versa 1n a givencase. During the traffic of such calls whether there 1sany manual intervention, 1s one of the points whichrequires expert evidence. Similarly, on what basis 1sthe “capacity” of each service provider fixed whenInterconnect Agreements are arrived at? Forexample, we are informed that each service provideris allotted a certain “capacity”. On what basis such“capacity” 1s allotted and what happens if a situationarises where a service provider's “allotted capacity”gets exhausted and it wants, on an urgent basis,“additional capacity’? Whether at that stage, anyhuman intervention is involved is required to beexamined, which again needs a technical data. Weare only highlighting these facts to emphasise thatthese types of matters cannot be decided without anytechnical assistance available on record. 8. There 1s one more aspect that requires to be goneinto. It 1s the contention of Respondent No.1 hereinthat Interconnect Agreement between, let us say,M/s. Bharti Cellular Limited and BSNL in these -)- cases 1s based on _ obligations and _ couobligations, which is called a “revenue sharingcontract’. According to Respondent No.1, Section194J of the Act 1s not attracted in the case of“revenue sharing contract”. According’ tRespondent No.l, 1n such contracts there is onlysharing of revenue and, therefore, payments byrevenue sharing cannot constitute “fees” underSection 194] of the Act. This submission 1s notaccepted by the Department. We leave it therebecause this submission has not been examined bythe Tribunal. 9. In short, the above aspects need reconsiderationby the Assessing Officer. We make it clear that theassessee(S) 1S not at fault in these cases for thesimple reason that the question of humanintervention was never raised by the Departmentbefore the CIT. It was not raised even before theTribunal; it 1s not raised even in these civil appeals.However, keeping in mind the larger interest and theramification of the issues, which 1s likely to recur,particularly, in matters of contracts between IndianCompanies and Multinational Corporations, we areof the view that the cases herein are required to beremitted to the Assessing Officer (TDS). 10. Accordingly, we are directing the AssessingOfficer (TDS) in each of these cases to examine atechnical expert from the side of the Department andto decide the matter within a period of four months.Such expert(s) will be examined (including cross-examined) within a period of four weeks from thedate of receipt of the order of this Court. Liberty 1salso given to Respondent No.1 to examine its expertand to adduce any other evidence.” 10. Accordingly, we are directing the AssessingOfficer (TDS) in each of these cases to examine atechnical expert from the side of the Department andto decide the matter within a period of four months.Such expert(s) will be examined (including cross-examined) within a period of four weeks from thedate of receipt of the order of this Court. Liberty 1salso given to Respondent No.1 to examine its expertand to adduce any other evidence.” 8. The primary basis whereby the Apex Court hadconcluded services to the falling under 194J of the Act to betechnical services that whether any human intervention wasinvolved in the activity or not. The Apex Court observedthat wherever there was human intervention requiringexamination of technical data, the same would fall withinthe definition of technical services and in the absencethereof, the same would not partake the character of -6- technical services. The Apex Court in that case had remittedthe matter to the Assessing Officer to examine the technicalexpert and after examining him adjudicate the matter afresh.In the present case as well from the perusal of the orders ofthe authorities below, it 1s not discernible whether there wasany intervention of the human element in the servicesprovided to the assessee, 9. Accordingly, while setting aside the orders of theauthorities below, the matter 1s remitted to the AssessingOfficer to examine afresh in the light of the observationsmade by the Apex Court inBharti Cellular Limited's case(supra), noted above. Further, the assessing authority shallalso examine whether the Provisos inserted in Sections201(1) and 201(1A) by Finance Act, 2012 are applicableretrospectively, as urged by learned counsel for theassessee. Since the [Tribunal had followed its order of thJaipur Bench and in such circumstances, it cannot be saidthat any independent finding has been recorded regardingelement of income 1n thiscase, therefore, it shall be openfor the Assessing Officer to consider the element of incomein the transaction as well before passing fresh order inaccordance with law. 6.Considering decisions referred above, the order of lowerauthorities with regard to dis-allowance of expenses claimed of Wheeling andSLDC charges are set aside. The matter 1s remanded back to the A.O. to decidethe said issue afresh 1n view of the observations in ITA No. 652 of 2010. TiThe substantial questions of law are decided accordingly. Theappeal is disposed of accordingly. (AJAY KUMAR MITTAL) JUDGE 09.10.2018TeeIN (AVNEESH JHINGAN)JUDGE Whether speaking/reasonedWhether Reportable; Yes/NoYes/No