PRINCIPAL COMMISSIONER OF INCOME TAX vs. M/S JAIPUR VIDYUT VITRAN NIGAM LTD

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 67 / 2015 PRINCIPAL COMMISSIONER OF INCOME TAX, JAIPUR-II ,JAIPUR ----Appellant Versus M/S. JAIPUR VIDYUT VITRAN NIGAM LIMITED, JANPATH, JYOTI NAGAR, PAN-AABCJ6373K ----Respondent _____________________________________________________ For Appellant(s) : Mr. K.D. Mathur for Mr. R.B. Mathur For Respondent(s) : Mr. Gunjan Pathak _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 12/09/2017 1. By way of this this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal of the department confirming the order of CIT(A). 2. This Court while admitting the appeal on 21.09.2015 framed following substantial questions of law: “1.Whether on the facts and in the circumstances of the case and in law the ITAT has erred in deleting addition of Rs.1,09,018/- made depositing the employee’s contribution to PF and ESI beyond the prescribed time limit provided in the respective Acts. 2.Whether on the facts and in the circumstances of the case and in law the ITAT has erred in holding that payment of Rs.2,81,23,73,125/- on account of transmission/wheeling/SLDC charges to RRVPN were not for technical services liable for making TDS under section 194J of the I.T. Act as such provisions of Section 40 (a)(ia) are not applicable.

(2 of 5) 3. Whether on the facts and in the circumstances of the case and in law the ITAT has erred in deleting the addition of Rs.1,73,07,800/- on account of front end fees paid in HIDSCO for raising the loan holding it to be revenue expenditure? 3. Learned counsel for the respondent contended that the issues No.1 and 2 are covered by decision of this Court passed on 19.10.2016, in D.B. Income Tax Appeal No.422/2011 Commissioner of Income Tax vs. Principal Officer JVVNL wherein the Division Bench while considering the matter observed as under:- “Counsel for the appellant relied on the provisions of Section 194C and 194J which reads as under:- 194C (1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of lobour for carrying out any work) in pursuance of a contract between the contractor and a specified person shall at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or graft or by any other mode, whichever is earlier, deduct an amount equal to- (I) One per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family; (ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family, of such sum as income-tax on income comprised therein. (2) Where any sum referred to in sub-section (1) is credited to any account, whether called “Suspense account” or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.

(3 of 5) (3) Where any sum is paid or credited for carrying out any work mentioned in sub-clause (e) of clause (iv) of the Explanation, tax shall be deducted at source- (I) on the invoice value excluding the value of material, if such value is mentioned separately in the invoice; or (ii) on the whole of the invoice value, if the value of material is not mentioned separately in the invoice. (4) No individual or Hindu undivided family shall be liable to deduct income-tax on the sum credited or paid to the accountof the contractor where such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family. (5) No deduction shall be made from the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor, if such sum does not exceed [thirty] thousand rupees 194J. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of- (a) fees for professional services, or (b) fees for technical services, [or] [(ba) any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, to a director of a company, or] (c) royalty, or (d) any sum referred to in clause (va) of section 28,] shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to [ten] percent of such sum as income-tax on income comprised therein.” 3. The assessee was bound to deduct TDS in lieu of services received by them and for the services received by them was liable to pay tax within the meaning of Explanation 2 to Section 9(1) (vii) of the Act.

(4 of 5) 4. However counsel for the respondent Mr. Jhanwar contended that the issue is concluded in view of the following decisions: 1. Commission of Income Tax Vs. Bharti Cellular Ltd. (2011) 330 ITR 239 (SC), 2. Union of India Vs. Satish Panalal Shah (2001) 249 ITR 221 (SC), 3. Commissioner of Income Tax Vs. Jaipur Vidyut Vitran Nigam Ltd. D.B. ITA No. 579/2009, High Court of Judicature for Rajasthan, Jaipur 4. Commissioner of Income Tax Vs Bharti Cellular Ltd (2009) 319 ITR 139 (Del.) 5. Skycell communications Ltd. And Anr. Vs Deputy Commissioner of Income Tax and Ors. (2001) 251 ITR 53 (MAD.) 6. M.S. Jewellery Vs. Assistant Commissioner (ASSESSMENT) Agricultural Income Tax and Sales 7. CIT vs. Maharashtra State Electricity Distribution Co. Ltd., (2015) 119 DTR (BOM) 278, 8. Commissioner of Income Tax-II and Ors. Vs Delhi Transport Ltd. Manu/DE/2199/2015.” 4. Learned counsel further relied upon decision in D.B. Income Tax Appeal No.278/2011 Commissioner of Income Tax, Jaipur-II, Jaipur vs. Jaipur Vidyut Vitran Nigam Ltd. Decided by Division Bench of this Court on 06.01.2014 wherein the issue was decided in favour of the assessee and against the department. 5. Regarding third issue the Tribunal in para 14 observed reads as under :- “We have heard the rival contentions of both the parties and perusal the material available on record. The assessee has raised loan of Rs.300 crores for improvement in transmission, network and infrastructure. The assessee paid this amount to HUDCO, which was pre-decided condition on the loan sanctioned. The learned CIT DR has not controverted the findings by the learned CIT(A) in his order. Further the laws relied upon by the AR for the assessee are squarely applicable on it being identical issue, therefore we uphold the order of the learned CIT(A).”

(5 of 5) 6. Taking into consideration the above we are of the opinion that the view taken by the Tribunal is just and proper. No interference is called for. 7. All the issues are decided in favour of the assessee and against the department. 8. However, it is made clear that issue No.1 will be subject to SLP. 9. The appeal stands disposed of in the above terms.

(VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. Chouhan/80