Case Law Details
CIT Vs Western Electricity Supply Company of Odisha Limited (WESCO) (Orissa High Court)
The ITAT held that the Respondent-Assessees have not used any of the equipment’s of OTPCL and, therefore, no rent can be deemed to have been paid by the Respondent to OPTCL. The relevant portion of the impugned order of the ITAT reads thus:
“At the outset, it is noticed that except the order of OERC, there is no connection between the assesssee herein and OPTCL. The agreement, right from the beginning, is between Gridco and the assessee. Gridco is to supply the electricity. Gridco is to deliver the electricity to the specified points as per the agreement. OPTCL was originally a part of Gridco and OPTCL was hived up from Gridco in 2005. Gridco is liable to pay OPTCL for the transmission of the electricity till the point of delivery as specified in the bulk supply agreement with assessees. Only to protect the interest of OPTCL in regard to the receipt of payments, OERC has directed OPTCL to raise invoices on the assessees. This is evident from the fact that the Regulatory Commission has specifically stated that OPTCL would have the first charge on the receivables of Gridco from the assessee. Thus, what the assessees are paying, is in fact the purchase price for the electricity supplied by Gridco. The purchase price has been broken down on account of the orders of OERC into cost of electricity and transportation cost which is based on the transmission loss of electricity. The assessees have not used anything belonging to OPTCL nor the assessees are a party in the petition filed by OPTCL to OERC for the fixation of the tariff. If the assessees were paying rent or were using any equipments of OPTCL, then assessee should have been a party before the OERC in respect of the fixation of the price in the case of OPTCL. This is because the assessee would be an affected party. The assessee are only a party in the fixation of the price between the Gridco and assessees and it in that order that a parallel identical direction is also available in para 37 and 294 and 295 of the order in the case of Gridco. Thus, it is evident that the raising of invoices by OPTCL on the assesse is for the purpose of raising for first change on the receipts of Gridco and for no other purposes. As mentioned above, the assessees have not used any of the equipment’s of OPTCL and in absence of use in any manner whatsoever, of the equipments of OPTCL by the assessee, no rent can be deemed to have been paid for the purpose of invoking of section 194(I) of the Act.”
Having heard learned counsel for the Appellants (Revenue), the Court is not persuaded that any error has been committed by the ITAT in coming to the above conclusion. In absence of there being any payment of rent or even deemed rent by the Respondents to OPTCL there was no obligation under Section 194-I of the IT Act to deduct TDS from the wheeling charges paid to OPTCL.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
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