ACIT Circler-76(1), New Delhi V. National Highway Authority of India (NHAI), New Delhi

ITA 5728/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 9735 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 07-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 194C

Judgement Text

ITA NO.- 5728/DEL/2017. NATIONAL HIGHWAY AUTHORITY OF INDIA (NHAI) PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: E: NEW DELHI) (THROUGH VIDEO CONFERENCING) BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA NO:- 5728/DEL/2017 ( ASSESSMENT YEAR: 2011-12) ACIT, CIRCLE-76(1), NEW DELHI. VS. NATIONAL HIGHWAY AUTHORITY OF INDIA (NHAI), NEW DELHI. APPELLANT RESPONDENT PAN NO: AAATN1963H REVENUE BY : MS. RAKHI VIMAL, SR. DR ASSESSEE BY : SHRI ATUL NINAWAT, CA PER ANADEE NATH MISSHRA, AM (A) THIS APPEAL BY ASSESSEE IS FILED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-41, NEW DELHI, [LD. CIT(A), FOR SHORT], DATED 23.06.2017 FOR ASSESSMENT YEAR 2011-12. GROUNDS TAKEN IN THIS APP EAL OF ASSESSEE ARE AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESS EE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE FROM NON-REFUNDABLE SUMS PAID UNDER ANY NAME BY NHAI TO THE CONCESSIONARIES WHEN SUCH PAID TO COMPE NSATE THE DECREASE OF TOLL COLLECTION FROM EXPECTED TOLL COLLECTION DURIN G THE CONCESSION PERIOD? 1.1 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESS EE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE FROM NON-REFUNDABLE SUMS PAID UNDER ANY NAME BY ITA NO.- 5728/DEL/2017. NATIONAL HIGHWAY AUTHORITY OF INDIA (NHAI) PAGE 2 OF 6 NHAI TO THE CONCESSIONARIES PARTICULARLY WHEN SUCH SUMS HAVE BEEN PAID AS PER CONCESSION AGREEMENT FROM SECURING RIGHTS OF NH AI? 1.2 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESS EE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE FROM NON-REFUNDABLE SUMS PAID UNDER ANY NAME BY NHAI TO CONCESSIONAIRES WHO HAVE NO INTEREST IN PRO PERTY SO CREATED EXCEPT PERSONAL PRIVILEGES THEREIN PARTICULARLY WHEN CONCE SSION AGREEMENT DO NOT VEST OR CREATE ANY PROPRIETARY OWNERSHIP OF CONCESS IONARIES IN THE PROJECT OR PART THEREOF? 1.3 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESS EE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE FROM NON-REFUNDABLE SUMS PAID UNDER ANY NAME BY NHAI TO CONCESSIONAIRES WHO ARE FORBIDDEN IN ANY MA NNER TO SELL, TRANSFER ASSIGN, MORTGAGE, CHARGE, CREATE ANY LIEN OR OTHERW ISE ENCUMBER OR DEAL WITH THE PROJECT EXCEPT TO COLLECT TOLL DURING THE CONCESSION PERIOD? 1.4 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE PROJEC T WAS IMPLEMENT BY THE ASSESSEE & CONCESSIONARIES IN JOINT VENTURE PARTICU LARLY WHEN THE NATURE OF CONCESSION AGREEMENT, IN LEGAL TERMS, SUGGEST IT AS LICENSE AGREEMENT? 1.5 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE NON-RE FUNDABLE SUMS PAID UNDER ANY NAME BY NHAI TO THE CONCESSIONARIES ARE CAPITAL IN NATURE AND THUS, THE SAME ARE BEYOND THE PURVIEW OF SECTION 194C OF THE INCOME TAX ACT. 1.6 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE CONCE SSIONARIES IS NOT AN AGENT OF NHAI AND THEREBY CLEARLY IGNORING THE FACT THAT IN THE ENTIRE CONCESSION PERIOD, THE CONCESSIONARIES IS NOTHING BUT A CONSTR UCTIVE AGENT OF NHAI? 2. THAT THE ORDER OF THE CIT(A) BEING ERRONEOUS IN LAW AND ON FACTS NEEDS TO BE VACATED AND THE ORDER OF THE AO BE RESTORED. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY ONE OR MORE OF THE GROUND OF THE APPEAL AS STATED ABOVE AS AND WHEN NE ED FOR DOING SO MAY ARISE. (B) IN THIS APPEAL FILED BY REVENUE, IN ESSENCE THE ONL Y ISSUE IN DISPUTE IS WHETHER THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE UNDER S ECTION 194C OF INCOME TAX ACT, 1961 (I.T. ACT, FOR SHORT) IN RESPECT OF NON-REFUNDABL E SUMS PAID UNDER ANY NAME BY THE ITA NO.- 5728/DEL/2017. NATIONAL HIGHWAY AUTHORITY OF INDIA (NHAI) PAGE 3 OF 6 ASSESSEE TO THE CONCESSIONARIES. AT THE TIME OF HE ARING BEFORE US, THE REPRESENTATIVES OF BOTH SIDES; NAMELY MS. RAKHI VIMAL, SENIOR DEPARTME NTAL REPRESENTATIVE (SR. DR, FOR SHORT) FOR REVENUE AND SHRI ATUL NINAWAT, C.A. THE AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE, WERE IN AGREEMENT THAT THE ISSUE IN DISPU TE IS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST REVENUE BY ORDER DATED 10 TH APRIL, 2017 OF CO-ORDINATE BENCH OF INCOME TAX APPELLATE TRIBUNAL, DELHI (ITAT, FOR SHORT) IN TH E ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010-11 IN ITA NO. 4438/DEL/2013; AND ALSO BY ORDER OF JAIPUR BENCH OF ITAT, FOR ASSESSMENT YEAR 2004-05 VIDE ORDER DATED 23 RD SEPTEMBER, 2016. FOR EASE OF REFERENCE, THE RELEVANT PORTIONS OF THE AFORESAID ORDERS DATED 10 TH APRIL, 2017 AND 23 RD SEPTEMBER, 2016 ARE REPRODUCED BELOW: RELEVANT PORTION OF ORDER DATED 10 TH APRIL, 2017 ...WE THUS HOLD THAT THE AUTHORITIES BELOW WERE N OT JUSTIFIES IN COMING TO THE CONCLUSION THAT GRANT GIVEN BY THE ASSESSEE TO CONC ESSIONAIRE AS A CONTACT PAYMENT AND NOT IN THE NATURE OF GRANT / SUBSIDY GIVEN BY T HE ASSESSEE FOR BUILDING, OPERATING AND MAINTAINING THE TOLL ROAD WITH THUS OBSERVATION THAT RELATIONSHIP BETWEEN ASSESSEE AND CONCESSIONARIES IS THAT OF CONTRACTOR BUILDER O R A CONTACTOR-MAINTAINER, CONCESSIONAIRES IS THAT OF CONTACTOR BUILDER OR A C ONTRACTOR-MAINTAINER, CONCESSIONAIRES ARE NOT THE OWNER OF THE ASSETS FOR THE PURPOSE OF INCOME TAX ACT THE WORDS GRANT HAS BEEN ISSUED AS IT IS NOT EXPECTED TO BE RETURNE D BACK AND THAT RELATIONSHIP0 BETWEEN THE ASSESSEE AND THE CONCESSIONAIRE IS THAT OF CONTACTOR-BUILDER OR CONTRACTOR-MAINTAINER. THE NATURE OF WORK BETWEEN THE ASSESSEE AND THE CONCESSIONAIRES, AS DISCUSSED ABOVE, DOES NOT SUPPO RT THE ABOVE OBSERVATIONS MADE BY THE ASSESSING OFFICER TO JUSTI FY HIS ACTION FOR APPLICATIONS OF THE PROVISIONS OF SECTION 194C OF T HE ACT ON THE CAPITAL GRANT SUBSIDY GIVEN BY THE ASSESSEE TO ITS CONCESSIONARIE S AS PER CONCESSION AGREEMENT ON BOT BASIS BASED ON THE POLICIES OF GOV ERNMENT OF INDIA AND TREATING IT TO BE A CONTRACTUAL PAYMENT. WE THUS, W HILE SETTING ASIDE ORDERS OF THE AUTHORITIES BELOW, DIRECT THE ASSESSING OFFI CE TO ACCEPT THE CLAIM OF THE ASSESSEE THAT PROVISIONS OF SECTION 194C OF THE ACT ARE NOT APPLICABLE ON THE CAPITAL GRANT SUBSIDY GIVEN BY THE ASSESSEE TO ITS CONCESSIONAIRES. THE GROUNDS ARE ACCORDINGLY ALLOWED. ITA NO.- 5728/DEL/2017. NATIONAL HIGHWAY AUTHORITY OF INDIA (NHAI) PAGE 4 OF 6 RELEVANT PORTION OF ORDER DATED 23 RD SEPTEMBER, 2017 THE CONTENTION OF THE ASSESSEE IN SUBSTANCE IS THAT FROM THE TERMS OF THE AGREEMENT IT CAN BE INFERRED THAT THE PAYMENTS MADE TO THE CO NCESSIONAIRES IN THE FORM OF GRANT WOULD NOT ATTRACT THE PROVISIONS OF SECTION 194C. ESSENTIALLY THESE PAYMENTS ARE IN THE NATURE OF CONTRIBUTION IN THE JOINT VENTURES . WE HAVE GONE THROUGH THE TERMS OF THE AGREEMENT. THE INFERENCE DRAWN BY THE AO IS THAT THE GRANT IS NOTHING BUT PAYMENT TO THE CONT RACTOR IS MIS-PLACED . AS PER SECTION 194C, THE PAYMENT IS REQUIRED TO BE MAD E TO THE CONTRACTOR BUT IN THE GIVEN CASE PAYMENT IS NOT MADE TO THE CONTRACTOR. T HE AGREEMENT CANNOT BE STATED TO BE PURELY A CONTRACT AGREEMENT BUT IT IS A CONTRACT AGREEMENT OF JOINT VENTURE. HENCE, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF LD. CIT(A), THEREFORE, THE SAME IS HEREBY UPHELD. (B.1) NEITHER SIDE HAS BROUGHT ANY MATERIALS FOR DISTING UISHING THE FACTS AND CIRCUMSTANCES OF THE CASE FOR ASSESSMENT YEAR 2011-12 (TO WHICH T HIS APPEAL PERTAINS) FROM FACTS AND CIRCUMSTANCES OF ASSESSMENT YEARS 2010-11 AND 2004- 05 (TO WHICH THE AFORESAID ORDERS DATED 10 TH APRIL, 2017 AND 23 RD SEPTEMBER, 2016 PERTAIN RESPECTIVELY). NEITHER SI DE HAS BROUGHT ANY MATERIALS FOR OUR CONSIDERATION TO PERS UADE US TO TAKE A VIEW IN THIS APPEAL IN DIFFERENT FROM THE VIEW TAKEN BY ITAT IN AFORESAID ORDERS DATED 10 TH APRIL, 2017 AND 23 RD SEPTEMBER, 2016. NEITHER SIDE HAS BROUGHT ANY MATE RIALS FOR OUR CONSIDERATION TO PERSUADE US TO INTERFERE WITH THE AFORESAID IMPUGNED APPELLA TE ORDER DATED 23.06.2017 OF THE LD. CIT(A). (C) IN VIEW OF THE FOREGOING, AND RESPECTFULLY FOLLOWI NG THE AFORESAID ORDERS DATED 10 TH APRIL, 2017 AND 23 RD SEPTEMBER, 2016 OF ITAT IN ASSESSEES OWN CASE; W E DECLINE TO INTERFERE WITH THE AFORESAID IMPUGNED APPELLATE ORD ER DATED 23.06.2017 OF THE LD. CIT(A). ITA NO.- 5728/DEL/2017. NATIONAL HIGHWAY AUTHORITY OF INDIA (NHAI) PAGE 5 OF 6 ACCORDINGLY, THE ISSUES IN DISPUTE IN GROUNDS OF AP PEAL IN THE PRESENT APPEAL BEFORE US ARE DECIDED IN FAVOUR OF THE ASSESSEE AND THE APPEAL FI LED BY REVENUE IS DISMISSED. (D) IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. THE ORDER WAS ALREADY PRONOUNCED ORALLY IN THE OPEN COURT ON 16/03/2021 IN THE PRESENCE OF REPRESENTATIVES OF BOTH SIDES AFTER CONCLUSION OF H EARING. NOW THIS ORDER IN WRITING IS SIGNED TODAY ON 18/03/21. SD/- SD/- (SUDHANSHU SRIVASTAVA) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 18/03/21 (POOJA) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO.- 5728/DEL/2017. NATIONAL HIGHWAY AUTHORITY OF INDIA (NHAI) PAGE 6 OF 6 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER