AI Drafter 
TaxTMI 
TaxTMI 
2019 (1) TMI 642
X X X X Extracts X X X X
X X X X Extracts X X X X
....7 79,21,592/- 3) 2007-08 1,19,80,403/- 4) 2008-09 2,14,11,372/- 5) 2009-10 2,55,16,678/- 6) 2010-11 1,61,32,231/- 3. The facts being common in all the years under appeals, we notice the facts, except quantum, from the Asstt.2005-06 for the sake of brevity for adjudication of the issue. 4. Brief facts as emerges out from the record are that, the assessee is a wholly owned subsidiary of National Highway Authority of India (NHAI) incorporated to construct express highway between Ahmedabad and Vadodara. On verification of record, it was noticed by the AO that the assessee company had given licence to Col. Pankaj Roy Bhatia (Retd.) proprietor of A.B. Infrastructure to collect toll tax on various places on the expressway between Ahmedabad and Vadodara. During the F.Y.2004-05, total amount of toll collection was Rs. 12,22,24,427/-, however, the assessee company has not collected TCS from the said A.B. Infrastructure and not paid to the government. During the course of verification, the AO has noticed that the assessee company had started its operation from F.Y.2004-05, but had not collected any TCS on the toll collected by it. However, AO noticed that w.e.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d with this order of the ld.AO, the assessee carried the matter in appeal before the ld.CIT(A), who after considering the submissions of the assessee, relevant provisions of the Act and relying on decision of the ITAT, Cuttack Bench in the case of Project Director Vs. Department of IT held that the assessee was not liable to deduct TCS under section 206C(1C) of the Act and not liable for charging of interest under section 206C(7) of the Act. The ld.CIT(A) accordingly allowed the appeal of the assessee. Aggrieved Revenue is now before the Tribunal. 6. Before us, the ld.DR supported order of the AO and contended the AO has rightly invoked the provisions and treated the assessee, as assessee-in-default. 7. The ld.counsel for the assessee, on the other hand, relied on the order of the ld.CIT(A). He reiterated submissions as were made before the Revenue authorities. He has contended that A.B. Infrastructure was simply doing the toll collection work at the plaza on behalf of the assessee company and deposit the same in the designated banker of the assessee-company. No right to collect the toll was transferred by the assessee to A.B. Infrastructure. He has placed reliance on the dec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsee is one of those bidders who submitted bid and quoted its offer in lieu of transferring Central Government's user fee collection rights for the said selection of the expressway. The licensee is authorized by its Memorandum of Association to carry on the business of providing various services on contract basis through its employees employed and where as the Licensee undertakes to get itself licensed and/or registered with appropriate authority under the relevant laws within 7 days of signing of this contract. 2. Under this contact, Agency is collecting toll on behalf of company and whatever actual collection made, it has to deposit very next day in company's account. Company was paying manpower charges plus service charges at the agreed rate on manpower charges to the Agency. Under this contract, Licensee has to remit the fixed amount in the company's account every Tuesday irrespective of the toll collected whether less or more than the quoted amount. 3. Under this contract, entire cost towards the collection including wages of the staff, Admin exp. and toll plaza maintenance is the responsibility of company and all the cost was borne by company. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the said collecting entity's role was restricted to collecting the toll amount and deposit the same on daily basis in bank account of the company and it has no right on any part of the toll collection. The ld.AO has construed the collection of toll with right of toll collection being transferred to the entity, which is not correct in the present case. Considering the scope and nature of the work carried out by the collecting entity, it clearly shows that activities of 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. The finding of the ld.CIT(A) on this issue is reproduced as under: "13.1 I have gone through the ordinance passed by assessing officer, remand report furnished by him, the submissions of the appellate and rebuttal of the remand report submitted by the appellant. As per Section 206C(1C), every person who grants a lease or a license or enters into a contract or otherwise transfers any right or interest in any parking lot or toll plaza or a mine or a quarry to anot....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt either engaged private companies for collecting the toll on its behalf or used to request the Director General of Resettlement, Ministry of Defence, for suggesting/recommending the names of manpower agencies for the purposes of collection of user fees at the toll plaza. On the basis of such request, the Director General of Resettlement is to sponsor/recommend various ex-serviceman (Officers), who run manpower agencies, out of which the appellant would engage some of them for collection of user fees at the toll plaza. The appellant used to indicate the manpower requirement for the toll plaza. After selecting the manpower agencies, appellant would also enter into performances security contract with such selected manpower agencies. The collecting agency is working under strict supervision of appellant. The appellant is monitoring its collection by a separate mechanism and thus it is provided in the contacts that any shortfall will have to be made good by collecting agency. 13.4 Thus, from the discussion aforesaid, it is clear that the NHAI has not given lease/ license or entered into contract for transferring right in respect of collection of toll fees to any person as und....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... transfer of any right or interest in parking lot of toll plaza or a mine or a quarry to other persons and the assessee has not granted lease or license nor entered into a contract or otherwise transferring the right of toll plaza in favour of the contractors for use of the toll plazas for the purpose of business against consideration. Therefore, this activity will not come within the provisions of Section 206C (6A) of the Income Tax Act, 1961. Therefore, the assessee has no obligation to deduct any TCS from the collecting entities and it will not comprehend into the scope of provisions contained in Section 206C (1C) of the Income Tax Act, 1961 and TCS is not applicable to the assessee. 13.7 The same issue has been discussed and decided in the case of The Project Director, vs. Department Of Income Tax on 24 January, 2013 "The ITAT, Cuttack Bench. Cuttack where the case was held in favour of assessee and it was decided that the assessee have not granted any right or interest in the toll plaza to the collecting entities. The agreements entered between assessee and the collecting entities will not comprehend into the scope of provisions contained in Section 206C(1C) of the LT....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the facts and circumstances of" the case, the Commissioner of Income Tax (Appeals)-1, Bhubaneswar does not appear to be justified in holding that the "collecting entity" did the job of collection of toll fees on behalf of the 'assessee'. deductor. 2.. The Ld. Commissioner of Income Tax (Appeals)-1, Bhubaneswar does not Appear to be. justified in concluding that the 'assessee' deductor has not given any lease 1 license or entered into a contract to the collecting agency /entity where 'as M/s-Paradip Port Road Co. Ltd.(tax deductor) has entered into performance security contract with the collecting agency as would be seen from his order at para 4.4 of page 4. 3. The Ld. Commissioner of Income Tax (Appeals)-l Bhubaneswar has referred to the agreement that, the collecting agency is only getting service charges for supplying man power @14% per month under the service contract.-This goes to indicate that there exists some kind of agreement/contract (clause 17 of the agreement mentioned at page 3 of the order). This-being so, how can it be said that there is no contract. The Ld. Commissioner of Income Tax (Appeals)-lf Bhubaneswar has failed to appreci....