Payments made for transmission of electricity by transmission lines do not constitute rent payment U/s.194-I

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INCOME TAX APPELLATE TRIBUNAL, MUMBAI

I.T.A.No.2872/Mum/2010 – Assessment Year: 2009-10

Maharashtra State Electricity Distribution Co. Ltd. Vs. DCIT TDS Range-2

Date of Pronouncement: 27/06/2012

Payments made for transmission of electricity by the transmission lines owned by PGCIL do not constitute payment for rent under section 194-I, it is not really necessary to go into this aspect of the matter. The question as to whether the definition of expression “rent”, introduced in section 194-I with effect from July 2006, is prospective or clarificatory is also, given our findings that, even on the touchstone of the definition of rent under the aforesaid provision, the payment for transmission of power will not constitute “rent”, not really relevant in the present context, and we see no need to deal with the same either. In view of the above discussions, and bearing in mind entirety of the case, we are of the considered view that the provisions of section 194-I cannot apply in respect of payments made for transmission of power by the PGCIL, on the facts of the case before us. Accordingly, the impugned demands raised under section 201(1) read with sections 194-I and 201(1A) read with section 201(1A) are cancelled. The assessee gets the relief accordingly”.

Similar view was also taken by ITAT Cuttack Bench in the case of GRIDCO Ltd in ITA No.404/CTK/2011 dated 17.11.2011. In view of the detailed discussions made by the Coordinate Benches in the above cases and since the agreement entered by assessee with MSETCL. and PGCIL are similar in nature, we hold that the payments made to the above companies cannot be considered as a ‘rent’ under the provisions of section 194I and consequently the levy of interest under section 201(1A) also does not arise.