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TMI Blog2019 (1) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... collecting toll fees as entrusted by the assessee was not a contract within the meaning of section 206C and will not attract provisions of section 206C(1C) of the Act, rather it was in the nature of outsourcing of job for collection of user fees. See ACIT, BHUBANESWAR VERSUS PROJECT DIRECTOR, NATIONAL HIGHWAY AUTHORITY OF INDIA, PROJECT DIRECTOR, PARADIP PORT ROAD CO. LTD., BHUBANESWAR [2013 (1) TMI 975 - ITAT CUTTACK] - Decided in favour of assessee. - ITA No.1381 TO 1386/Ahd/2015 - - - Dated:- 9-1-2019 - AMARJIT SINGH, ACCOUNTANT MEMBER AND BEFORE MS.MADHUMITA ROY, JUDICIAL MEMBER For The Revenue : Shri Mudit Nagpal, Sr.DR For The Assessee : Shri Sumat Chadha, AR ORDER PER BENCH: These six appeals of the Revenue are against common order of the ld.CIT(A)-8, Ahmedabad dated 25.3.2015 passed for the Asstt.Years 2005-06 to 2010-11. Since common issue is involved in all these appeals, the same are disposed of by this consolidated order. 2. Revenue has filed separate appeals for each assessment year. Grounds raised in all these appeals are identical except change in the figures of quantum. In short, sole grievance of the Revenue in all these appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy, rather the agency was engaged sole for the purpose of collecting toll on behalf of the assessee, and whatever collection made, was deposited by the agency in the very next day in assessee s bank account. For this work, the assessee was paying manpower charges to the collecting entity besides services charges at the agree rate. Toll collection is nothing but an income of the assessee, which was collected by the Agency on its behalf, and therefore, provisions of section 206C(1C) was not applicable, as the right to collect toll was not transferred to the agency. The assessee its reply also distinguished the treatment given by the assessee company before 29.12.200 and after 29.12.2010, which was incorporated by the ld.AO in his order in page no.5 to 7 of the assessment order. However, the ld.AO has not satisfied with submissions of the assessee. He held that right to collect the toll has been granted by the assessee to the said A.B. Infrastructure by entering into a contract agreement titled Contact for department collection of fee . The AO has referred para 23 of the contract regarding obligation of the collecting entity. He has also stated that sub-clause (a) to (o) indicate tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osited in the designated bank of the assessee-company, and therefore, there is no question of transfer of right or interest over the toll collection for the use of expressway with complete responsibility. Role of the collecting entity is just to collect the toll and deposit the amount in the bank account of the assesseecompany. These facts have been appreciated by the ld.CIT(A), who after considering relevant materials and also contract agreement entered by the assessee-company and the collecting entity, came to the conclusion that the role of the collecting was very much restricted to collection of toll amount and depositing the same in the bank, and therefore, there is no transfer of right or interest by the assesseecompany. Job assigned to the collecting entity was in the nature of outsourcing and there is no scope for elaboration of meaning of contract agreement so as to treat the assessee, as assessee-in-default for not collecting TDS. 9. On due consideration of facts and circumstances, we find that the assessee has filed point wise reply before both the authorities. In its reply, the assessee differentiated nature of the work carried out by the different agencies before 29 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... All the risk and rewards is being borne by the Licensee. 6. Toll collection is entirely the income of AVEXCL which is collected by the Agency on behalf of AVEXCL and deposited the same in to AVEXCL account. Toll collection is entirely the income of Licensee. The licensee has given a fixed amount to the AVEXCL. That fixed Amount is the income of AVEXCL. Fixed amount is being paid for obtaining license for collection of toll tax on its own behalf. 7. In the profit loss account of the AVEXCL the toil collected was shown as income and the Agency charges paid to Agency was treated as expenses. The other expenses like salary expense, administration exp etc. was also booked as expenses. In the profit loss account of the AVEXCL the fixed amount paid by Licensee is shown as income. 8. In the profit loss account of the Agency the Agency charges paid by the AVEXCL was shown as income. In the profit loss account of the Licensee the toll collected is shown as income and the fixed amount paid to AVEXC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aza or mine or quarry for the purpose business shall be responsible for collection of tax at source. Tax shall be collected at the time of debiting of the amount payable by the licensee or lessee to the account of the license or lease or at the time or receipt of such amount from the said license or lease in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier. In the present case, the appellant has made TDS on the payments made by it to the collecting agency rather than doing TCS in respect of toll collection. In the case cited and mentioned in Para 12.2 by the DCIT, it is seen that leave of toll plaza was granted in favour of Gulzar Co. and thus that agreement was similar to the one entered by the appellant after 29/12/2010 with MEP Toll Road Pvt. Ltd. It is not so in the case where the collecting agency is making collection on behalf of the appellant. 13.2 In the present case, the assessee has not granted lease or a license nor entered into a contract or otherwise transferred right or interest in the Toll Plaza in favour of the contractors for use of the Toll Plaza for the purpose of business against consideration. Under such facts and cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount collected as toll would belong to collecting entity and in lieu of it, AVEXCL will get consideration which may be fixed or variable but this is not the case here. In the present case the collection made by the collecting entity belongs to AVEXCL. Normally TCS is the amount that is collected over and above the amount of consideration agreed upon in case of toll plaza lease/license. In instant case the collecting agency is not paying any consideration to the appellant but rather the appellant is paying collection charges to the collecting agency. The appellant has made TDS in respect of consideration paid to the collecting entity for services provided by them by treating the same as work contract. Accordingly, appellant has merely outsourced the job of collection of the user fees and not entered into any contract or parted with any right in favor of a 3rd party man power-agency for lump sum receipts. Accordingly, under the facts and circumstances discussed above, section 206C(1C) is not applicable to the case of the appellant. 13.5 It is also interpreted that the internal circular of NHAI was mainly for collection of tax at source from franchisee. Under the Franchisee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessees are not obliged to collect TCS from the collecting agency to whom it has entrusted the activities of collecting toll fees as prescribed by the assessee. As was observed by the learned CIT(A) it is not a contract. It is only outsourcing job for collection of user fees. The learned CIT(A) has come to this conclusion after thorough verification of the agreement entered by the NHAI with the collecting entities and other various provisions of the Rules made by the Government in regard to the management of toll plazas. Therefore, under these facts and circumstances of the case, we are of the considered view that the learned CIT(A)'s orders in all these appeals are not at all infirm in any way requiring interference and hence, we uphold the same by finding the issues raised by the Department as devoid of merit and as such, we dismiss the appeals of the Revenue. 11. We find that the ld.CIT(A) has also relied upon the order of the Tribunal Cuttack Bench in the case of the Project Director Vs. ITO, dated 24.1.2013, which is directly on issue and covered in favour of the assessee in the present case. We would note the ground taken by the Revenue before the ITAT, Cuttack ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the light of the submissions of both the parties together with, the agreements stated to have been entered into by the assessee with the-different collecting entities, it is seen that the assessees have given only permission to the collecting entities to collect the toll fees and maintain the toll plazas by employing a specified category of persons and supervise them and deposit the toll collection in the signatory account of the NHAI has agreed to pay service and the NHAI agreed to pay the men-power employed by the collecting entities the salary as fixed by the collecting entity. On perusal of all these, it is clear that the assessees have not granted any right or interest in the toll plaza to the collecting entities. Therefore, the said agreement will not comprehend into the scope of provisions contained in Section 206C(1C) of the I.T.Act,196l as was found by the learned CIT(A) rightly. Therefore, the learned CIT(A) has rightly found that the assessees are not obliged to collect TCS from the collecting agency to whom it has entrusted the activities of collecting toll fees as prescribed by the assessees. As was observed by the learned CIT(A) it is not a contract. It is only out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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