PR. COMMISSIONER OF INCOME TAX PANCHKULA vs. M/S UTTAR HARYANA BIJLI VITRAN NIGAM LTD SECTOR 6 PANCHKULA

ITA/401/2015HC Punjab & HaryanaPHHC01110053201509 October 2018Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE AVNEESH JHINGAN6 pages
AI SummaryRemanded

What were the facts?

The assessee, M/s Uttar Haryana Bijli Vitran Nigam Ltd., is engaged in power distribution and purchases electricity from HPGCL, transmitting it through HVPNL's network. The assessee pays 'wheeling charges' and 'SLDC charges' to HVPNL, with rates fixed by HERC. The Assessing Officer (AO) disallowed these expenses under Section 40(a)(ia) for Assessment Year 2008-09, holding that the assessee failed to deduct TDS on payments to HVPNL. The CIT(A) partly allowed the appeal, setting aside the disallowance. The Tribunal, following its earlier orders and a Jaipur Bench decision, dismissed the revenue's appeal. The revenue then filed an appeal before the High Court.

What did the High Court hold?

The High Court, setting aside the orders of the lower authorities, remitted the matter back to the Assessing Officer for a fresh examination. The Court noted that the primary basis for classifying services under Section 194J as 'technical services' by the Supreme Court in Bharti Cellular Limited was the involvement of human intervention, requiring examination of technical data. The High Court observed that it was not discernible from the orders of the authorities below whether there was any human intervention in the services provided. Therefore, the AO is directed to examine this aspect afresh, considering the observations in Bharti Cellular Limited. Additionally, the AO shall examine the applicability of the Provisos inserted in Sections 201(1) and 201(1A) by the Finance Act, 2012, retrospectively, as urged by the assessee. The AO is also permitted to consider the element of income in the transaction before passing a fresh order.

What were the issues?

1. Whether, on the facts and circumstances, the ITAT was justified in deleting the disallowance of Rs. 371,52,15,673/- made by the AO under Section 40(a)(ia) of the Income Tax Act, 1961, on account of non-deduction of TDS on payments of wheeling charges and SLDC charges to HVPNL? Assessee's Contention: The judgment does not record specific contentions for the assessee regarding this issue, other than implicitly agreeing with the Tribunal's finding that there was no liability to deduct TDS under Section 194-J. Revenue's Contention: The revenue argued that an identical question was decided by the High Court in ITA No. 652 of 2010, where the matter was remanded to the AO for fresh consideration in light of the Supreme Court's decision in CIT, Delhi Vs. Bharti Cellular Limited. The revenue contended that the Supreme Court's decision emphasized the need for expert evidence to determine if human intervention was involved in 'technical services'.

Which sections of the Income-tax Act were involved?

Section 260A,Section 40(a)(ia),Section 9(1)(vii),Section 194-J,Section 201(1),Section 201(1A)

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: 09.10.2018 Pr. Commissioner of Income Tax, Panchkula

.......Appellant Versus M/s Uttar Haryana Bijli Vitran Nigam Ltd.

......Respondent CORAM: HON'BLE MR. JUSTICE AJAY KUMAR MITTAL, JUDGE HON'BLE MR. JUSTICE AVNEESH JHINGAN, JUDGE Present: Mr. Yogesh Putney, Senior Standing counsel for the appellant. Mr. K.L. Goyal, Senior Advocate with Mr. Umang Goyal, Advocate for the respondent. **** AVNEESH JHINGAL, J. The revenue has filed the present appeal under Section 260A of the Income Tax Act, 1961 (for brevity 'the Act') against the order dated 15.07.2015 of the Income Tax Appellate Tribunal, Division Bench, Chandigarh (for short 'the Tribunal') passed in ITA No. 452/CHD/2014. The assessment year involved is 2008-09. 2. Notice of motion was issued to consider the following substantial question of law: ''Whether on the facts and circumstances of the case, the ld. ITAT was justified in deleting dis-allowance of R

The order continues below.

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