ACIT, NOIDA vs. M/S. NOIDA POWER COMPANY LTD., GREATER NOIDA

The following are the grounds taken by the Revenue-

The brief facts of the case are that Assessee is a Public Limited Company engaged in the business of distribution and supply of electricity to consumers in the District of Gautam Budh Nagar. In this case TDS verification letter was issued on 18.3.2014 to check the correct applicability of TDS related provisions. During the assessment proceedings the AO noticed that the assessee has been making the payments under the head “transportation and wheeling charges” to various persons under transportation service agreement without deduction of tax at source u/s. 194J. In this regard, the assessee was asked to explain the reasons for failure to deduct tax at source u/s. 194J as according to AO these payments qualified to be covered u/s. 194J i.e. being fees for technical or professional services. In response, the assessee furnished submission explaining the reasons for above failure which was not acceptable to the AO.

Ld. DR relied upon the Order of the AO and reiterated the contentions raised in the grounds of appeal.

We have heard both the parties and perused the relevant records, especially the impugned order and the case laws cited by the Ld. Counsel of the assessee. We find that section 194J would have application only when the technology or technical knowledge, experiences/skills of a person is made available to others which can be further used by him for its own purpose and not where by using technical systems, services are rendered to others. Rendering of services by allowing use of technical System is different than charging fees for rendering technical services. In the present case no scientific knowledge, experience or skill is made available/rendered by the PGCIL to the assessee. From the records, we have seen that the assessee itself has its own engineers and technicians who consistently monitor and supervise the flow of the electricity to its system and ultimately supplies to its customers which according to Ld. CIT(A) are the designated function of power grid which do not amount to providing technical services within the meaning of expln.2 to section 9(i)(vii) of the Act. Moreover, we also in complete agreement with the judgment of Hon'ble Delhi High Court in the case of CIT vs. Bharati Cellular Limited [175 Taxmann 573 (Del)] affirmed by the Hon’ble Supreme Court in 193 Taxman 97(SC) wherein, it has been held that technical services which are relevant for the purpose of section 194J would be those technical services which involve human interface/element. In other words, the expression 'technical service' could have reference to only technical service rendered by a human and that it would not include my service provided by machines or robots. However as against above contention we find that the AO has completely failed to bring relevant materials, whatsoever, on record to prove the existence of human interface/element in the present case. In view of the above, we find that such transmission and wheeling charges paid by the assessee does not come within the purview of fees for technical service as defined under Explanation 2 to sec 9(1)(vii) of the Act and accordingly no tax is required to be deducted by the assessee u/s. 194J therefrom. Hence, the action of the AO in treating the assessee to be an assessee-in-default u/s. 201(1) of the Act and the order dated 27.3.2014 passed u/s. 201(1)/201(1A) of the I.T. Act were rightly deleted by the Ld. CIT(A), which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) and reject the ground raised by the Revenue. Our aforesaid view is also fortified by the decision of the Hon’ble Delhi High Court in the case of CIT vs. Delhi Transco Ltd. (62 taxmann.com 166 )