|CORAM:||Joginder Singh (JM), N. K. Billaiya (AM)|
|CATCH WORDS:||TDS deduction, use of asset|
|COUNSEL:||J. D. Mistry|
|DATE:||October 29, 2014 (Date of pronouncement)|
|DATE:||October 31, 2014 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 194-I: Payment for use of an asset simpliciter, whether with control and possession in its legal sense or not, could be said to be for the use of an asset. However, payment for a specific act such as power transmission and even if an asset is used in the said process, cannot be said to be for the use of an asset|
(i) It is thus clear that in a situation in which the payment in made for the use of an asset simpliciter, whether with control and possession in its legal sense or not, the payment could be said to be for the use of an asset. However, in a situation in which the payment is made only for the purpose a specific act, i.e. power transmission in this case, and even if an asset is used in the said process, the payment cannot be said to be for the use of an asset. When control of the as set (transmission lines in the present case) always remains with the PGCIL, any payment made to the PGCIL for transmission of power on the transmission lines and infrastructure owned control led and in physical possession of PGCIL can be said to have been made for “the use of’ these transmission lines or other related infrastructure. Viewed in this perspective, section 194-I has no application so far as the impugned payments for transmission of electricity is concerned. For this short reason alone the impugned demands must be held to unsustainable in law.
(ii) We have taken note of learned Departmental Representative’s reliance on the Hon’ble Delhi High Court’s judgment in the case of CIT v. Japan Airlines Co. Ltd. 325 ITR 298 (Delhi), which in turn follows its earlier decision in the case of United Airlines U. CIT  287 ITR 281 (Delhi), in support of the proposition that even in a situation in which landing and parking charges are paid by airlines to the Airport Authority, and when such charges are not in respect of the specific area of land, the provisions of section 194-I come into play. By the same logic, according to the learned Departmental representative, transmission charges are paid by the assessee, even though the same may not pertain to specific transmission lines which may be simultaneously used by more than one persons, the provisions for tax deduction at source from rent under section 194-I be held to be applicable. We are unable to see any merits in this submission. When an aircraft is parked in a portion of land in the airport, such a portion of land could still be viewed as being effectively used by the airlines owning the aircraft, and the same is the position with regard to the landing strip. The learned Departmental representative has also referred to the decision of the Hon’ble Andhra Pradesh High Court in the case of Krishna Oberoi v. Union of India  257 ITR 105 (AP) but we see no meri ts in this defence either. This case only deals with the question whether payment for hotel rooms will be covered by the definition of rent, but then it was not, and could not have been, in dispute that the payment for hotel room constitutes payment for “the use of’ an asset-the precise point of controversy in the present decision. Clearly, a hotel customer pays for the use of or the right to the use of the hotel room. It is for the same distinguishing feature that decisions in the cases of J. C. Bansal v. TRO  313 ITR (AT) 215 (Indore) and CIT v. Reebok India Co.  291 ITR 455 (Delhi ) are not relevant in the present context.