Tribunal Vide Order Dated 15.07.2015 Following The Earlier Orders In The Caseof Assessee For The Assessment Years 2006-07 And 2007-08 And Relying Upondecision O v. “7. The Problem Which Arises In These Cases 1Sthat There 1S No Expert Evidence From The Side Ofthe Department To Show How Human Interventiontakes Place, Particu

-|- IN THE HIGH COURT OR PUNJAB AND HARYANA|AT CHANDIGARH ITA No. 401 of 2015 (O&M) Date of Decision: 09.10.2018Pr. Commissioner of Income Tax, Panchkula ....... Appellant *"+%,% M/s Uttar Haryana Bijli Vitran Nigam Ltd. ...... 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 withMr. Umang Goyal, Advocate,for the respondent. 3333 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 dated15.07.2015 of the Income Tax Appellate Tribunal, Division Bench,Chandigarh (for short 'the Tribunal’) passed in ITA No. 452/CHD/2014. Theassessment year involved is 2008-09. 2 Notice of motion was issued to consider the followingsubstantial question of law; "Whether on the facts and circumstances of the case, theId. ITAT was justified in deleting dis-allowance ofRs.371,52,15,673/- made by the Assessing Officer underSection 40(a) (ia) of the Income Tax Act, 1961 onaccount of non-deduction of TDS on the payment ofwheeling charges and the SLDC charges to theHVPNL 2? The brief facts necessary for adjudication of the controversy involved are that respondent-M/s Uttar Haryana Bijli Vitran Nigam Ltd. is acompany under the Companies Act, 1956, which is engaged in thedistribution of power in the State of Haryana. It purchases electricity fromM/s Haryana Power Generation Corporation Limited, Panchkula (HPGCL)and distributes the same to the consumers. The electricity from the sourcele. generation point to the consumers is transmitted through thetransmission network of Haryana Vidyut Prasaran Nigam Ltd. (HVPNL).The rates of purchase and supply of electricity are fixed by the HaryanaElectricity Regulatory Commission (HERC). Thus, the electricity purchasedfrom 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 "technicalservices" and is earning income within the meaning of Section 9(1) (vil) ofthe Act and as such duty bound to deduct tax at source. The assessee ismaking payment to HVPNL on account of transmission charges called‘wheeling charges' and State Load Dispatch Centre charges (SLDC).According to the Assessing officer, the assessee should have deducted TDSon wheeling charges and SLDC paid by it to HVPNL. Since the assesseehad not deducted TDS from the payments made by it to HVPNL, theAssessing Officer passed order dated 10.12.2010; dis-allowing expensesclaimed by the respondent-assessee for wheeling and SLDC charges paid toHVPNL for the assessment year 2008-09. Aggrieved of the assessmentorder, the respondent filed appeal before the Commissioner of Income Tax(Appeals) [CIT(A)]. Vide order dated 14.02.2014 the appeal was partlyallowed but dis-allowance of the expenses claimed by respondent onwheeling and SLDC charges was set aside. The revenue assailed order of CIT(A) betore the Tribunal. The Tribunal vide order dated 15.07.2015 following the earlier orders in the caseof assessee for the assessment years 2006-07 and 2007-08 and relying upondecision of Jaipur Bench of the Tribunal in the case ofJaipur VidyutVitran Nigam Limited Vs. ITOin ITA Nos.127 to 131/JP/2009 dated30.04.2009, dismissed the appeal. It was held that there was no liability ofthe respondent to deduct tax at source on transmission/wheeling charges andSLDC charges under Section 194-J of the Act. Hence, the present appeal bythe revenue. The revenue assailed order of CIT(A) betore the Tribunal. The Tribunal vide order dated 15.07.2015 following the earlier orders in the caseof assessee for the assessment years 2006-07 and 2007-08 and relying upondecision of Jaipur Bench of the Tribunal in the case ofJaipur VidyutVitran Nigam Limited Vs. ITOin ITA Nos.127 to 131/JP/2009 dated30.04.2009, dismissed the appeal. It was held that there was no liability ofthe respondent to deduct tax at source on transmission/wheeling charges andSLDC charges under Section 194-J of the Act. Hence, the present appeal bythe revenue. 5 Learned counsel for the revenue submitted that identicalquestion has been decided by this Court in ITA No. 652 of 2010 decided on08.05.2014. In the said ITA, the orders of the lower authorities were setaside and the matter was remanded back to the Assessing Officer fordecision afresh in the light of the observation of the Supreme Court in thecase ofCIT, Delhi Vs. Bharti Cellular Limited(2011) 330 ITR 239. Therelevant portion of the order is 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 theseappeals requires to be re-adjudicated by the AssessingOfficer keeping in view the principles of law enunciatedby the Apex Court 1nBharti Cellular Limited's case(supra).The Apex Court while discussing the scope of“technical service’ had recorded as under:- “7. The problem which arises in these cases 1sthat there 1s no expert evidence from the side ofthe Department to show how human interventiontakes place, particularly, during the process whencalls take place, let us say, from Delhi to Nainitaland vice versa. If, let us say, BSNL has nonetwork in Nainital whereas it has a network 1nDelhi, the Interconnect Agreement enables M/s.Bharti Cellular Limited to access the network ofBSNL 1n Nainital and the same situation can arise vice versa 1n a given case. During the traffic ofsuch calls whether there is any manualintervention, 1s one of the points which requiresexpert evidence. Similarly, on what basis is the“capacity” of each service provider fixed whenInterconnect Agreements are arrived at? Forexample, we are informed that each serviceprovider is allotted a certain “capacity”. On whatbasis such “capacity” is allotted and whathappens if a situation arises where a Serviceprovider's “allotted capacity” gets exhausted andit wants, on an urgent basis, “additionalcapacity’? Whether at that stage, any humanintervention is involved is required to beexamined, which again needs a technical data,We are only highlighting these facts to emphasisethat these types of matters cannot be decidedwithout any technical assistance available onrecord. 8. [here is one more aspect that requires to begone into. It 1s the contention of RespondentNo.l herein that Interconnect Agreementbetween, let us say, M/s. Bharti Cellular Limitedand BSNL 1n these cases 1s based on obligationsand counter obligations, which is called a“revenue sharing contract’. According toRespondent No.1, Section 194J of the Act 1s notattracted in the case of “revenue sharingcontract’. According to Respondent No.l, insuch contracts there 1s only sharing of revenueand, therefore, payments by revenue sharingcannot constitute “fees” under Section 194] ofthe Act. This submission 1s not accepted by theDepartment. We leave it there because thissubmission has not been examined by theTribunal| 9. In short, the above aspects needreconsideration by the Assessing Officer. Wemake it clear that the assessee(s) 1s not at fault inthese cases for the simple reason that the questionof human intervention was never raised by theDepartment before the CIT. It was not raised 9. In short, the above aspects needreconsideration by the Assessing Officer. Wemake it clear that the assessee(s) 1s not at fault inthese cases for the simple reason that the questionof human intervention was never raised by theDepartment before the CIT. It was not raised even before the Tribunal; it 1s not raised even inthese civil appeals. However, keeping in mindthe larger interest and the ramification of theissues, which 1s likely to recur, particularly, inmatters of contracts between Indian Companiesand Multinational Corporations, we are of theview that the cases herein are required to beremitted to the Assessing Officer (TDS). 10. Accordingly, we are directing the AssessingOfficer (TDS) 1n each of these cases to examine atechnical expert from the side of the Departmentand to decide the matter within a period of fourmonths. Such expert(s) will be examined(including cross-examined) within a period offour weeks from the date of receipt of the orderof this Court. Liberty 1s also given to RespondentNo.1 to examine its expert and to adduce anyother evidence.’ 8. The primary basis whereby the Apex Court hadconcluded services to the falling under 194J of the Act tobe technical services that whether any humanintervention was involved in the activity or not. TheApex Court observed that wherever there was humanintervention requiring examination of technical data, thesame would fall within the definition of technicalservices and in the absence thereof, the same would notpartake the character of technical services. The ApexCourt in that case had remitted the matter to theAssessing Officer to examine the technical expert andafter examining him adjudicate the matter afresh. In thepresent case as well from the perusal of the orders of theauthorities 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 in|Bharti Cellular Limited'scase (supra), noted above. Further, the assessingauthority shall also examine whether the Provisosinserted in Sections 201(1) and 201(1A) by Finance Act,2012 are applicable retrospectively, as urged by learned counsel for the assessee. Since the Tribunal had tollowedits order of the Jaipur Bench and in such circumstances,it cannot be said that any independent finding has beenrecorded regarding element of income in thisCase,therefore, it shall be open for the Assessing Officer toconsider the element of Income 1n the transaction as wellbefore passing fresh order 1n accordance with law. 6]Considering decisions referred above, the order of lower authorities with regard to dis-allowance of expenses claimed of Wheeling and SLDC charges are set aside. The matter 1s remanded back to the A.O. to decide the said issue atresh in view of the observations in ITA No. 652 of 2010 TiThe substantial question of law is decided accordingly. The appeal is disposed of accordingly. (AJAY KUMAR MITTAL)JUDGE 09.10.2018TeeIn (AVNEESH JHINGAN)JUDGE Whether speaking/reasonedWhether Reportable; Yes/NoYes/No