IN INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER M.A. Nos. 29 & 30/HYD/2016 (Arising out of ITA Nos. 1327 & 1328/Hyd/2014) Assessment Years: 2008-09 & 2009-10 Income Tax Officer (TDS), M/s. Southern Power TDS Ward-1, Vs Distribution Co. of AP Ltd., TIRUPATI TIRUPATI [TAN: HYDS08188F] (Applicant) (Respondent) For Revenue : Shri K.J. Rao, DR For Assessee : Shri M. Chandramouleswara Rao, AR Date of Hearing : 16-09-2016 Date of Pronouncement : 28-09-2016 ORDER PER B. RAMAKOTAIAH, A.M. : These two are Miscellaneous Applications preferred by Revenue against orders of ITAT in ITA Nos. 1327 & 1328/Hyd/2014 and C.O. Nos. 49 & 50/Hyd/2014 dt. 31-07-2015. Revenue has preferred present Miscellaneous Applications on following grounds: 1. Hon'ble Tribunal has erred in its order by referring certificate u/s. 197 dt. 05.11.2009 issued for Asst. Year 2010-11 as applicable for impugned Asst. Year 2008-09. Thus, order of M.A. Nos. 29 & 30/Hyd/2016 :- 2 -: M/s. Southern Power Distribution Co. of AP Ltd., Hon'ble ITAT in ITA Nos. 1327 & 1328/HYD/2014 dt. 31.07.2015 needs to be reviewed. 2. revenue has preferred appeal before Hon'ble Tribunal against order of Ld. CIT(A), Vijayawada on issue whether transmission charges paid by assessee deductor was covered by provisions u/s. 194-J/194-I as opined by AO or 194-C as opined by Ld. CIT(A) since, it has failed to deduct/short deduct tax at source on transmission & SLDC charges for years under consideration. But, Hon'ble Tribunal has not given any finding on grounds of department that whether nature of payment is covered under TDS provisions of Section 194J/194-I as held by Assessing Officer or 194C as opined by CIT(A). 3. Since, Hon'ble ITAT in ITA Nos. 1327 & 1328/HYD/2014 dt. 31.07.2015 has not given any finding and main ground raised by department needs to be reviewed in view of above stated facts. 4. Any other ground that may be urged at time of hearing. 5. In view of foregoing, it is submitted that, Hon'ble ITAT may kindly consider above submissions and pass appropriate orders as deemed fit . 2. Before adverting to decision on contentions raised by Revenue, it is necessary to state certain facts. Assessee is Power Distribution Company and survey u/s. 133A of Income Tax Act [Act] was conducted by DCIT, TDS-3(1), Vijayawada in premises on 29-09-2008. On noticing that tax was not deducted at source on certain payments made towards legal charges, technical fees, rents and transmission charges, proceedings u/s. 201(1) and 201(1A) were initiated by DCIT, TDS-3(1), Vijayawada. He has passed orders (which are not in impugned appeals) and on further appeal, CIT(A), Tirupati vide appeal Nos. 517/DCIT/Cir-3(1)/TDS/VJY CIT(A)/TPT/9-10 dt. 25-06-2010 has held that services rendered by AP Transco for Transmission of power through their lines could only be in M.A. Nos. 29 & 30/Hyd/2016 :- 3 -: M/s. Southern Power Distribution Co. of AP Ltd., category of rentals but not work contract or Royalty . However, he was on opinion that whether same would come within mischief of 194J or 194I would only be academic as amount of deduction of tax on payments being made under these provisions was same at 10%. After holding as such, Ld.CIT(A) in order however, noticed that assessee-company has been issued certificate by competent authority to deduct tax at 1.75% of payments being made. Accordingly, after discussing provisions u/s. 197, Ld.CIT(A) held that assessee cannot be held as assessee- in-default, if deduction at 1.75% would be adequate to meet liability. Accordingly, for AYs. 2008-09, 2009-10 & 2010-11 upto August, 2009, Ld.CIT(A) allowed appeals partly. As far as amount of tax u/s. 201(1), he has noticed that AO himself has taken cognizance of ratio in case of Hindustan Coca-cola Beverages Pvt. Ltd., Vs. CIT [293 ITR 226] (SC). (Wrongly mentioned as [295 ITR 226]) 3. After this order was passed by Ld.CIT(A), AO passed order raising demand u/s. 201(1A) dt. 30-03-2012, which has given rise to impugned proceedings. In spite of clear directions of CIT(A) that tax deduction at 1.75% would satisfy liability, AO however, considered that CIT(A) has upheld deduction u/s. 194I and calculated shortfall in deduction and delay in payment at 11.3% and levied interest u/s. 201(1A). 4. On appeal by assessee, relying on order of ITAT in Central Power Distribution Company, Hyderabad, Ld.CIT(A) vide orders dt. 28-03-2014 has held as under: M.A. Nos. 29 & 30/Hyd/2016 :- 4 -: M/s. Southern Power Distribution Co. of AP Ltd., "5.1 I have considered facts of case, order of Assessing Officer as well as submissions of appellant. I find that Assessing Officer passed order u/s. 201(1A) of Act towards interest on TDS dues which were computed by him at 11.33% as principle TDS amount. I find that in case of appellant, Commissioner of Income-tax (Appeals), Tirupathi vide his order No.517/DCIT. Cir- 3(1)/TDS/VJY/CIT(A)/TPT/09-10 dated 25.06.2010 has deleted entire demand by holding that transmission charges paid to M/s. APTRANSCO for transmission of power through their lines would only be in category of rentals but not work contract nor royalty. CIT(A) also laid emphasis on certificate u/s. 197 of Act, issued by valid authority to appellant for deduction of tax at lower rate i.e, 1.75%. Assessing Officer ignored all above facts and computed interest u/s. 201(1A) on amount of TDS computed at 11.33% instead of 2% u/s. 194C and in case of appellant @ 1.75% since appellant bearing certificate for lower deduction of tax u/s. 197 of Act. In this regard, I rely upon decision of Hon'ble ITAT, Hyderabad Bench-A in case of M/s. Central Power Distribution Company of AP Limited wherein it was held that transmission charges paid to M/s. APTRANSCO are akin to transportation of electricity and TDS is to be made u/s. 194C at @2%. Accordingly, I hold that order in question passed by Assessing Officer is bad in law and hence cancelled". 4.1. However, in appeal preferred by Revenue, Revenue has raised grounds on merits of deduction u/s. 194C or u/s. 194J which was not subject matter of proceedings. In fact Ld CIT(A) in earlier proceeding has already gave in favour of Revenue that 194C does not apply. Revenue should not have any grievance on that. Why grounds were raised are best known to AO/CIT. Consequently, ITAT has decided appeals as under: 3. After considering rival contentions and orders placed on record by Ld. Counsel, we are of opinion that both AO and CIT(A) are not correct in considering issues. First of all grounds raised by Revenue are mainly on merits of deduction u/s. 194J or 194-I, even though matters were crystallised and those provisions are not applicable to facts of assessee's case. There was in fact order of Ld.CIT(A) directing accept to extent of 1.75% rate of TDS, as assessee has obtained certificate for lesser deduction U/s 197 of Act. Having issued certificate to assessee, allowing it to deduct tax @ 1.75%, we are M.A. Nos. 29 & 30/Hyd/2016 :- 5 -: M/s. Southern Power Distribution Co. of AP Ltd., unable to understand how AO can demand tax deduction at source @ 10% Plus surcharge. To that extent grounds are infructuous. Be that as it may, we are also not in position to approve cancellation of entire interest levied by Ld.CIT(A). AO has to examine whether there is any default in deducting tax @ 1.75% by assessee and in case there is any default or delay in remitting tax interest u/s. 201(1A), certainly interest u/s 201(1A) is attracted. In view of this, modifying order of CIT(A) partially, we direct AO to examine facts again and in case there is no deduction or delay in remitting amounts as per provisions of Act, interest u/s. 201(1A) can be charged for impugned years. AO is however, directed that tax deductible should be arrived at 1.75% as per directions of CIT(A), consequent to certificate of lower deduction granted by AO. In view of this, order of CIT(A) to extent of deleting entire interest stands modified. AO is directed to re-workout interest if any, after giving due opportunity to assessee. Revenue's appeals are partly allowed . 5. In this background, present Miscellaneous Applications were preferred by AO. In fact, AO originally preferred Miscellaneous Applications in one application vide application dt. 04-03-2016, even though there are two appeals. Consequently, defect notice was issued vide this office letter dt. 09- 03-2016. Later again, one more copy was received on 15-04-2016, again another letter was issued to ITO, Ward-I, Tirupati, requesting to submit two more original copies of Miscellaneous Applications to be filed for each assessment year separately vide letter dt. 20-04- 2016. Thereafter, two separate Miscellaneous Applications for each assessment year was filed on 20-05-2016, but still with defects, without enclosing approval of Ld.CIT. Later on, defects were rectified and appeals were taken on record. 6. In course of present proceedings, Ld. DR submitted that certificate issued on 05-11-2009 would apply for AY. 2010-11, whereas same is not applicable for impugned assessment years, therefore, findings of ITAT needs to be reviewed. M.A. Nos. 29 & 30/Hyd/2016 :- 6 -: M/s. Southern Power Distribution Co. of AP Ltd., 7. When questioned whether date of certificate u/s. 197 was discussed in any of orders in impugned appeals, Ld. DR fairly admitted that date of certificate was nowhere mentioned except in petition. It was further submitted that order of CIT(A) dt. 25-06-2010 was separately appealed and Hon'ble High Court is seized of matter, as appeals preferred by Revenue were admitted. When it was specifically asked whether there was any mistake in order of ITAT, he submitted that issue whether TDS is to be deducted u/s. 194C or 194I requires to be adjudicated. 8. After considering rival contentions, we are of opinion that Miscellaneous Applications raised by Revenue are misconceived. only issue which was subject matter of appeal in order of CIT(A) was levy of interest u/s. 201(1A) and not whether TDS was to be deducted u/s. 194C or 194I. That issue was concluded by order of Ld.CIT(A), Tirupati dt. 25-06- 2010, which was subject matter of appeals separately. Even though copies of those orders and order of ITAT on that issue was nowhere referred to either in orders or in submissions before us, DR submits that matters are pending before High Court on that issue. We were not informed about these pending matters, but fact is that whether issue of TDS has to be done u/s. 194C or 194I is not subject matter of appeal in present proceedings. 8.1. What is subject matter of appeal before us in appeals is levy of interest u/s. 201(1A). In spite of Ld.CIT(A) order dt. 25-06-2010 where in it was clearly held that certificate issued M.A. Nos. 29 & 30/Hyd/2016 :- 7 -: M/s. Southern Power Distribution Co. of AP Ltd., by competent authority is valid as company s past record would have been considered in arriving at decision to issue lower deduction u/s. 197 and clearly directed that In this background, appellant cannot be held as assessee-in-default if deduction at 1.75% would be adequate to meet liability. In spite of clear directions of CIT(A) to consider tax deduction at 1.75%, Ld.AO violated same and calculated tax deductible taking 11.33% as basis and raised hefty demands. Ld.CIT(A) on noticing that there is already direction to consider only lower rate of 1.75% however, cancelled entire order. This forum considering that there was already separate orders for fixing rate at 1.75% however, modified orders of CIT(A) and AO is directed to re-workout interest if any, after giving due opportunity to assessee. In order itself it was clearly stated that grounds raised by Revenue are misconceived; therefore present applications contesting that there is no adjudication on issue are misconceived and misdirected. 9. As seen from applications and approval given by CIT, we are of opinion that there is no application of mind either by AO or by Ld.CIT. This sort of misconceived applications will only increase work load on Tribunal. As can be seen, even Miscellaneous Applications were not properly filed and this office has to resort correspondence with AO to make him file proper applications. Keeping these factors in mind, we are constrained to levy cost of Rs. 100/- tokenly on AO and another Rs. 100/- on CIT for persuing appeals by way of Miscellaneous Applications even though issue does not arise at all and there is no error or mistake in orders of ITAT. This cost M.A. Nos. 29 & 30/Hyd/2016 :- 8 -: M/s. Southern Power Distribution Co. of AP Ltd., should be paid to Prime Minister s Relief Fund within one month and should be intimated to Registry on or before 30th November, 2016. We also advise Administrative Commissioner to apply his mind and pursue appeals correctly and should not resort to unnecessary appeals and raise grounds which are not relevant and does not arise out of orders issued by Ld.CIT(A). We hope better sense will prevail on Senior Officers who should take interest in matters of second appeal in not only preferring grounds properly but also to decide whether appeal should be preferred or not and more so in form of Miscellaneous Applications like this. With these observations, and with levy of costs, we dismiss both Miscellaneous Applications as infructuous . Order pronounced in court on 28th September, 2016 Sd/- Sd/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated 28th September, 2016 TNMM M.A. Nos. 29 & 30/Hyd/2016 :- 9 -: M/s. Southern Power Distribution Co. of AP Ltd., Copy to : 1. Income Tax Officer (TDS), TDS Ward-I, Tirupati. 2. M/s. Southern Power Distribution Co. of AP Ltd., D.No. 19-13-65/A, Kesavayana Kunta, Tirupati. 3. CIT (Appeals), Vijayawada. 4. CIT (TDS), Hyderabad. 5. D.R. ITAT, Hyderabad. 6. Guard File. Income Tax Officer (TDS), TDS Ward-1, TIRUPATI v. M/s. Southern Power Distribution Co. of AP Ltd