S. 194-I TDS: To be “Rent”, payee must have “control” over asset

Chattisgarh State Electricity Board vs. ITO (ITAT Mumbai)

The assessee, a SEB, entered into an agreement with NTPC for purchase of power and another with Power Grid Corporation for transmission of the power from NTPC’s ‘bus bars’ to the delivery point. The AO & CIT (A) took the view that the transmission charges paid by the assessee to Power Grid was “rent for use of plant” and tax ought to have been deducted u/s 194-I. The argument that as the payee had been assessed, no recovery could be made from the payer was also rejected. The assessee was held liable for failure to deduct TDS. On appeal by the assessee, HELD allowing the appeal: