TaxTMI 
TaxTMI 
2018 (3) TMI 1176
X X X X Extracts X X X X
X X X X Extracts X X X X
.... learned CIT(A) confirming the action of the Assessing Officer in holding the assessee liable for collection of TCS under Section 206C(1C) of the Income-tax Act, 1961 (hereinafter 'the Act'). For this, the assessee, in all the five years, has raised identically worded grounds, and the grounds as raised in ITA No.102/Nag/2017 for assessment year 2011-12 read as under :- "1. That the order passed u/s 206C(6A) and 206C(7) by the learned Income Tax Officer TDS Ward 2(1), Nagpur is bad in law and wrong on facts and the learned CIT(A) erred in confirming the same. 2. That the learned CIT(A) and AO erred in law and on facts in holding that the assessee is liable for collection of TCS u/s 206C(1C). On the facts and circumstances of the case, the assessee has neither granted a lease or a licence or transferred any right or interest for the use of toll plaza. 3. That the learned CIT(A) erred in law and on facts in disregarding the fact that the assessee was not the owner of the toll plaza and that there was no separate agreement of grant of lease or licence or any other contract of transfer of any right or interest in any toll plaza between the assessee and the concessioners and henc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g that the assessee is in default u/s 201(1) on account of non deduction of tax at source u/s 194C on the amount paid as grant by the assessee to the concessioners into the Escrow Account. On the facts and circumstances of the case, the learned authorities failed to appreciate that the payment was in the nature of a capital grant being Viability Gap Funding (VGF) and was outside the purview of Section 194C and that no TDS was deductible on same. 3. (a) That the learned CIT(A) erred in law and on facts in confirming the action of AO of holding that the toll collection deposited in escrow account belongs to the assessee and further erred in holding that the withdrawals from this toll collection by the BOT contractor (concessioner) is towards cost of project and is payment made by the assessee to the BOT contractor and that such withdrawals are liable to deduction of tax at source (TDS) u/s 194C. (b) On the facts and circumstances of the case and the explanation offered the learned authorities should have appreciated that the entire toll collection is done by concessioners and assessee has no right in the collection amount. The action of the learned CIT(A) in treating the assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... execution of the concession agreement. 7. In view of this background, learned counsel explained that a concession agreement was executed between NHAI and Ashoka Highways (Bhandara) Ltd. (AHB) on 18.09.2007 for design, engineering, financing, construction, operation and maintenance of the project on existing carriageway from Km.405 to Km.485 on Chhattisgarh/Maharashtra border i.e., of Wainganga Bridge Section of National Highway No.6 and widening thereof to 4-lanes on section of NH-6 in the state of Maharashtra on build, operate and transfer (BOT) basis. This project is granted to the concessionaire for a period of 20 years with a total project cost of Rs. 424 crores. Similarly, another concession agreement was executed between NHAI and Oriental Nagpur Bye Pass Construction Pvt.Ltd. on 5th October, 2009 for fourlaning of Madhya Pradesh/Maharashtra Border - Nagpur section of NH-7 from Km.652 to Km.729 including construction of Kamptee-Kanhan and Nagpur Bypass and maintenance of already 4-laned section from Km.14.585 to Km. 36.6 of NH-7 in the state of Maharashtra under the NHDP Phase-II on design, build, finance, operate and transfer (DBFOT) basis. This project is granted for a per....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e is in appeal before the Tribunal. 10. In view of above facts, the learned counsel for the assessee made arguments that the Assessing Officer has wrongly mentioned in page 3 of the assessment order vide his show cause notice dated 15th January, 2015 that the project belongs to NHAI and the escrow account is a project account. Further, the Assessing Officer has mentioned that the escrow account is opened jointly in the name of NHAI, concessionaire and the representative of lenders consortium. Learned counsel referred to page 3 and the relevant paragraph reads as under :- "A close reading of the escrow account shows that this is an account maintained for the purposes of completion of the project. In this account, funds are pulled either from the NHAI or from lenders or from the contractor. The toll collections made are also credited to this account. The account is debited as and when any expenditure is made from this account towards the cost of the project. Thus in a way the so called escrow account is a project account. The project belongs to NHAI. Therefore, the amounts of toll collections credited in this account are nothing but the amounts collected by the Concessionaire on b....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 34 in paragraph 7.1 as under:- "7.1 The appellant has further submitted that NHAI is a signatory to the 'Escrow Account' to provide assurance to the bankers that the toll receipts will be appropriated in a prescribed manner and that does not mean that there is a receipt of such amount by NHAI. Further that as laid down in the concession agreement no amount has been remitted to the 'Consolidated Fund of India' by NHAI. Therefore, in view of the specific finding recorded by the Hon'ble ITAT Nagpur Bench, Nagpur in para-12 of its order, the appellant was specifically asked to furnish the 'Escrow Account' and explain whether or not NHAI has remitted any amount to the Consolidated Fund of India. However, the appellant could not furnish the 'Escrow Account' which is jointly held by NHAI and the concessionaires for verification. The appellant has also contended that the toll fee is being collected by the concessionaires under the authority of NHAI but such collection is not deposited in 'Escrow Account' jointly held by the NHAI and the concessionaire but such collection receipts are deposited in a separate account opened by the concessionaires himself. This contention of the appellant ....