The DCIT, TDS Circle, Ahmedabad V. M/s. Ahmedabad Vadodara Express Way Co.Ltd., Ahmedabad

ITA 1384/AHD/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7039 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 18-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUMAT CHADHA
• Keywords: Wholly owned subsidiary

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH B BEFORE AMARJIT SINGH, ACCOUNTANT MEMBER AND BEFORE MS.MADHUMITA ROY, JUDICIAL MEMBER ./ ITA NO.1381 TO 1386/AHD/2015 / ASSTT. YEAR: 2005-06 TO 2010-11 DCIT, TDS CIRCLE AHMEDABAD. VS. M/S.AHMEDABAD VADODARA EXPRESS WAY CO. LTD. 2 ND FLOOR, AMUL BUILDING AMRUT BAG SOCIETY, VEJALPUR AHMEDABAD 380 051. PAN : AADCA 3349 L / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI MUDIT NAGPAL, SR.DR ASSESSEE BY : SHRI SUMAT CHADHA, AR ! / DATE OF HEARING : 02/01/2019 '#$ ! / DATE OF PRONOUNCEMENT: 09/01/2019 %& / O R D E R PER BENCH: THESE SIX APPEALS OF THE REVENUE ARE AGAINST COMMON ORDER OF THE LD.CIT(A)-8, AHMEDABAD DATED 25.3.2015 PASSED F OR THE ASSTT.YEARS 2005-06 TO 2010-11. SINCE COMMON ISSUE IS INVOLVE D IN ALL THESE APPEALS, THE SAME ARE DISPOSED OF BY THIS CONSOLIDA TED ORDER. 2. REVENUE HAS FILED SEPARATE APPEALS FOR EACH ASSE SSMENT YEAR. GROUNDS RAISED IN ALL THESE APPEALS ARE IDENTICAL E XCEPT CHANGE IN THE FIGURES OF QUANTUM. IN SHORT, SOLE GRIEVANCE OF TH E REVENUE IN ALL THESE APPEALS IS THAT THE LD.CIT(A) HAS ERRED IN DELETING DEMAND RAISED BY THE ITA NO.1381/AHD/2015 & 5 ANOTHERS 2 AO UNDER SECTION 206C(6A)/206C(7) OF THE INCOME TAX ACT, 1961 OF THE FOLLOWING AMOUNTS IN RESPECT OF RESPECTIVE ASSESSME NT YEARS: ASSTT.YEAR AMOUNT (RS.) 1) 2005-06 47,91,112/- 2) 2006-07 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 AP PEALS, WE NOTICE THE FACTS, EXCEPT QUANTUM, FROM THE ASSTT.2005-06 F OR THE SAKE OF BREVITY FOR ADJUDICATION OF THE ISSUE. 4. BRIEF FACTS AS EMERGES OUT FROM THE RECORD ARE T HAT, THE ASSESSEE IS A WHOLLY OWNED SUBSIDIARY OF NATIONAL HIGHWAY AU THORITY OF INDIA (NHAI) INCORPORATED TO CONSTRUCT EXPRESS HIGHWAY BE TWEEN AHMEDABAD AND VADODARA. ON VERIFICATION OF RECORD, IT WAS NO TICED BY THE AO THAT THE ASSESSEE COMPANY HAD GIVEN LICENCE TO COL. PANK AJ ROY BHATIA (RETD.) PROPRIETOR OF A.B. INFRASTRUCTURE TO COLLEC T TOLL TAX ON VARIOUS PLACES ON THE EXPRESSWAY BETWEEN AHMEDABAD AND VADO DARA. DURING THE F.Y.2004-05, TOTAL AMOUNT OF TOLL COLLECTION WA S 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 ASSESS EE COMPANY HAD STARTED ITS OPERATION FROM F.Y.2004-05, BUT HAD NO T COLLECTED ANY TCS ON THE TOLL COLLECTED BY IT. HOWEVER, AO NOTICED T HAT W.E.F 27.12.2010, THE ASSESSEE COMPANY HAD ENTERED INTO A CONTRACT WI TH M/S.MEP TOLL ROAD PVT.LTD., MUMBAI FOR COLLECTION OF TOLL AND TI LL THE DATE OF VERIFICATION I.E. 8.3.2011 TCS AMOUNT OF RS.27,59,3 41/- HAS BEEN COLLECTED AND DEPOSITED IN THE GOVERNMENT ACCOUNT. THEREFORE, LD.AO ISSUED SHOW CAUSE NOTICE AS TO WHY ORDER UNDER SECT ION 206C(6A)/206C(7) OF THE ACT SHOULD NOT BE PASSED IN THIS CASE QUA TOLL ITA NO.1381/AHD/2015 & 5 ANOTHERS 3 TAX COLLECTED BY A.B. INFRASTRUCTURE. THE ASSESSEE SUBMITTED ITS REPLY DATED 26.3.2012 STATING THAT THE ASSESSEE-COMPANY W AS NOT LIABLE TO DEDUCT TCS UNDER SECTION 206C(1C) OF THE ACT BEFORE 29.12.2010 AS THE COMPANY DID NOT TRANSFER THE RIGHT TO COLLECT TOLL TAX TO THE AGENCY, RATHER THE AGENCY WAS ENGAGED SOLE FOR THE PURPOSE OF COLLECTING TOLL ON BEHALF OF THE ASSESSEE, AND WHATEVER COLLECTION MAD E, WAS DEPOSITED BY THE AGENCY IN THE VERY NEXT DAY IN ASSESSEES BANK ACCOUNT. FOR THIS WORK, THE ASSESSEE WAS PAYING MANPOWER CHARGES TO T HE COLLECTING ENTITY BESIDES SERVICES CHARGES AT THE AGREE RATE. TOLL COLLECTION IS NOTHING BUT AN INCOME OF THE ASSESSEE, WHICH WAS CO LLECTED BY THE AGENCY ON ITS BEHALF, AND THEREFORE, PROVISIONS OF SECTION 206C(1C) WAS NOT APPLICABLE, AS THE RIGHT TO COLLECT TOLL WAS NO T TRANSFERRED TO THE AGENCY. THE ASSESSEE ITS REPLY ALSO DISTINGUISHED THE TREATMENT GIVEN BY THE ASSESSEE COMPANY BEFORE 29.12.200 AND AFTER 29.12.2010, WHICH WAS INCORPORATED BY THE LD.AO IN HIS ORDER IN PAGE NO.5 TO 7 OF THE ASSESSMENT ORDER. HOWEVER, THE LD.AO HAS NOT SATISFIED WITH SUBMISSIONS OF THE ASSESSEE. HE HELD THAT RIGHT TO COLLECT THE TOLL HAS BEEN GRANTED BY THE ASSESSEE TO THE SAID A.B. INFRA STRUCTURE BY ENTERING INTO A CONTRACT AGREEMENT TITLED CONTACT FOR DEPARTMENT COLLECTION OF FEE. THE AO HAS REFERRED PARA 23 OF THE CONTRACT REGARDING OBLIGATION OF THE COLLECTING ENTITY. HE HAS ALSO STATED THAT SUB-CLAUSE (A) TO (O) INDICATE THAT THE RIGHT TO CO LLECT THE TOLL WAS TRANSFERRED BY THE ASSESSEE TO A.B. INFRASTRUCTURE. IT WAS FURTHER HELD BY THE AO THAT AS PER THE PROVISIONS OF SECTION 206 C(1C) OF THE ACT EVEN IN CASE OF PARTIAL TRANSFER OF THE RIGHT OR IN TEREST, THE CASE OF THE ASSESSEE CLEARLY FALLS WITHIN THIS PURVIEW. ACCORD INGLY, THE LD.AO TREATED THE ASSESSEE AS ASSESSEE-IN-DEFAULT FOR NOT COLLECT ING TAX AT SOURCE FROM TOLL COLLECTING ENTITY AT THE RATE OF 2%, AND ALSO LEVIED INTEREST UNDER SECTION 206C(7) OF THE ACT. ITA NO.1381/AHD/2015 & 5 ANOTHERS 4 5. DISSATISFIED WITH THIS ORDER OF THE LD.AO, THE A SSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CO NSIDERING 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 LIABL E FOR CHARGING OF INTEREST UNDER SECTION 206C(7) OF THE ACT. THE LD. CIT(A) ACCORDINGLY ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED REV ENUE IS NOW BEFORE THE TRIBUNAL. 6. BEFORE US, THE LD.DR SUPPORTED ORDER OF THE AO A ND CONTENDED THE AO HAS RIGHTLY INVOKED THE PROVISIONS AND TREATED T HE ASSESSEE, AS ASSESSEE-IN-DEFAULT. 7. THE LD.COUNSEL FOR THE ASSESSEE, ON THE OTHER HA ND, 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 DESIGN ATED 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 DECISION OF THE ITAT, CUTTACK BENCH IN THE CASE OF THE PROJECT DIRECTOR VS. DEPARTMENT OF INCOME TAX. 8. WE HAVE CONSIDERED SUBMISSIONS OF BOTH THE PARTI ES AND GONE THROUGH THE RECORD CAREFULLY AND ALSO THE ORDERS OF REVENUE AUTHORITIES BELOW. THE CASE OF THE DEPARTMENT WAS THAT WORK CA RRIED OUT BY THE COLLECTING AGENCY WAS CONTRACT WITHIN THE MEANING O F SECTION 206C(6A) AND IS TO BE ASSESSED AS SUCH BY TREATING THE ASSES SEE AS ASSESSEE-IN- DEFAULT FOR NOT COLLECTING TCS FROM THE COLLECTING PARTY. WHEREAS THE CASE OF THE ASSESSEE IS THAT, THE COLLECTING ENTITY IS DOING JOB OF TOLL COLLECTION FROM DIFFERENT PLAZAS ON BEHALF OF THE A SSESSEE AND THE ITA NO.1381/AHD/2015 & 5 ANOTHERS 5 COLLECTION AMOUNT DAILY DEPOSITED IN THE DESIGNATED BANK OF THE ASSESSEE-COMPANY, AND THEREFORE, THERE IS NO QUESTI ON OF TRANSFER OF RIGHT OR INTEREST OVER THE TOLL COLLECTION FOR THE USE OF EXPRESSWAY WITH COMPLETE RESPONSIBILITY. ROLE OF THE COLLECTING EN TITY IS JUST TO COLLECT THE TOLL AND DEPOSIT THE AMOUNT IN THE BANK ACCOUNT OF THE ASSESSEE- COMPANY. THESE FACTS HAVE BEEN APPRECIATED BY THE L D.CIT(A), WHO AFTER CONSIDERING RELEVANT MATERIALS AND ALSO CONTR ACT AGREEMENT ENTERED BY THE ASSESSEE-COMPANY AND THE COLLECTING ENTITY, CAME TO THE CONCLUSION THAT THE ROLE OF THE COLLECTING WAS VERY MUCH RESTRICTED TO COLLECTION OF TOLL AMOUNT AND DEPOSITING THE SAME I N THE BANK, AND THEREFORE, THERE IS NO TRANSFER OF RIGHT OR INTERES T BY THE ASSESSEE- COMPANY. JOB ASSIGNED TO THE COLLECTING ENTITY WAS IN THE NATURE OF OUTSOURCING AND THERE IS NO SCOPE FOR ELABORATION O F MEANING OF CONTRACT AGREEMENT SO AS TO TREAT THE ASSESSEE, AS ASSESSEE- IN-DEFAULT FOR NOT COLLECTING TDS. 9. ON DUE CONSIDERATION OF FACTS AND CIRCUMSTANCES, WE FIND THAT THE ASSESSEE HAS FILED POINT WISE REPLY BEFORE BOTH THE AUTHORITIES. IN ITS REPLY, THE ASSESSEE DIFFERENTIATED NATURE OF THE WO RK CARRIED OUT BY THE DIFFERENT AGENCIES BEFORE 29.12.2010 AND AFTER 29.1 2.2010. THIS REPLY HAS BEEN INCORPORATED BY THE LD.AO IN ITS ORDER IN PAGE NO.5. FOR BETTER UNDERSTANDING OF THE ISSUE ON HAND, WE REPRODUCE TH E SAME HEREINBELOW: SR. NO. AGREEMENT BEFORE 29-12-2010 NEW ARRANGEMENT WITH MEP TOLL ROAD PVT. LTD. (W.E.F. 29/12/2010) 1. THE COMPANY HAS ENTERED INTO CONTRACT WITH EX-SERVICEMAN SPONSORED DIRECTOR GENERAL RE- SETTLEMENT, MINISTRY OF DEFENSE FOR PROVIDING MANPOWER FOR THE WORK OF COLLECTION OF USER FEE ON BEHALF OF COMPANY. THE LICENSEE 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 ITA NO.1381/AHD/2015 & 5 ANOTHERS 6 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. UNDER THIS CONTRACT, ENTIRE COST TOWARDS THE COLLECTION INCLUDING SALARY OF THE STAFF, ADMIN EXP. AND TOLL PLAZA MAINTENANCE IS BORNE BY LICENSEE ITSELF. 4. ONLY DELEGATION OF POWER TO COLLECT TOLL TAX HAS BEEN TRANSFERRED IN THIS AGREEMENT RIGHT IN THE TOLL PLAZA IS TRANSFERRED IN THIS AGREEMENT 5. ALL THE RISK AND REWARDS WAS BORNE BY THE AVEXCL ALL THE RISK AND REWARDS IS BEING BORNE BY THE LICENSEE. 6. TOLL COLLECTION IS ENTIRELY THE INCOME OF AVEXCL WHICH IS COLLECTED BY THE AGENCY ON BEHALF OF AVEXCL AND DEPOSITED THE SAME IN TO AVEXCL ACCOUNT. TOLL COLLECTION IS ENTIRELY THE INCOME OF LICENSEE. THE LICENSEE HAS GIVEN A FIXED AMOUNT TO THE AVEXCL. THAT FIXED AMOUNT IS THE INCOME OF AVEXCL. FIXED AMOUNT IS BEING PAID FOR OBTAINING LICENSE FOR COLLECTION OF TOLL TAX ON ITS OWN BEHALF. 7. IN THE PROFIT & LOSS ACCOUNT OF THE AVEXCL THE TOIL COLLECTED WAS SHOWN AS INCOME AND THE AGENCY CHARGES PAID TO AGENCY WAS TREATED AS EXPENSES. THE OTHER EXPENSES LIKE SALARY EXPENSE, A DMINISTRATION EXP ETC. WAS ALSO BOOKED AS EXPENSES. IN THE PROFIT & LOSS ACCOUNT OF THE AVEXCL THE FIXED AMOUNT PAID BY LICENSEE IS SHOWN AS INCOME. 8. IN THE PROFIT & LOSS ACCOUNT OF THE AGENCY THE AGENCY CHARGES PAID BY THE AVEXCL WAS SHOWN AS INCOME. IN THE PROFIT & LOSS ACCOUNT OF THE LICENSEE THE TOLL COLLECTED IS SHOWN AS INCOME AND THE FIXED AMOUNT PAID TO AVEXCL IS TREATED AS EXPENSES. THE OTHER EXPENSES LIKE SALARY EXPENSE, ADMINISTRATION EXP ETC, IS ALSO BOOKED AS EXPENSES. 9. SECTION 206C(1C) IS NOT APPLICABLE WHERE THE RIGHT TO COLLECT TOLL IS NOT TRANSFERRED IN THE TOLL PLAZA. SO SECTION 206C(1C) OF THE INCOME TAX ACT IS NOT APPLICABLE IN THIS AGREEMENT. SECTION 206C(1C) IS APPLICABLE WHERE THE RIGHT TO COLLECT TOLL IS TRANSFER IN THE TOLL PLAZA. SO SECTION 206C(1C) OF THE INCOME TAX ACT IS APPLICABLE IN THIS AGREEMENT. 10. AS PER POINT NO. 1 TO 9 AVEXCL IS NOT REQUIRED TO DEDUCT TCS. SO THE ASSESSEE WAS NOT DEDUCTED THE TCS. AS PER POINT NO. 1 TO 9 AVEXCL IS LIABLE TO DEDUCT TCS. SO THE ASSESSEE HAS BEEN DEDUCTING THE TCS AS PER THE PROVISIONS OF SECTION 206C(1C) OF THE INCOME TAX ACT, 1961. ITA NO.1381/AHD/2015 & 5 ANOTHERS 7 10. WE FIND THAT THE LD.CIT(A) HAS GONE THROUGH ALL THE RELEVANT MATERIAL AND ANALYSED THE ISSUE IN DETAILS INCLUDIN G THE AGREEMENT ENTERED INTO BY THE ASSESSEE-COMPANY AND THE COLLEC TING ENTITY, AND CAME TO A CONCLUSION THAT THE SAID COLLECTING ENTIT YS 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 P ART OF THE TOLL COLLECTION. THE LD.AO HAS CONSTRUED THE COLLECTION OF TOLL WITH RIGHT OF TOLL COLLECTION BEING TRANSFERRED TO THE ENTITY, WH ICH 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 ACT IVITIES OF COLLECTING TOLL FEES AS ENTRUSTED BY THE ASSESSEE WAS NOT A CONTRAC T WITHIN THE MEANING OF SECTION 206C AND WILL NOT ATTRACT PROVIS IONS 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.CI T(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 RE MAND REPORT SUBMITTED BY THE APPELLANT. AS PER SECTION 206C(1C) , EVERY PERSON WHO GRANTS A LEASE OR A LICENSE OR ENTERS IN TO A CONTRACT OR OTHERWISE TRANSFERS ANY RIGHT OR INTEREST IN ANY PA RKING LOT OR TOLL PLAZA OR A MINE OR A QUARRY TO ANOTHER PERSON, OTHE R THAN A PUBLIC SECTOR COMPANY, FOR THE USE OF SUCH PARKING LOT OR TOLL PLAZA OR MINE OR QUARRY FOR THE PURPOSE BUSINESS SHALL BE RE SPONSIBLE FOR COLLECTION OF TAX AT SOURCE. TAX SHALL BE COLLECTED AT THE TIME OF DEBITING OF THE AMOUNT PAYABLE BY THE LICENSEE OR L ESSEE TO THE ACCOUNT OF THE LICENSE OR LEASE OR AT THE TIME OR R ECEIPT OF SUCH AMOUNT FROM THE SAID LICENSE OR LEASE IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER. IN THE PRESENT CASE, THE APPELLANT HAS MADE TDS ON THE PAY MENTS MADE BY IT TO THE COLLECTING AGENCY RATHER THAN DOING TC S IN RESPECT OF TOLL COLLECTION. IN THE CASE CITED AND MENTIONED IN PARA 12.2 BY THE DCIT, IT IS SEEN THAT LEAVE OF TOLL PLAZA WAS GRANT ED IN FAVOUR OF GULZAR & CO. AND THUS THAT AGREEMENT WAS SIMILAR TO THE ONE ENTERED BY THE APPELLANT AFTER 29/12/2010 WITH MEP TOLL ROAD PVT. LTD. IT IS NOT SO IN THE CASE WHERE THE COLLEC TING AGENCY IS MAKING COLLECTION ON BEHALF OF THE APPELLANT. ITA NO.1381/AHD/2015 & 5 ANOTHERS 8 13.2 IN THE PRESENT CASE, THE ASSESSEE HAS NOT GRA NTED LEASE OR A LICENSE NOR ENTERED INTO A CONTRACT OR OTHERWISE TR ANSFERRED RIGHT OR INTEREST IN THE TOLL PLAZA IN FAVOUR OF THE CONT RACTORS FOR USE OF THE TOLL PLAZA FOR THE PURPOSE OF BUSINESS AGAINST CONSIDERATION. UNDER SUCH FACTS AND CIRCUMSTANCES OF THE CASE OF T HE PROVISIONS OF SECTION 206(1C) ARE CLEARLY NOT APPLICABLE IN TH E CASE OF THE APPELLANT. THE WORDS 'FOR THE PURPOSE OF BUSINESS' IN SECTION 206C(1C) IS RELATED TO 'ANOTHER-PERSON', I.E., THE LESSEE /LICENSEE AND NOT TO THE PERSON AWARDING THE CONTRACT I.E. TH E PERSON LIABLE FOR COLLECTING TCS. THE CONDITION OF BUSINESS PURPO SE APPLIES TO THE LICENSEE/LESSEE AND NOT TO THE PERSON AWARDING THE CONTRACT I.E. THE PERSON LIABLE FOR COLLECTING TCS. IN THE I NSTANT CASE THE CONTRACTOR/MANPOWER AGENCY ONLY SUPPLIES PERSONNEL TO THE APPELLANT FOR PURPOSES OF TOLL FEE COLLECTION BY TH E APPELLANT AND IS NOT ENGAGED IN BUSINESS OF TOLL FEE COLLECTION. IT ACTS ONLY AS A MANAGER OF THE APPELLANT. RATHER THAN ENGAGING ITS OWN EMPLOYEES, THE WORK OF TOLL FEE COLLECTION WAS OUTS OURCED TO ITS OWN CONTRACTOR. THE MAIN PURPOSE OF THE MAN POWER A GENCY IS TO FACILITATE REEMPLOYMENT OF EX-SERVICEMAN UNDER GUID ANCE OF MINISTRY OF DEFENSE IN LIEU SERVICE CHARGES. HENCE THE PROVISIONS OF SECTION 206C(1C) ARE CLEARLY NOT APPLICABLE TO T HE APPELLANT. 13.3 THE APPELLANT EITHER ENGAGED PRIVATE COMPANIE S FOR COLLECTING THE TOLL ON ITS BEHALF OR USED TO REQUES T THE DIRECTOR GENERAL OF RESETTLEMENT, MINISTRY OF DEFENCE, FOR SUGGESTING/RECOMMENDING THE NAMES OF MANPOWER AGENC IES FOR THE PURPOSES OF COLLECTION OF USER FEES AT THE TOLL PLAZA. ON THE BASIS OF SUCH REQUEST, THE DIRECTOR GENERAL OF RESE TTLEMENT 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 TOL L PLAZA. THE APPELLANT USED TO INDICATE THE MANPOWER REQUIREMENT FOR THE TOLL PLAZA. AFTER SELECTING THE MANPOWER AGENCIES, APPEL LANT 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 MONITORI NG ITS COLLECTION BY A SEPARATE MECHANISM AND THUS IT IS PROVIDED IN THE CONTACTS THAT ANY SHORTFALL WILL HAVE TO BE MADE GOOD BY COL LECTING AGENCY. 13.4 THUS, FROM THE DISCUSSION AFORESAID, IT IS CL EAR THAT THE NHAI HAS NOT GIVEN LEASE/ LICENSE OR ENTERED INTO CONTRA CT FOR TRANSFERRING RIGHT IN RESPECT OF COLLECTION OF TOLL FEES TO ANY PERSON AS UNDERSTOOD BY THE PROVISIONS OF SECTION 206C(1C) . IN CASE OF LEASE OR LICENSE OR TRANSFER OF RIGHT, THE AMOUNT C OLLECTED AS TOLL WOULD BELONG TO COLLECTING ENTITY AND IN LIEU OF IT , AVEXCL WILL GET CONSIDERATION WHICH MAY BE FIXED OR VARIABLE BUT TH IS IS NOT THE ITA NO.1381/AHD/2015 & 5 ANOTHERS 9 CASE HERE. IN THE PRESENT CASE THE COLLECTION MADE BY THE COLLECTING ENTITY BELONGS TO AVEXCL. NORMALLY TCS I S THE AMOUNT THAT IS COLLECTED OVER AND ABOVE THE AMOUNT OF CONS IDERATION AGREED UPON IN CASE OF TOLL PLAZA LEASE/LICENSE. IN INSTANT CASE THE COLLECTING AGENCY IS NOT PAYING ANY CONSIDERATION T O THE APPELLANT BUT RATHER THE APPELLANT IS PAYING COLLECTION CHARG ES TO THE COLLECTING AGENCY. THE APPELLANT HAS MADE TDS IN RE SPECT OF CONSIDERATION PAID TO THE COLLECTING ENTITY FOR SER VICES PROVIDED BY THEM BY TREATING THE SAME AS WORK CONTRACT. ACCORDI NGLY, APPELLANT HAS MERELY OUTSOURCED THE JOB OF COLLECTI ON OF THE USER FEES AND NOT ENTERED INTO ANY CONTRACT OR PARTED WI TH ANY RIGHT IN FAVOR OF A 3RD PARTY MAN POWER-AGENCY FOR LUMP SUM RECEIPTS. ACCORDINGLY, UNDER THE FACTS AND CIRCUMSTANCES DISC USSED ABOVE, SECTION 206C(1C) IS NOT APPLICABLE TO THE CASE OF T HE APPELLANT. 13.5 IT IS ALSO INTERPRETED THAT THE INTERNAL CIRC ULAR OF NHAI WAS MAINLY FOR COLLECTION OF TAX AT SOURCE FROM FRANCHI SEE. UNDER THE FRANCHISEE AGREEMENT, A FIXED CHARGES HAS TO BE PAI D BY THE FRANCHISEE TO THE FRANCHISOR. BUT IN THIS SITUATION , NO FIXED CHARGES HAVE BEEN PAID BY THE AGENCY, THEY ONLY COL LECT THE TOLL TAX AND DEPOSITED THE SAME AMOUNT TO THE AVEXCL'S A CCOUNT. FOR THESE SERVICES, AVEXCL PAID THE SERVICE CHARGES TO THE AGENCY. SO THE NHAI'S INTERNAL CIRCULAR IS NOT APPLICABLE I N THIS SITUATION. 13.6 ON PERUSAL OF THE ABOVE FACTS, IT IS CLEAR TH AT THE ASSESSEE HAS NOT TRANSFERRED ANY RIGHT TO THE COLLECTING ENT ITIES WHEREAS THE COLLECTING ENTITIES ARE ACTING AS THE EMPLOYEES OF THE ASSESSEE AND COLLECTING TOLL ON BEHALF OF THE ASSESSEE, IN RETUR N FOR SUCH COLLECTION OF TOLL, THE COLLECTING ENTITIES ARE REC EIVING REMUNERATION AND SERVICE CHARGES. THE TOLL COLLECTED BY THE COLL ECTING ENTITIES GET DEPOSITED BY THEM TO THE ASSESSEE'S BANK ACCOUN T AS THE COLLECTING ENTITIES DOES NOT CARRY ANY RIGHT ON THE TOLL COLLECTION. THEREFORE IT IS CLEAR THAT THE AGREEMENT ENTERED IN TO BY THE AVEXCL AND THE COLLECTING ENTITIES DOES NOT AMOUNT TO ANY CONTRACT GRANTING LEASE OR LICENSE AND DOES NOT INV OLVE 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 GR ANTED LEASE OR LICENSE NOR ENTERED INTO A CONTRACT OR OTHERWISE TR ANSFERRING THE RIGHT OF TOLL PLAZA IN FAVOUR OF THE CONTRACTORS FO R USE OF THE TOLL PLAZAS FOR THE PURPOSE OF BUSINESS AGAINST CONSIDER ATION. THEREFORE, THIS ACTIVITY WILL NOT COME WITHIN THE P ROVISIONS OF SECTION 206C (6A) OF THE INCOME TAX ACT, 1961. THER EFORE, THE ASSESSEE HAS NO OBLIGATION TO DEDUCT ANY TCS FROM T HE COLLECTING ENTITIES AND IT WILL NOT COMPREHEND INTO THE SCOPE OF PROVISIONS CONTAINED IN SECTION 206C (1C) OF THE INCOME TAX AC T, 1961 AND TCS IS NOT APPLICABLE TO THE ASSESSEE. ITA NO.1381/AHD/2015 & 5 ANOTHERS 10 13.7 THE SAME ISSUE HAS BEEN DISCUSSED AND DECIDED IN THE CASE OF THE PROJECT DIRECTOR, VS. DEPARTMENT OF INCOME T AX ON 24 JANUARY, 2013 'THE ITAT, CUTTACK BENCH. CUTTACK WHE RE THE CASE WAS HELD IN FAVOUR OF ASSESSEE AND IT WAS DECIDED T HAT THE ASSESSEE HAVE NOT GRANTED ANY RIGHT OR INTEREST IN THE TOLL PLAZA TO THE COLLECTING ENTITIES. THE AGREEMENTS ENTERED BET WEEN ASSESSEE AND THE COLLECTING ENTITIES WILL NOT COMPREHEND INT O THE SCOPE OF PROVISIONS CONTAINED IN SECTION 206C(1C) OF THE LT. ACT,196I AS WAS FOUND BY THE LEARNED CIT(A) RIGHTLY. THEREFORE, THE LEARNED CIT(A) HAS RIGHTLY FOUND THAT THE ASSESSEES ARE NOT OBLIGED TO COLLECT TCS FROM THE COLLECTING AGENCY TO WHOM IT H AS ENTRUSTED THE ACTIVITIES OF COLLECTING TOLL FEES AS PRESCRIBE D BY THE ASSESSEE. AS WAS OBSERVED BY THE LEARNED CIT(A) IT IS NOT A C ONTRACT. IT IS ONLY OUTSOURCING JOB FOR COLLECTION OF USER FEES. T HE LEARNED CIT(A) HAS COME TO THIS CONCLUSION AFTER THOROUGH V ERIFICATION OF THE AGREEMENT ENTERED BY THE NHAI WITH THE COLLECTI NG ENTITIES AND OTHER VARIOUS PROVISIONS OF THE RULES MADE BY T HE GOVERNMENT IN REGARD TO THE MANAGEMENT OF TOLL PLAZ AS. THEREFORE, UNDER THESE FACTS AND CIRCUMSTANCES OF T HE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE LEARNED CIT(A)' S ORDERS IN ALL THESE APPEALS ARE NOT AT ALL INFIRM IN ANY WAY REQU IRING INTERFERENCE AND HENCE, WE UPHOLD THE SAME BY FINDI NG THE ISSUES RAISED BY THE DEPARTMENT AS DEVOID OF MERIT AND AS SUCH, WE DISMISS THE APPEALS OF THE REVENUE. 11. WE FIND THAT THE LD.CIT(A) HAS ALSO RELIED UPON THE ORDER OF THE TRIBUNAL CUTTACK BENCH IN THE CASE OF THE PROJECT D IRECTOR VS. ITO, DATED 24.1.2013, WHICH IS DIRECTLY ON ISSUE AND COV ERED IN FAVOUR OF THE ASSESSEE IN THE PRESENT CASE. WE WOULD NOTE THE GR OUND TAKEN BY THE REVENUE BEFORE THE ITAT, CUTTACK BENCH, AND THE FIN DING OF THE CO- ORDINATE BENCH, HEREUNDER: GROUNDS OF REVENUE: 1. ON THE FACTS AND CIRCUMSTANCES OF THIS CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-1, BBUBANESWAR DOES NOT APPEAR TO BE JUSTIFIED IN HOLDING THAT NAT IONAL HIGHWAY AUTHORITY HAS MERELY OUTSOURCED THE JOB OF COLLECTION OF THE USER. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-1, BHUBANESWAR DOES NOT APPEAR TO BE JUSTIFIED. IN HOL DING THAT THERE WAS NO CONTRACT BETWEEN NHAI AND THE AGE NCY ITA NO.1381/AHD/2015 & 5 ANOTHERS 11 FOR COLLECTING TOLL-FEES THOUGH IN REALITY THERE EX ISTS A KIND OF CONTRACT WHICH MAY NOT BE ALWAYS A WRITTEN ONE. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-1, BHUBANESWAR IS NOT JUSTIFIED IN ARRIVING AT A CONCL USION, THAT NHAI HAS MERELY ENGAGED A MANPOWER AGENCY FOR DOING THE JOB OF COLLECTION OF TOLL FEES ON ITS BEHALF. ACTUA LLY THE MANPOWER AGENCY HAS CARRIED OUT THE WORK BASING ON A KIND OF AGREEMENT/CONTRACT,' 5. IN RESPECT OF THE ASSESSEE. THE PROJECT DIRECTOR , PARADIP PORT ROAD CO. I REVENUE HAS RAISED THE FOLLOWING CO MMON ISSUES. '1. ON THE FACTS AND CIRCUMSTANCES OF' THE CASE, TH E COMMISSIONER OF INCOME TAX (APPEALS)-1, BHUBANESWAR DOES NOT APPEAR TO BE JUSTIFIED IN HOLDING THAT THE 'COLLECT ING ENTITY' DID THE JOB OF COLLECTION OF TOLL FEES ON BEHALF OF THE 'AS SESSEE'. DEDUCTOR. 2.. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-1 , BHUBANESWAR DOES NOT APPEAR TO BE. JUSTIFIED IN CON CLUDING THAT THE 'ASSESSEE' DEDUCTOR HAS NOT GIVEN ANY LEASE 1 LICENSE OR ENTERED INTO A CONTRACT TO THE COLLECTING AGENCY /E NTITY WHERE 'AS M/S-PARADIP PORT ROAD CO. LTD.(TAX DEDUCTOR) HAS EN TERED INTO PERFORMANCE SECURITY CONTRACT WITH THE COLLECTING A GENCY AS WOULD BE SEEN FROM HIS ORDER AT PARA 4.4 OF PAGE 4. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-L B HUBANESWAR 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 INDI CATE THAT THERE EXISTS SOME KIND OF AGREEMENT/CONTRACT (CLAUSE 17 O F THE AGREEMENT MENTIONED AT PAGE 3 OF THE ORDER). THIS-B EING SO, HOW CAN IT BE SAID THAT THERE IS NO CONTRACT. THE LD. C OMMISSIONER OF INCOME TAX (APPEALS)-LF BHUBANESWAR HAS FAILED TO A PPRECIATE THE ISSUE.' FINDING OF THE TRIBUNAL: 9) ON CAREFUL, ANALYSIS OF THE ORDERS PASSED BY TH E LEARNED CIT(A) IN THE LIGHT OF THE SUBMISSIONS OF BOTH THE PARTIES TOGETHER WITH, THE AGREEMENTS STATED TO HAVE BEEN ENTERED IN TO BY THE ASSESSEE WITH THE-DIFFERENT COLLECTING ENTITIES, IT IS SEEN THAT THE ASSESSEES HAVE GIVEN ONLY PERMISSION TO THE COLLECT ING ENTITIES TO COLLECT THE TOLL FEES AND MAINTAIN THE TOLL PLAZAS BY EMPLOYING A SPECIFIED CATEGORY OF PERSONS AND SUPERVISE THEM AN D DEPOSIT THE TOLL COLLECTION IN THE SIGNATORY ACCOUNT OF THE NH AI HAS AGREED TO ITA NO.1381/AHD/2015 & 5 ANOTHERS 12 PAY SERVICE AND THE NHAI AGREED TO PAY THE MEN-POWE R EMPLOYED BY THE COLLECTING ENTITIES THE SALARY AS FIXED BY T HE COLLECTING ENTITY. ON PERUSAL OF ALL THESE, IT IS CLEAR THAT T HE ASSESSEES HAVE NOT GRANTED ANY RIGHT OR INTEREST IN THE TOLL PLAZA TO THE COLLECTING ENTITIES. THEREFORE, THE SAID AGREEMENT WILL NOT CO MPREHEND INTO THE SCOPE OF PROVISIONS CONTAINED IN SECTION 206C(1 C) OF THE I.T.ACT,196L AS WAS FOUND BY THE LEARNED CIT(A) RIG HTLY. THEREFORE, THE LEARNED CIT(A) HAS RIGHTLY FOUND THA T THE ASSESSEES ARE NOT OBLIGED TO COLLECT TCS FROM THE COLLECTING AGENCY TO WHOM IT HAS ENTRUSTED THE ACTIVITIES OF COLLECTING TOLL FEES AS PRESCRIBED BY THE ASSESSEES. AS WAS OBSERVED BY THE LEARNED CI T(A) IT IS NOT A CONTRACT. IT IS ONLY OUTSOURCING JOB FOR COLLECTI ON OF USER FEES. THE LEARNED CIT(A) HAS COME TO THIS CONCLUSION AFTE R THOROUGH VERIFICATION OF THE AGREEMENT ENTERED BY THE NHAI W ITH THE COLLECTING ENTITIES AND OTHER VARIOUS PROVISIONS OF THE RULES MADE BY THE GOVERNMENT IN REGARD TO MANAGEMENT OF TOLL P LAZAS. THEREFORE, UNDER THESE FACTS AND CIRCUMSTANCES OF T HE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE LEARNED CIT(A)' S ORDERS IN ALL THESE APPEALS ARE NOT AT ALL INFIRM IN ANY WAY REQU IRING INTERFERENCE AND HENCE, WE UPHOLD THE SAME BY FIND ING THE ISSUES RAISED BY THE DEPARTMENT AS DEVOID OF MERIT AND AS SUCH WE DISMISS APPEALS OF THE REVENUE IN RESPECT OF BOTH T HE ASSESSEES. 12. IN LIGHT OF THE ABOVE FINDING AND OBSERVATIONS OF THE LD.CIT(A), AND FOLLOWING ORDER OF THE ITAT CUTTACK BENCH DECID ED ON SIMILAR ISSUE, WE ARE NOT INCLINED TO INTERFERE WITH IMPUGNED ORDE R OF THE LD.CIT(A), WHICH IS ACCORDINGLY CONFIRMED, AND THE GROUNDS OF APPEAL OF THE REVENUE IN ALL THE APPEALS ARE REJECTED. 13. IN THE RESULT, APPEALS OF THE REVENUE IN ALL TH E ASSESSMENT YEARS ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 9 TH JANUARY, 2019 AT AHMEDABAD. SD/- SD/- (MS.MADHUMITA ROY) JUDICIAL MEMBER (AMARJIT SINGH) ACCOUNTANT MEMBER AHMEDABAD; DATED 09/01/2019