Section 194J : Transmission of electricity couldn't be held as 'FTS'

Sum paid for transmission of electricity couldn't be held as 'FTS'

[2015] 57 taxmann.com 261 (Lucknow - Trib.)

IN THE ITAT LUCKNOW BENCH 'A'

Assistant Commissioner of Income-tax

v.

Madhyanchal Vidyut Vitran Nigam Ltd

Section 194J of the Income-tax Act, 1961 - Deduction of tax at source - Technical services fee (Transmission charges) - Assessment year 2008-09 - Assessee was a distributor licensee of electricity - In terms of agreement between three parties, namely, UPPCL (transmission licensee) supplied power, assessee company (distribution licensee) distributed power and UPPTCL (service provider) rendered technical service to assessee for transmission of power - Assessing Officer found that transmission charges paid by assessee were in nature of fees for technical services in hands of receipts, such payments were therefore liable for TDS under section 194J - It was noted that payments made by assessee to UPPTCL did not involve any element of profit and it was merely in nature of reimbursement of cost of transmitting electricity which did not require deduction for TDS - Moreover, UPPTCL was simply involved in transmitting electricity through its standards/equipments which did not involve rendering of technical services - Whether on facts, provisions of section 194J were not attracted and therefore impugned disallowance was to be deleted Held, yes [Para 17] [In favour of assessee]