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TMI Blog2016 (5) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... as insignificant amount the provisions of section 206C(1C) cannot be applied because it is not practicable. As far as the doubts raised by the Revenue Department that the deposits made in the escrow account would have been used by NHAI to remit to the “consolidated fund of India”, this fact can easily be verified from the said escrow account. If no amount of toll fees is recovered by NHAI to be remitted to the consolidated fund of India or otherwise then naturally the impugned deposits of toll fees by OPPL is out of the ambits of the provisions of section 206C(1C) of I.T. Act. Otherwise on the payment of Re.1/- we have already held that it is not practicable to invoke the provisions of section 206C(1C). - Decided against revenue - I.T.A. Nos. 54, 55 & 56/Nag/2012 - - - Dated:- 31-3-2016 - SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER For The Appellant : Shri Narendra Kane. For The Respondent : Shri R.V. Loya. ORDER Per Mukul K. Shrawat, J.M. All the three appeals have been filed by the Revenue arising from a consolidated order of learned CIT(Appeals)-II, Nagpur dated 16-11-2011 pertaining to the assessment years 2009-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad not collected the prescribed amount of TCS, hence defaulted, for which an explanation was called. A show cause notice was issued, relevant portions are reproduced below : In view of the above of the above provisions and as per the contract between you concessionaire (M/s Oriental Pathways (Nagpur) Pvt. Ltd.) known as Concession Agreement, You are the PERSON who has entered in to agreement and the concessionaire are the Licencee or lessee, Vide the agreement you have entrusted the right of collection of toll fees for Toll Plaza at Karanja (Ghadge) on Amravati- Nagpur Highway. Further from the perusal of the agreement it is clearly evident that you have authorized the M/s Oriental Pathways (Nagpur) Pvt. Ltd. for collection of fees from the vehicles at the Toll Plaza on the route after the completion of the Build part of the concession. The excerpts from the Scope of the above agreement are being reproduced as under. 3.1 Subject to and in accordance with the terms and conditions sed forth in this Agreement, NHAI hare by grants to the Concessionaire and the Concessionaire hereby accepts the Concession for a period of 20 (twenty) years commencing from the Appointed Date th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by NHAI in exercise of its rights under this Agreement during the Concession Period and all disbursements or payments by NHAI pursuant hereto shall also, subject to the rights of deductions and appropriations there from of NHAI under this Agreement, be deposited by NHAI in the Escrow Account. 3.2 For assessment year 2009-10 the AO has finally held that the assessee had not collected TCS on the toll fees collected by the concessionaire, hence liable to pay TCS demand of ₹ 40,42,188/- raised against the assessee. 4. When the matter was carried before the first appellate authority, learned CIT(Appeals) has examined the facts of the case and thereupon held that the amount payable by the licensor/concessionaire was only Re. 1/- per year which had been paid to the assessee. Therefore, there was no infringement of the provisions of section 206 of I.T. Act. Being aggrieved by the relief granted, now the Revenue is in appeal. 5. From the side of the Revenue learned D.R. Mr. Narendra Kane supported the action taken by the AO. He has pleaded that there was no logic of asking Re. 1/- annually from M/s Oriental Pathways (Nagpur) Pvt. Ltd. specially when he had collected a huge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as annexure-I for ready reference. Further, the NHAI has issued letter dated 28-07-2011 to all its Project Directors including the assessee that all the above mentioned receipts have to be remitted to the consolidated fund of India The said letter is enclosed as annexure-II of this letter. Further, another office memorandum dated 21-05-2010 from NHAI is also enclosed which also states that the NHAI entitled to get toll revenue, shared revenue and negative grant and interest on receipts which has to be accounted for in a separate Bank Account opened for the purpose and the entire amount has to be remitted to the consolidated fund of India on quarterly basis. The letter is enclosed as annexure-III. Further, the NHAI issued instructions dated 22-03-2010 to its field formulations stating that the maturity amount of all the FD s maintained with bank may be deposited in consolidated fund of India. The same is enclosed as annexure IB and V. In this connection, the issue of non deduction of TDS was taken up with DIT(TDS) who vide his letter dated 21-01-2011 has clarified the issue which is enclosed as Page No.6. The relevant Para of the letter is reproduced as under for ready reference :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Road Transport and Highway. A tender was issued for national highway No. 6 to be developed on BOT (Build, Owned, Transfer) basis. The project was granted to develop the National Highways No. 6 to M/s Oriental Pathways (Nagpur) Pvt. Ltd., in short M/s OPPL. The cost of the project was stated to be approximately ₹ 212 crores. The cost was to be met by M/s OPPL, through own finance, equity, participation, grant of Government and other sources. The project was for a fixed term of 20 years. The cost of the project as well as the profitability was to be recovered by M/s OPPL. The cost was to be recovered through collection of toll during the period of lease. The objection of the Revenue Department is that there was infringement of provisions of section 206C(1C) of I.T. Act. The AO has reproduced the provisions of section 206C(1C) in the impugned order and the silent feature is that every person who grants a lease or a licence or otherwise transfers any rights either in whole or in part in any toll plaza to another person for the use of such toll plaza for the purpose of business, shall at the time of debiting of the amount payable by the licensee or lessee to his account or at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minimal amount of Re. 1/- no TCS liability can be infested upon the assessee. 9.2 For the purpose to ascertain the amount which was subjected to TCS the Revenue Department has drawn our attention on the clauses of the agreement according to which the escrow account was opened. The plea of the assessee is that the amount collected was to be appropriated by the concessionaire to compensate the cost of the project and the maintenance expenses of the highway. As far as the concession fees is concerned there was a specific clause in the agreement that in consideration of the grant of concession under the agreement, the concession fees payable by the concessionaire to NHAI shall be Re. 1/- per year during the term of the agreement. Next comes the clause under which parties have agreed to open a escrow account. As per clause 17.3 considering the adverse circumstances or there was change in the commitment then a provision has been made that in case NHAI has to recover from the concessionaire, the amount will be recovered directly from the escrow account and for that purpose the concessionaire thereby expressly authorise NHAI by giving irrevocable instruction to escrow bank to make pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of repair and maintenance work being carried out by NHAI (pursuant to the failure on the part of the Concessionaire in doing so) to maintain and/or repair the Project Highway or a part thereof up to and in accordance with the Specifications and Standards and/or failure on the part of the Concessionaire to commence remedial works within 30 (thirty) days of receipt of notice in this regard from NHAI or the Independent Consultant, if any, including those on account of exercise of any of its rights under this Agreement provided NHAI certifies to the Escrow Agent that NHAI had incurred such expenses in accordance with the provisions of this Agreement ; (e) All Concession Fees and any Negative Grant Due to NHAI from the Concessionaire under this Agreement; (f) Monthly proportionate provision of Debt Service Payments due in any Accounting Year and payment of Debt Service Payments in the month when due; (g) Reimbursements of expenditure incurred by NHAI, if any, for payment of insurance premia, etc. which are otherwise Concessionaire s responsibility, on account of failure on part of the Concessionaire to keep such insurance(s) effective and in force. (h) Any payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ler as price at the time of sale and cannot by any stretch of reasoning be held to include that amount which has not been recovered or paid directly to the seller. Later on by an insertion of sub-section (1C) the toll plaza has also been included. Therefore, by the insertion of toll plaza, isco facto the term seller is to be read in that context also. 12. In the light of the discussion made herein above pertaining to the intent of the legislation we have to examine the objection of the Revenue Department which has also been raised before the CIT(Appeals) that in a situation when an escrow account has been jointly opened by the lesser and the lessee, then the amount deposited by the concessionaire can be treated as payment to NHAI. As far as the nature of collection and the deposit of the said collection in the escrow account is concerned, our attention has been drawn on a notification issued by Ministry of Road Transport dated 21st April, 2008 according to which in exercise of the powers confe rred National Highways Act, 1956 authorises the concessionaire to collect and retain the said fees on and from the date of commercial operation till the termination. The emphasis of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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