BHUBANESWAR: In a major relief to the State power trading utility Gridco and transmission companies, the Income Tax Appellate Tribunal, Cuttack, has ruled against levy of tax on power transmission charges by the Income Tax Department. “We are of the considered view that the assessing officer was not justified in invoking the provisions of Section 40(A)(IA) of the Income Tax Act for disallowance of the transmission and wheeling charges, judicial member KSS Prasad Rao and accountant member KK Gupta of the Income Tax Appellate Tribunal said in their November 17 order. The IT Department has not only imposed TDS on transmission charges but fees paid by generators, consumers, power traders and distribution companies to the regional load despatch centre and the state load despatch centres which has been protested by all the states. Since TDS recovery is a pass-through on the consumers, a favourable decision for the IT Department would have led to a hike in the cost of power. While assessing tax of Gridco for the year 2008-09, the Income Tax Department had imposed TDS (tax deduction at source) on wheeling charges amounting to ` 512.44 crore including ` 145.38 crore paid to the Power Grid Corporation of India Limited (PGCIL). Defining the wheeling charges within the meaning of ‘rent’, the assessing officer applied the TDS provisions under section 194-I of the IT Act. Meanwhile, the IT Department has already recovered ` 51 crore TDS from Gridco.
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