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TMI Blog2019 (4) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... 206C(7) of the Act, the Assessing officer noticed that assessee ' PIDB' had received certain amounts from the contractor [herein referred to as 'Concessionaire'] in awarding / entering into Concession Agreement for toll plaza operation / Toll based operation and maintenance concession for certain segments of roads. That the assessee being Person Responsible ('PR') was required to collect tax at source u/s 206C of the Act, however, the assessee failed to so. Therefore, the Assessing officer issued noticed to the assessee / PR to the effect as to why it may not be held responsible under the provisions of section 206C (1C) / 206C (7) of the Act for not collecting tax at source. However, the assessee denied its liability to collect the tax at source. It was pleaded that the concessionaire namely M/s Rohan Rajdeep Tollways Ltd. filed its return of income and paid the due taxes, therefore, even though the assessee had not collected the tax at source but it could not be treated as 'assessee in default' in the light of the decision of the Hon'ble Supreme Court in the case of 'Hindustan Coca Cola Beverage (P) Ltd Vs. CIT' [2007] 293 ITR 226 (SC) However, the Assessing officer observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal point for calculation of the interest / penalty payable has to be taken as the date on which the assessee was liable to collect tax i.e. the date of payment till the date on which the Concessionaire should have filed the return However, a plea was taken by the assessee before the Hon'ble High Court that the liability to pay interest or the penalty, as the case may be, under the provisions of section 206C(7) or 271 CA, as the case may be, would arise only, if the assessee was held to be Person Responsible to deduct / collect tax at source. It was pleaded that the Concession Agreement was entered into between the State of Punjab and the Concessionaire 'M/s Rohan Rajdeep Tollways Ltd. and that the assessee 'PIDB' was just a confirming party. The assessee acted just as a nodal agency on behalf of the Government of Punjab, whereas, the toll rights were in fact granted by the Government of Punjab to the concessionaire. It was also contended that the concessionaire was responsible for the overall operation and maintenance of the project facility and that it was not merely granted usage of the toll plaza, therefore, the provisions of section 206 C(IC) were not attracted in this ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the contract referred to by the parties as 'concessionaire agreement' would be of vital importance in ascertaining whether the assessee entered into the same on its own account and for and on behalf itself or whether it did so as a nodal agency for and on behalf of the Government of Punjab. Further the matter may not end by a mere reading of the contract. It may be necessary to consider the surrounding circumstances if the terms thereof are not clear. It has also been observed by the Hon'ble High Court in the order dated 20.12.2016 in ITA No. 73-2016 relating to the identical issue raised therein that there is a possibility of questions of fact arising. For instance, it would be necessary to consider whether the assessee was merely a nodal agency for the Government of Punjab or whether it was acting on its own on a principle to principle basis with the concessionaire. The answer to this issue may not depend only upon the terms of the agreement. 10. We therefore, proceed to decide the issue in the light of the above observations made by the Hon'ble High Court. At the outset, the Ld. Counsel for the assessee invited our attention to the 'Concession Agreement' dated 21. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re sector. That as per section 20 (2)(v) of the PI (D&R) Act, 2002 the Board can recommend the grant of concessions to the public infrastructure agency in accordance with the provisions of the Act and that the concession agreement are to be entered into between the 'concessionaire' and the 'public Infrastructure agency' as per provisions of the Act. That as per section 2(23) of the Act, the 'Public Infrastructure Agency' means a Government Department, Government company, Government-owned or controlled Corporation, Local Authority or a Public Body which own or governs or control infrastructure sectors or infrastructure projects. The Ld. Counsel, therefore, has submitted that a perusal of the Concession Agreement as well as of the statutory provisions would reveal that neither the PIDB had actually entered into an agreement with the Concessionaire nor the PIDB was statutorily authorised to do so. Since the PIDB had not granted the Concession Agreement, hence, it was not authorized to collect toll fee also. That what has been collected by PIDB was only a Concession fee being a confirming party to the agreement and that too has been collected on behalf of the Government of Punjab. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h other acts as it may think necessary or expedient for the proper conduct of its functions and for carrying into effect the purposes of this Act. 12. He further has invited our attention to section 34 (7) of the PI (D&R) Act, 2002', which reads as under:- "(7) In the case of Infrastructure projects based on private participation schemes, the Board shall award the contract to the bidder whose proposed tolls or fees or rentals or charges or period of concession in respect of models of contract (shortly indicated as BOT, BOO, CAO, DOT, ROT, ROO in Schedule II) and other similar schemes or proposed Schedule of amortization payments in respect of BT,BLT,BTO (as shortly indicated in Schedule II) and other similar schemes are determined to have the lowest present value." 13. Further, attention has been invited to the relevant provisions of section 35 of the said Act which reads as under:- "35. Grant of Concession: (1) The concession shall be granted by a Public Infrastructure agency to a bidder who:- .... (3) Immediately after the completion of the second stage evaluation, a decision on whether or not to award the contract shall be taken by the Board. (4) If the Board takes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aire and further that the amount so collected was deposited in the own funds / used by the Board and was not deposited with the Government of Punjab. 17. Though, the Ld. Counsel for the assessee Board tried to convince us from the agreement as well as from the relevant statutory provisions that it was just a nodal agency of the Government and being so, was the confirming party in the agreement and that the agreement, if any, has been executed between the Government of Punjab and the concessionaire and that it is the Government of Punjab which is entitled to grant the concession and collect concession fee / toll fee by whatever name it is called, however, we find that practically it is the assessee Board which has collected the toll fee / concession fee and it is performing such day to day activities as a grantor of the concession on principle to principle basis and even the so collected toll fee / concession fee has been used / applied by the Board for its own purposes / deposited in its own funds and has not been deposited with the Government of Punjab. Now coming to the statutory provisions, from the reading of the entire statutory provisions of the Act, it reveals that the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the definition of Licensor and has acted as a Grantor of the licensee /contract in the Toll Plaza to the concessionaire and has received from the licensee / concessionaire the consideration for the award of said contract and, as such, it was liable to collect tax at source as per the provisions of section 206C (1C)of the Act. 19. So far as the contention of the Ld. Counsel for the assessee that it was not merely grant of usage of toll plaza, rather, the concessionaire was responsible for the overall operation and maintenance of the project facility, is concerned, the Ld. Counsel for the assessee could not establish from the evidence or documents on record that as to why these agreement be not treated as agreement for grant of license / toll rights as per the provisions of section 206 C(1C) of the Act. A perusal of the License /concession agreements relating to these appeals, considering the nature, scope and ambit of the agreement and also considering the actual activity carried on by the assessee PIDB, we are of the firm view that the provisions of section 206C(1C) are squarely applicable to the case in hand. Being held so, the assessee 'PIDB. as per the law laid down by the H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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