TaxTMI 
TaxTMI 
2018 (1) TMI 549
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....ssed an order u/s 201(1) and Section 201(1A) of the Act, raising a demand on the assessee for non-deduction of tax on payments made to Haldia Water Management Ltd. for operation, maintenance and collection of water bills. The ld. CIT(A) deleted the same. 3.1. Aggrieved the revenue is in appeal before us on the following grounds :- For Assessment Year 2010-11 (Financial Year 2009-10) "1. Under the facts and circumstances of the case, the CIT(A) has erred in holding that the technical fees paid by Haldia Development Authority to Haldia Water Management Ltd. (HWML) for having the water supply in the Haldia Township, is not subject to TDS. 2. Under the facts and circumstances of the case, the CIT(A) has erred in not giving any finding on the issue, when the Assessee Deductor took second alternative lea before him that in case the payment is liable for deduction of tax at source, applying the ratio of Hindustan Coca Cola Ltd. case, there would have been no default as the payee HWML has paid the due tax on the receipt, thereby denying the Department of charging interest u/s 201(1A) even if the payee has paid the tax by themselves. 3. The appellant craves ....
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....lls to the water consumers in favour of H.D.A. The water rent was deposited into revenue collection account maintained at PNB, Durgachowk branch, Haldia and the revenue was shared between H,D.A. and HWML as per the said agreement. 2.2 Regarding salient features of the said concession agreement, the A.R. of the assessee filed a submission on 25.02.2013 and as per the said communication, the H.W.M.L. is responsible for the following: 1 . To extract raw water from the Hooghly/Roopnarayan River and the 15 tube wells constructed from Mahishadal to Chityanapur and such other sources of raw water as permitted by law, 2. To monitor, manage, occupy, repair, operate and maintain the existing facilities; 3. To develop, design, engineer, finance, procure, construct, operate and maintain the new facilities; 4. To responsible for the smooth and regular supply of purified water to Haldia Township (both for residential as well as industrial purpose); 5. To levy, bill and collect, retain and appropriate Water Charges and payments from the customers on behalf of H.D.A. 6. To Implement the Customer Service Rules; 7. To bear and P....
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....e by the assessee and just because there were no debit entries in respect of HWML, in the books of account of the assessee, the true nature of transaction cannot be ignored. He concluded that Section 194J of the Act, applies. 7. The ld. First Appellate Authority, considered the material facts submitted by the assessee and at para 3.1. and 3.2., concluded as follows:- "3.1 From the A.O.'s order and the submission it appears that HWML set up the water supply facility and is operating in terms of the concession agreement on its own. For the initial 25 years the facility is completely under the control of HWML, which is required to incur all expenses for maintaining and operating the water facility. The revenue is being collected by HWML which is being deposited in the revenue collection account, from which HDA the appellant deductor is transferred licence fee. There is provision for additional payments from the said revenue collection account to the appellant but that situation did not arise as the volume of water supplied did not exceed the stipulated volume limit. HWML got the share in the revenue collection account after payment of licence fee to HDA. There is nothi....
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....he terms and conditions set forth in the agreement. The concession granted, obliged or entitled (as the case may be) the said company to, inter alia, the following : - (i) right of way, access and licence to the site and the existing facilities; (ii) right to extract raw water free of charge; (iii) monitor, manage, occupy, repair, operate and maintain the existing facilities; (iv) develop, design, engineer, finance, procure, construct, operate and maintain the new facilities during the concession period; (v) manage, operate and maintain the project facilities and to operate and maintain the water supply; (vi) be responsible for the smooth and regular supply of water; (vii) levy, bill and collect, retain and appropriate water charges and payment from customers on behalf of the assessee for all services; (viii) implement the Customer Service Rules; (ix) handover the project facilities to the assessee upto the concession period coming to an end; and (x) bear and pay all expenses, costs and charges incurred in the fulfillment of its obligations under the agreement; 4.3 The words/ expressi....
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.... facilities, undertake the design, engineering, procurement and construction and financing of the project, operate and maintain the project facilities, hand over the project to the assessee upon termination of the agreement etc. etc. The said company was to be solely responsible for all costs, wages of the existing personnel and expenses relatable to services rendered from the date of handing over of the existing facilities by the assessee to the said company. 4.7. As per Article 8.3.8, the cost of carrying out the rehabilitation/ replacement work of the existing facilities was to be borne by the assessee and the said company equally subject to the condition that the total cost of the rehabilitation/replacement over the period of five years did not exceed Rs. 10 crores. Any excess over Rs. 10 crores was to be borne by the said company. As per Article 8.4.1, the assessee was to reimburse its share of such cost on the basis of completion of such work as may be invoiced by the said company. 4.8. Article 9 contained detailed provisions requiring the said company to complete the new facilities at its own cost within a period of two years. 4.9. Article 10.6 pro....
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....t between the said company, the Revenue Collection Bank, namely, Punjab National Bank and the assessee was made on January 12, 2009. It would appear from the said agreement that the revenue collection account was a trust account and the Revenue Collection Bank was the trustee and held the money for and on account of the said company and the assessee in accordance with their respective entitlements. The said company and the assessee were to provide the Revenue Collection Bank a list of their respective authorised officers alongwith their specimen signature, who would be authorised to communicate the relevant decisions, notices, letters, etc. The rights of the said company and the assessee in the moneys held in the revenue collection account were set forth in the said agreement in their entirety and neither party had any other right in respect of such money. The said company was entitled to receive its operation and maintenance expenses from the Revenue Collection Bank by making a claim duly supported by appropriate documentary proof of approval of the operation and I maintenance budget. The provisions regarding priority of payment from the revenue; collection account were the same a....