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TMI Blog2015 (9) TMI 1663X X X X Extracts X X X X X X X X Extracts X X X X ..... handigarh has erred in law in holding that the following payments was made to the parties detail below or not liable to IDS u/ s 194C of the I.T. Act, 1961:- S.No. Name of the Party Amount of contractual payment made during the year. 1 M/s Patiala Malerkotla Tollways Ltd. Rs. 1,29,00,000/- 2 M/s Rohan & Rajdeep Tollways Ltd., Rs. 9,08,00,000/- 3 M/s Chetak Enterprises (P) Ltd. Rs. 8,26,000/- 4 M/s Telecommunications Consultant India Ltd., Rs. 1,16,80,000 Total Rs. 19,79,80,000/- 3. Briefly stated, the facts of the case are that during the course of TDS inspection and assessment proceedings u/s 201(1) and 201(1A) of the Income-tax Act, 1961, the Assessing officer noticed that assessee in its receipt and expenditure account for the year ending 31.3.2009 had made expenditure of Rs. 492,68,37,890/- under the head 'project related expenditure' to different parties but the assessee had not deducted tax on these payments. The Assessing officer also observed that during financial year 2008-09, the Person Responsible ('PR') has received an amount of Rs. 7,36,10,000/- on account of toll fee for which no TDS was collected by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts made to contractor. The Ld. Counsels have argued that due to peculiar nature of terms and conditions of the agreement, the same do not fall under the category of work contract, mainly because the concessionaires also have ownership rights. The appellant Board is not the owner of the roads and there was no contract of carrying out any work under work contract, since assets built were owned, operated, repaired and maintained by the concessionaires. The appellant has also clarified that the it was merely a facilitator and a nodal agency of the State Government, being confirming party and the obligation are inter-se between the authority i.e. PIA and the concessionaires. The impugned projects are, in fact, in the nature of joint venture of public and private participation and the contribution/payments made by the appellant on behalf of the Government of Punjab are actually equity participation towards the cost of project. In view of this discussion, it is held that the Assessing Officer was not right in holding that the appellant was required to deduct tax u/s 194C on the impugned payments and in treating the PR as 'assessee in default' u/s 201(1) and 201(1A) of the Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onclusion that the tax could not be recovered once again from the assessee. 7. We also observe here that the issue involved is squarely covered by the decision of Hon'ble Delhi High Court dated 26.8.2015 in the case of CIT Vs. Ansal Land Mark Township (P) Ltd in ITA No. 162 of 2015. The issue raised by the Revenue before the Hon'ble Delhi High Court pertain to the retrospectivity of the second proviso to Section 40(a)(ia) of the Act which reads as under:- "Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of Section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso" The Hon'ble Delhi High Court has held that what is common to both the provisos to Section 40(a)(ia) and Section 201 (1) of the Act is that as long as the Payee / resident has filed its return o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income; And the person furnishes a certificate to this effect from an accountant in such form as may be prescribed. 11. The first proviso to Section 201 (1) of the Act has been inserted to benefit the Assessee. It also states that where a person fails to deduct tax at source on the sum paid to a resident or on the sum credited to the account of a resident such person shall not be deemed to be an assessee in default in respect of such tax if such resident has furnished his return of income under Section 139 of the Act. No doubt, there is a mandatory requirement under Section 201 to deduct tax at source under certain contingencies, but the intention of the legislature is not to treat the Assessee as a person in default subject to the fulfillment of the conditions as stipulated in the first proviso to Section 201(1). The insertion of the second proviso to Section 40(a) (ia) also requires to be viewed in the same manner. This again is a proviso intended to benefit the Assessee. The e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, Shri Deepak Aggarwal, Ld. Counsel for the assessee submitted that recipient / payee (M/s Rohan Rajdeep Tollways Ltd has suffered loss in the impugned assessment year. It was claimed before us that the recipient / payee had filed the return for the year under consideration declaring loss, therefore, no interest u/s 201(1A) is required to be charged from the assessee (Payer) for not deducing tax at sources. Even if the assessee herein deducts / remit the TDS amount on the income paid to recipient / payee, the same is liable to be refunded to the said recipient / payee and there is no tax liability in their hands. In our view, there is no loss to the Revenue. While taking such a view we are supported by the decision of ITAT, Lucknow Bench in the case of DCIT v Sahara India Commercial Corporation Ltd (2015) 117 DTR (Lucknow)(Trib) 59. In view of the above, we do not find any merit in the appeal preferred by the Revenue. 10. In the result, the appeal is dismissed. ITA No. 882/Chd/2013 - Revenue's appeal 11. In this appeal the only ground raised by the Revenue is as under:- "That the Ld. CIT(A), Chandigarh has erred in law treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concession fee in respect of Kiratpur Sahib - Una Road project, which has been treated as toll fee by the Assessing Officer and liability u/s 206C(7) has been created in respect of this amount. During the course of appellate proceedings, the appellant had filed a certificate from M/s Ghaisas & Associates, Chartered Accountants of M/s Rohan Rajdeep Tollways Ltd, certifying that the project - Kiratpur Sahib-Una Road was awarded on BOT basis. The additional evidence was forwarded to the Assessing Officer for his comments vide letter No. 457 dated 05.06.2013 in view of Rule 46A(3) of the Income Tax Rules, 1962, to be replied by 17.06.2013, but no reply was received from him. The additional evidence filed by the appellant is accepted. In view of the fact that this project was awarded on BOT basis and the amount was received as concession fee and not as toll fee, the provisions of section 206C(7) cannot be applied to the amount received. The liability created on the amount received in respect of this project is accordingly deleted. Ground of appeal No.3 is allowed." 14. The main contention of the assessee is that the project namely Kiratpursahib-Una Road project was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arter in accordance with the provisions of sub-section (3)]" The above provisions are not attracted in the facts and circumstances of the present case as the assessee had received the payment as commission fee and not as toll fee. In our opinion, the CIT(A) has taken a correct view, therefore, we uphold his view and dismiss the appeal of the Revenue. 15. In the result the appeal is dismissed. ITA No. 880/Chd/2013 - Assessee's appeal 16. This appeal filed by the assessee is directed against the order of CIT(A) Chandigarh dated 28.6.2013 relating to assessment year 2009-10. The only ground raised by the assessee in this appeal reads as under:- "1. (a) That the Id. CIT(A) was not justified in confirming the demand created under section 206C of the Income Tax Act, 1961 by treating the appellant as assessee in default under Section 206C(7) on the ground that the appellant was required to collect TCS on toll fee whereas as per the Appellant the concessionaire is responsible for overall operation and maintenance of the project facility and not merely granted the usance of the toll plaza therefore the demand created on this ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest at Rs. 5,59,141/-. 18. On appeal, the CIT(A) upheld the order of the Assessing officer stating that the PR was required to collect and deposit tax u/s 206C of the Act in respect of the impugned amount of Rs. 7,36,10,000/- pertaining to toll fee received on Jagraon - Nakodar and Ropar-Phargarwa Road projects and the Assessing officer was right in treating the PR as 'assessee in default' u/s 206C(7) of the Act and creating demand under TCS provisions.. 19. We have heard the rival submissions. Shri Deepak Aggarwal, Ld. Counsel for the assessee pointed out that the first proviso to section 201(1) of the Act was inserted w.e.f. 1.7.2012. The said proviso reads as under:- "Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident- (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01(1) of the Act and proviso section 206C(6A) were brought on statute on 1.7.2012 for rationalization of tax deduction at source (TDS) and Tax Collection at Source (TCS) provisions. These provisions are declaratory and curative in nature and have retrospective effect from 1st April, 2005 being the date from which sub section (ia) to section 40(a) was inserted by Finance (No.2). Act, 2004. Therefore, the findings given in ITA No. 774/Chd/2013 relating to assessment year 2009-10 shall apply to the issue in hand with equal force. Therefore, the impugned demand created under section 206C(1C) / 206C(7) of the Act are, hereby deleted. The appeal of the assessee stands allowed. 20 In the result appeal of the assessee is allowed ITA No. 1354/Chd/2012 - Revenue's appeal 21. This appeal filed by the Revenue is directed against the order dated 13.10.2012 of CIT(A), Chandigarh relating to assessment year 2007-08. 22. The only ground raised by the Revenue in this appeal reads as under:- "The Ld. Commissioner of Income Tax{A), Chandigarh has erred in law in holding that the following payments was made to the parties detail be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), Chandigarh has erred in law in holding that the following payments was made to the parties detail below or not liable to TDS u/ s 194C of the I.T. Act, 1961:- S.No. Name of the Party Amount of contractual payment made during the year. 1 M/s Rohan & Rajdeep Tollways Ltd. Rs. 22,57,00,000/- 2 M/s P.D. Aggrwal Infrastructure Ltd. Rs. 18,18,40,000/- 3 M/s Patiala Malaerkotla Tollways Ltd Rs. 10,63,00,000/- 4 M/s Chetak Enterprises (P) Ltd Rs. 33,89,00,000/- 5 M/s Telecommunications Consultant India Ltd., Rs. 5,13,60,000/- Total Rs. 90,41,30,000/- (2). The Ld. CIT(A), Chandigarh has not appreciated the facts that above expenditure has been booked as Revenue expenditure in the P&L account by the deductor. 29. Brief facts of the case are that assessee has received following payments on account of Toll fee and the tax liability is as under;- S.No. Name of the projects from where the toll was received Amount of Toll fee received (Rs.) Tax to be collected u/s 206C Tax collected Interest u/s 206(7) upto March, 2011 Total liability 1 JagraonNakodra Road 5940000 132444 Nil 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2009-10 shall apply to this appeal also with equal force. Hence, we allow the appeal of the assessee. 36. In the result, appeal of the assessee is allowed. ITA No. 775/Chd/2013 - Revenue's appeal 37. In this appeal the Revenue has raised the following ground:- "The Ld. Commissioner of Income Tax{A), Chandigarh has erred in law in holding that the following payments was made to the parties detail below or not liable to TDS u/ s 194C of the I.T. Act, 1961:- S.No. Name of the Party Amount of contractual payment made during the year. 1 Bhawanigarh-Nabha-Gobindgarh Rs. 3,89,10,000/- Total Rs. 3,89,10,000/- (2). The Ld. CIT(A), Chandigarh has not appreciated the facts that above expenditure has been booked as Revenue expenditure in the P&L account by the deductor. 38. At the very outset Shri Deepak Aggarwal, Ld. Counsel for the assessee pointed out that the facts of the present year are similar to that of assessment years 2008-09 and 2009-10 in ITA Nos. 1355/Chd/2012 and 774/Chd/2013 respectively. For the detailed reasons given in the order for the above years, we do not find any merit in the appeal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factor raised by the Ld. CIT(A) in distinguishing the judgment passed by the Hon'ble Apex Court in the case of Hindustan Coca Cola Beverages (P) Ltd. Vs. Commissioner of income Tax 293 ITR 226, by holding that the said judgment was delivered in context of TDS provisions therefore not applicable on TCS. Further, the transaction is revenue neutral and there is no loss to revenue." 44. At the very outset, Shri Deepak Aggarwal, Ld. Counsel for the assessee pointed out that the facts of the present year are similar to the facts of assessment year 2009-10. We have already decided a similar issue in ITA No. 882/Chd/2013 in assessee's case for assessment year 2009-10. The findings given therein shall apply to this appeal also with equal force. For the detailed reasons given therein, we allow the appeal of the assessee. 45. In the result, appeal of the assessee is allowed. ITA No. 776/Chd/2013 - Revenue's appeal 46. The only ground raised by the Revenue reads as under:- "The Ld. Commissioner of Income Tax{A), Chandigarh has erred in law in holding that the following payments was made to the parties detail below or not liable to TDS u/ s 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 52. These four appeals by the assessee are directed against the consolidated order of CIT(A), Chandigarh dated 13.6.2014 in confirming the penalty of Rs. 15,66,180/-, Rs. 20,44,460, Rs. 38,83,265/- and Rs. 4,77,255/- for assessment years 2007-08, 2008-09, 2009-10, 2010-11 respectively imposed u/s 271CA of the Income-tax Act, 1961 53. The Assessing officer observed that during the course of TDS inspection, it was noticed that deductor / collector has received payment of toll fee from different projects. On this amount, the Person Responsible ('PR' ) was required to collect tax at source u/s 206C of the Income-tax Act, which he has failed to do so. Therefore, penalty proceedings u/s 271CA of the Act were initiated against the assessee, and after affording an opportunity of being heard to the assessee, the Assessing officer imposed penalty u/s 271CA of the Act as under:- Financial Year Amount of Toll fee Receipt Tax to be collected u/s 206C Penalty imposable u/s 271CA 2007-08 69300000 15,66,180 15,66,180 200809 96891319 20,44,460 20,44,460 2009-10 184041000 38,83,265 38,83,265 2010-11 142050 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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