Municipal Corporation, Aurangabad V. ITO,TDS,Ward, Aurangabad

ITA 717/PUN/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67064 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-06-2013
• Assessment Year: misc
• Appeal Filed On: 24-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Period of limitation; Non-deduction of tax
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI G. S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 717 / P N/ 20 1 1 ASSESSMENT YEAR S : 2002 - 03 TO 2009 - 10 MUNICIPAL CORPORATION , C/O ADV G K SANCHETI, 202, TAPDIYA GARDEN, SAMARTH NAGAR, AURANGABAD VS. ITO, TDS WARD, AURANGABAD (APPELLANT) (RESPONDENT) PAN NO. AAALM0567A ITA NO S . 1888, 1889, 1890 & 1891 /PN/20 12 ASSESSMENT YEAR S : 2006 - 7, 2007 - 08, 2008 - 09 & 2009 - 10 AURANGA BAD MUNICIPAL CORPORATION, C/O ADV G K SANCHETI, 202, TAPDIYA GARDEN, SAMARTH NAGAR, AURANGABAD VS. ITO, TDS WARD, AURANGABAD (APPELLANT) (RESPONDENT) PAN NO. AAALM0567A APPELLANT BY: SHRI NIKHIL PATHAK RESPONDENT BY: SHRI SANTOSH KUMAR DATE OF HEARING : 21 - 06 - 2013 DATE OF PRONOUNCEMENT : 25 - 06 - 2013 ORDER P ER R.S. PADVEKAR , JM : - IN T HIS BATCH OF FIVE APPEALS , THE ASSESSEE HAS CHALLENGED THE ORDER PASSED BY THE ITO (TDS), AURANGABAD (IN SHORT THE ASSESSING OFFICER) U/S. 201(1) AND 201 (1A) OF THE INCOME - TAX ACT, 1961 DATED 04 - 05 - 2009 FOR THE F.YS. 2005 - 06, 2006 - 07, 2007 - 08, 2008 - 09 AND 2009 - 10 RELEVANT TO THE A.YS. 2006 - 07, 2007 - 08, 2008 - 09 AND 2009 - 10. THE ASSESSEE HAS CHALLENGED THE LEGALITY AND VALIDITY OF THE IMPUGNED ORDER FOR DIR ECTING THE ASSESSEE CORPORATION TO PAY THE AMOUNT OF RS.53,90,743/ - FOR THE ASSESSMENT YEARS FOR ALLEGED FAILURE TO DEDUCT TAX AT SOURCE ON THE AMOUNT RET AINED BY THE AKOLA PRAVSHI MALVAHTUK SAHAKARI SANSTHA MARYADIT WHICH IS PLYING OF THE CITY BUSES . 2 ITA NO. ITA NO. 717/PN/2011 & ITA NOS.1888, 1889, 1890 & 1891/PN/2012, MUNICIPAL CORPORATION, AURANGABAD 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL WHICH ARE COMMON IN ALL THE APPEALS AS UNDER: 1] THE LEARNED C1T(A) ERRED IN HOLDING THAT THE PROVISION OF SECTION194C WERE CLEARLY APPLICABLE TO THE AGREEMENT BETWEEN THE ASSESSEE AND AKOLA PRAVASI MALVAHATUK SAHAKARI SANSTHA MARYADIT, AKOLA AND HENCE, THE A.O. WAS JUSTIFIED IN RAISING THE DEMAND U/S 201/201(1 A) ON ACCOUNT OF FAILURE OF THE ASSESSEE IN NOT DEDUCTING TDS U/S 194 C. 2] THE LEARNED C1T(A) FAILED TO APPRECIATE THA T THE PROVISIONS OF SECTION 194 C WERE NOT APPLICABLE TO THE AGREEMENT BETWEEN THE ASSESSEE AND AKOLA PRAVASI MALVAHATUK SAHAKARI SANSTHA MARYADIT, AKOLA AND THEREFORE, THE ASSESSEE CORPORATION WAS NOT REQUIRED TO DEDUCT ANY TDS U/S I94C AND CONSEQUENTLY, THE DEMAND RAISED U/S 201/201(1 A) IS NOT JUSTIFIED. 3] THE LEARNED C1T(A) OUT TO HAVE APPRECIATED THAT AS PER THE AGREEMENT BETWEEN THE ASSESSEE AND AKOLA PRAVASI MALVAHATUK SAHAKARI SANSTHA MARYADIT, AKOLA,THE ASSESSEE WAS NOT REQUIRED TO MAKE ANY PAY MENT TO THE SAID SANSTHA AND 'THEREFORE, THERE WAS NO QUESTION OF DEDUCTION AND TAX U/S 194C. 4] THE LEARNED C1T(A) ERRED IN NOT APPRECIATING THE ASSESSEE HAD AWARDED THE RIGHTS TO AKOLA PRAVASI MALVAHATUK SAHAKARI SANSTHA MARYADIT, AKOLA, FOR RUNNING TH E BUS ES IN AURANGABAD CITY B US IN LIEU OF THE SAME, THE SAID PARTY WAS REQUIRED TO SAID ROYALTY TO THE ASSESSEE CORPORATION AND HENCE, THERE WAS NO REQUIREMENT ON THE PART OF THE ASS ESSEE TO DEDUCT AND TDS U/S 194C. 5] THE LEARNED C1T(A() ERRED IN HOLDI NG THAT THE ASSESEE SHOULD HAVE DEDUCTED TDS ON THE PAYMENTS MADE TO AKOLA PRAVASI MALVAHATUK SAHAKARI SANSTHA MARYADIT, AKOLA WITHOUT APPRECIATING THAT THE ASSESSEE WAS NOT MAKING ANY PAYMENT OT THE SAID PARTY AND ON THE CONTRARY, THE ASSESSEE WAS RECEIV ING ROYALTY FROM THE SAID PARTY AND THEREFORE, THE PROVISION OF SECTION 194 C WERE NOT ATTRACTED TO THE FACTS OF THE PRESENT CASE. 3. SO FAR AS THE APPEAL NO. 717/PN/2011 IS CONCERNED THE LEARNED COUNSEL SUBMITS THAT THE SAID APPEAL WAS FILED COMMON FOR F OUR ASSESSMENT YEARS AND NOW THE ASSESSEE HAD FILED SEPARATE APPEALS FOR ALL THE FOUR RESPECTIVE YEARS AND HENCE, THE SAID APPEAL BECOME INFRUCTUOUS A N D SAID MAY BE DISMISSED. 4 . IT IS SEEN THAT SO FAR AS THE A PPEAL NOS. 1888, 1889, 1890 & 1891/PN/2012 TH ERE IS A DELAY IN FILING THOSE APPEALS . T HE LEARNED COUNSEL SUBMITS THAT THOSE APPEALS ARE ONLY SUBSTITUTION FOR THE APPEAL BEING ITA NO. 717/PN/ 2011 WHICH WAS FILED FOR FOUR ASSESSMENT YEARS 3 ITA NO. ITA NO. 717/PN/2011 & ITA NOS.1888, 1889, 1890 & 1891/PN/2012, MUNICIPAL CORPORATION, AURANGABAD COMMONLY AND WHEN THIS WAS BROUGHT TO THE NOTICE BY THE HON'BLE BENCH THE ASSESSEE FILED SEPARATE APPEALS AND ALSO PAID THE REQUISITE FEES. HE SUBMITS THAT ORIGINAL APPEAL BEING ITA NO. 717/PN/2011 WAS FILED WITHIN THE PERIOD OF LIMITATION AND JUST TO MAKE THE TECHNICAL COMPLIANCE SEPARATE APPEALS ARE FILED HENCE, DE LAY MAY BE CONDONED. 5 . WE HAVE ALSO HEARD THE LD. DR. WE FIND FORCE IN THE ARGUMENT OF THE LEARNED COUNSEL. THE ASSESSEE FILED THE COMMON APPEAL FOR THE FOUR ASSESSMENT YEARS BEING ITA NO. 717/PN/2011 I.E. A.YS. 2002 - 03 TO A.Y. 2009 - 10 ; THAT WAS CHAL LENGING THE COMMON ORDER PASSED BY THE ASSESSING OFFICER FOR THOSE ASSESSMENT YEARS BUT EFFECTIVELY THE GRIEVANCE OF THE ASSESSEE IS CONFINED TO ONLY FOUR ASSESSMENT YEARS. IN OUR OPINION , THE DELAY NEEDS TO BE CONDONED AS THE ORIGINAL COMMON APPEAL FILED BY THE ASSESSEE IS WITHIN THE PERIOD OF LIMITATION. WE ACCORDINGLY CONDONE THE DELAY IN FOUR APPEALS I.E. 1888, 1889, 1890 & 1891/PN/2012. 6 . THE FACTS PERTAINING TO THE CONTROVERSY IN ISSUE ARE AS UNDER. IT WAS NOTICED BY THE ASSESSING OFFICER THAT TH E ASSESSEE MUNICIPAL CORPORATION H AS ENTERED INTO AN AGREEMENT WITH AKOLA PRAVASI MALVAHTUK SAHAKARI SANSTHA MARYADIT (IN SHORT THE SOCIETY), AKOLA AND ASSIGNED THE WORK OF PLYING THE CITY BUSES. IN THE OPINION OF THE ASSESSING OFFICER , THERE WAS A CONT RACT BETWEEN THE ASSESSEE AND THE SAID SOCIETY . A S PER THE TERMS OF AGREEMENT THE SOCIETY WAS TO MAKE THE PAYMENT ON THE BASIS OF PER KILOMETER TO THE ASSESSEE MUNICIPAL CORPORATION. THE ASSESSING OFFICER TREATED THE AGREEMENT BETWEEN THE ASSESSEE MUNICI PAL CORPORATION AND THE SAID SOCIETY AS A CONTRACT COVERED U/S. 194C AND HENCE HELD THAT ASSESSEE SHOULD HAVE DEDUCTED THE TAX AT SOURCE ON THE AMOUNT RETAINED BY THE SOCIETY. THE ASSESSING OFFICER ALSO REFERRED TO THE DECISION OF THE HON'BLE HIGH COURT O F PUNJAB 4 ITA NO. ITA NO. 717/PN/2011 & ITA NOS.1888, 1889, 1890 & 1891/PN/2012, MUNICIPAL CORPORATION, AURANGABAD & H ARYA NA IN THE CASE OF S. S. AND CO. VS. STATE OF PUNJAB & ORS. 268 ITR 298. THE ASSESSING OFFICER RAISED THE FOLLOWING DEMANDS AGAINST THE ASSESSEE: SR. NO. F.Y. TAX SOUGHT TO BE DEDUCTED (INCLUDING SURCHARGE & CESS) INT. U/S. 201(1A) TOTAL 1 2005 - 06 1,45,041/ - 54,375/ - 1,99,416/ - 2 2006 - 07 12,05,961/ - 3,66,308/ - 15,72,269/ - 3 2007 - 08 13,50,142/ - 2,51,127/ - 16,01,269/ - 4 2008 - 09 18,94,964/ - 1,22,825/ - 20,17,789/ - TOTAL 45,96,108/ - 7,94,635/ - 53,90,743/ - 7 . THE ASSESSEE CHALLENGED THE SA ID DEMAND B EFORE THE LD. CIT(A). T HE LD. CIT(A) CONFIRMED THE DEMAND RAISED BY THE ASSESSING OFFICER AND OPERATIVE PART OF THE FINDINGS AND REASONS ARE AS UNDER: 12. I HAVE CAREFULLY GONE THROUGH THE SUBMISSION OF THE APPELLANT, ASSESSING OFFICERS ORDER U/S. 201(1) AND 201(1A) OF THE IT ACT, 1961 HIS REMAND REPORT, MATERIAL ON RECORD INCLUDING THE ENGLISH VERSION OF THE AGREEMENT FOR CITY BUS PLYING BETWEEN AMC AND APMSSM. A PERUSAL OF THE AGREEMENT REVEALS THE FOLLOWING: (I). AMC APPOINTED APMSSM IN OC TOBER 2005 TO RUN LOCAL BUSES IN THE CITY FOR 10 YEARS. PPMSSM WAS TO PAY RS.0.80/ - (EIGHT PAISA) PER K.M. AS ROAD USAGE CHARGES TO THE AMC. THE RATE WAS LINKED WITH THE TICKET RATES. (II). BUSES WERE TO RUN IN THE CORPORATION LIMIT UNDER THE NAME AMC. T HE BUSES WERE TO BE PURCHASED BY THE AGENCY IN THE NAME, OF COMMISSIONER AMC. WHILE AGENCY WAS TO CONTRIBUTE 20% OF THE FUNDS FOR BUYING THE BUSES, 80% WAS TO BE ARRANGED AS BANK LOANS. (III). NO AMOUNT WAS TO BE SPENT BY AMC. STAFF ETC. WAS THAT OF PPMSS M. RESPONSIBILITY OF ALL TAXES, CESS ETC. LIED WITH THE AGENCY. ALL OPERATING EXPENSES WERE TO BE BORNE BY THE AGENCY. (IV). RATES ETC. WERE TO BE GOVERNED BY STATE TRANSPORT RULES OR C OMMISSIONER, TRANSPORT. (V). AGENCY WAS ALLOWED TO USE CORPORAT ION'S LAND FOR BUS STOPS, SERVICE STATIONS, PARKING ETC. WITHOUT PAYING ANY RENT. (VI). THE AGENCY WILL OPEN 'ESCROW BANK ACCOUNT' IN THE NAME OF COMMISSIONER, CITY BUS TRANSPORT FUND WHICH WILL BE JOINTLY OPERATED BY CHIEF OFFICER, AMC, AND SECRETARY OF 5 ITA NO. ITA NO. 717/PN/2011 & ITA NOS.1888, 1889, 1890 & 1891/PN/2012, MUNICIPAL CORPORATION, AURANGABAD A PMSSM. THE PRIOR DAY'S COLLECTION WILL BE DEPOSITED IN THE ACCOUNT IN THE MORNING OF SUBSEQUENT CLAY BY 'AGENCY'. BY FIFTH DAY OF EACH MONTH, EM1 OF THE BANK WILL BE PAID TILL REPAYMENT OF THE ENTIRE BANK LOAN. THEN THE MONTHLY ROAD USAGE CHARGES, RTO TAX AND OTHER TAXES ETC. WILL BE DEBITED AND TRANSFERRED BY AMC. THE BALANCE AMOUNT THEREAFTER WILL BE UTILIZED BY THE AGENCY FOR REGULAR EXPENSES, THE, POWERS OF MAINTAINING ECONOMICAL ADMINISTRATION AND REPAYMENT OF BANK LOAN LIES WITH CHIEF OFFICER MADE ON BEHALF OF AMC. THIS WILL BE BINDING ON PARTY NO. 2 I.E. APMSSM. (VII). LIABILITY OF REPAYMENT OF THE BANK LOAN IN SIXTY INSTALLMENTS WILL BE THE RESPONSIBILITY OF THE AGENCY ONLY. 13. A PERUSAL OF (VI) ABOVE SUGGESTS THAT THE ENTIRE DAILY COLLECTION WAS R EQUIRED TO BE DEPOSITED IN THE BANK ACCOUNT FIRST.. THE BANK ACCOUNT WAS JOINTLY OPERATED BY THE AMC AND THE AGENCY. AMC AFTER RETAINING MONTHLY ROAD USAGE CHARGES FROM THE SAID ACCOUNT COULD HAVE DEDUCTED TDS U/S 194C OF THE IT ACT AS THE REMAINING AMOUNT BECOMES THE PAYMENT TO BE KEPT BY THE AGENCY. SINCE REPAYMENT OF THE BANK LOAN, TAXES, CESS ETC. IS THE RESPONSIBILITY OF THE AGENCY UNDER THE OVERALL MONITORING OF AMC, IT WOULD HAVE MADE PAYMENTS ON THESE ACCOUNTS OUT OF THE SAID REMAINING BALANCE [COL LECTION DEPOSITED - MONTHLY ROAD USAGE CHARGES KEPT BY AMC] KEPT IN THE ESCROW BANK ACCOUNT. THIS SITUATION IS TOTALLY DIFFERENT FROM THAT OF OCTROI COLLECTION WHICH HAS BEEN DISCUSSED IN DETAIL IN THE PRECEDING PARAS. IN CASE OF OCTROI COLLECTION THE AGENCY WAS NOT DEPOSITING COLLECTION WITH THE AMC OR IN A JOINT BANK ACCOUNT WITH AMC. THE AGENCY WAS SIMPLY MAKING THE PAYMENT OF THE TENDERED AMOUNT IN 50 EQUAL WEEKLY INSTALLMENTS. THUS THERE WAS NO CONTROL OF AMC ON THE OCTROI COLLECTION MADE BY THE AG ENCY. IN CASE OF 'BUS PLYING CONTRACT', THE ENTIRE DAILY COLLECTION IS FIRST DEPOSITED IN A BANK ACCOUNT WHICH IS JOINTLY OPERATED BY AMC AND THE AGENCY. IN MY VIEW THE DECISION OF HON'BLE PB & H HIGH COURT IN THE CASE S.S.& CO. OCTROI CONTRACTOR VS STA TE OF PUNJAB AND OTHERS WOULD BE SQUARELY APPLICABLE AS FAR AS CONTRACT FOR BUS PLYING IS CONCERNED. THE APPLICABILITY OF* 194C WILL DEPEND UPON THE NATURE OF CONTRACT BETWEEN THE CONTRACTOR AND THE CONTRACTEE. 14. I N VIEW OF THE FACTS AS EXPLAINED AB OVE I AM IN AGREEMENT WITH THE AO THAT AMC SHOULD HAVE DEDUCTED TDS U/S 194C THOUGH REASONS FOR REACHING TO THE SAME CONCLUSION MAY DIFFER. TDS LIABILITY AS WORKED OUT BY THE AO IN PARA 6.1 OF PAGE 5 OF THE ORDER DTD. 04/05/2009 IS HEREBY CONFIRMED. 8 . NOW THE ASSESSEE IS IN APPEAL BEFORE US. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE HAS FILED THE PAPER BOOK IN WHICH THE ORIGINAL MARATHI AGREEMENT DATED 31 - 6 ITA NO. ITA NO. 717/PN/2011 & ITA NOS.1888, 1889, 1890 & 1891/PN/2012, MUNICIPAL CORPORATION, AURANGABAD 10 - 2005 AS WELL AS THE FREE ENGLISH TRANSLATION OF T HE SAID AGREEMENT IS ALSO FILED. 9. SECTION 194C READS AS UNDER: ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREAFTER INCLUDING SUPPLY OF LABOR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIED PE RSON SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OF DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO (I) ONE PER CENT WHERE THE PAYMEN T IS BEING MADE OR CREDIT IS BEING GIVEN TO AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY; (II) TWO PER CENT WHERE THE PAYMENT IS BEING MADE OR CREDIT IS BEING GIVEN TO A PER SON OTHER THAN AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, OF SUCH SUM AS INCOME - TAX ON INC OME COMPRISED THEREIN. (2) WHERE ANY SUM REFERRED TO IN SUB - SECTION (1) IS CREDITED TO ANY ACCOUNT, WHETHER CALLED SUSPENSE ACCOUNT OR BY ANY OTHER NAME, IN THE BOOKS OF ACCOUNT OF THE PERSON LIABLE TO PAY SUCH INCOME, SUCH CREDITING SHALL BE DEEMED TO B E CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE AND THE PROVISIONS OF THIS SECTION SHALL APPLY ACCORDINGLY. (3) WHERE ANY SUM IS PAID OR CREDITED FOR CARRYING OUT ANY WORK MENTIONED IN SUB - CLAUSE (E) OF CLAUSE (IV) OF THE EXPLANATION, TAX SHALL BE DEDU CTED AT SOURCE (I) ON THE INVOICE VALUE EXCLUDING THE VALUE OF MATERIAL, IF SUCH VALUE IS MENTIONED SEPARATELY IN THE INVOICE; OR (II) ON THE WHOLE OF THE INVOICE VALUE, IF THE VALUE OF MATERIAL IS NOT MENTIONED SEPARATELY IN THE VOICE. (4) NO INDIVIDUA L OR HINDU UNDIVIDED FAMILY SHALL BE LIABLE TO DEDUCT INCOME - TAX O THE SUM CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR WHERE SUCH SUM IS CREDITED OR PAID EXCLUSIVELY FOR PERSONAL PURPOSES OF SUCH INDIVIDUAL OR ANY MEMBER OF HINDU UNDIVIDED FAMILY. (5 ) NO DEDUCTION SHALL BE MADE FROM THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID TO THE ACCOUNT OF, OR TO, THE CONTRACTOR IF SUCH SUM DOES NOT EXCEED THIRTY THOUSAND RUPEES: PROVIDED THAT WHERE THE AGGREGATE OF THE AMOUNTS OF SUCH SUMS CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FINANCIAL YEAR EXCEEDS SEVENTY - FIVE THOUSAND RUPEES, THE PERSON RESPONSIBLE FOR PAYING SUCH SUMS REFERRED TO IN SUB - SECTION (1) SHALL BE LIABLE TO DEDUCT INCOME - TAX UNDER THIS SECTION. (6) NO DEDUCTION SHALL BE MADE FROM ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF A CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON FURNISHING OF HIS PERMANENT AC COUNT NUMBER, TO THE PERSON PAYING OR CREDITING SUCH SUM. (7) THE PERSON RESPONSIBLE FOR PAYING OR CREDITING ANY SUM TO THE PERSON REFERRED TO IN SUB - SECTION (6) SHALL FURNISH, TO THE PRESCRIBED INCOME - TAX AUTHORITY OR THE PERSON AUTHORIZED BY IT, 7 ITA NO. ITA NO. 717/PN/2011 & ITA NOS.1888, 1889, 1890 & 1891/PN/2012, MUNICIPAL CORPORATION, AURANGABAD SUCH PAR TICULARS, IN SUCH FORM AND WITHIN SUCH TIME AS MAY BE PRESCRIBED. EXPLANATION FOR THE PURPOSES OF THIS SECTION, - (I) SPECIFIED PERSON SHALL MEAN, - (A) THE CENTRAL GOVERNMENT OR ANY STATE GOVERNMENT; OR (B) ANY LOCAL AUTHORITY; OR (C) ANY CORPORATION ESTABLISHED BY OR UNDER A CENTRAL, STATE OR PROVINCIAL ACT; OR (D) ANY COMPANY; OR (E) ANY CO - OPERATIVE SOCIETY; OR (F) ANY AUTHORITY, CONSTITUTED IN INDIA BY OR UNDER ANY LAW, ENGAGED EITHER FOR THE PURPOSE OF DEALING WITH AND SATISFYING THE NEED FOR HOUSING ACCOMMODATION OR FOR THE PURPOSE OF PLANNING, DEVELOPMENT OR IMPROVEMENT OF CITIES, TOWNS AND VILLAGES, OR FOR BOTH; OR (G) ANY SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 (21 OF 1860) OR UNDER ANY LAW CORRESPONDING TO THAT ACT IN FORCE IN ANY PART OF INDIA; OR (H) ANY TRUST; OR (I) ANY UNIVERSITY ESTABLISHED OR INCORPORATED BY OR UNDER A CENTRAL, STATE OR PROVINCIAL ACT AND AN INSTITUTING DECLARED TO BE A UNIVERSITY UNDER SECTION 3 OF THE UNIVERSITY GRANTS COMMISSION ACT, 1956, (3 OF 1956); OR (J) ANY GOVERNMENT OF A FOREIG N STATE OR A FOREIGN ENTERPRISES OR ANY ASSOCIATION OR BODY ESTABLISHED OUTSIDE INDIA; OR (K) ANY FIRM; OR (L) ANY PERSON, BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY OR AN ASSOCIATION OF PERSONS OR A BODY OF INDIVIDUALS, IF SUCH PERSON, - (A) DOES NOT FALL UNDER ANY OF THE PRECEDING SUB - CLAUSES; AND (B) IS LIABLE TO AUDIT OF ACCOUNTS UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44B DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WHICH SUCH SUM IS CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR; (II) GOODS CARRIAGE SHALL HAVE THE MEANING ASSIGNED TO IT IN THE EXPLANATION TO SUB - SECTION (7) OF SECTION 44AE; (III) CONTRACT SHALL INCLUDE SUB - CONTRACT; (IV) WORK SHALL INCLUDE (A) ADVERTISING; (B) BROADCASTING AND TELECASTING INCLUDING PRODUCTION OF PROGRAMS FOR SUCH BROADCASTING OR TELECASTING; (C) CARRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS; (D) CATERING; (E) MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM SUCH CUSTOMER, BUT DOES NOT INCLUDE MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM A PERSON, OTHER THAN SUCH CUSTOMER. 10 . T HE PROVISION OF SECTION 194C CONTEMPLATES THAT SOME WORK SHOULD BE ASSIGNED TO THE CONTRACTOR AND PURSUANCE OF THE CONTRACT AS 8 ITA NO. ITA NO. 717/PN/2011 & ITA NOS.1888, 1889, 1890 & 1891/PN/2012, MUNICIPAL CORPORATION, AURANGABAD SPECIFIED IN THE SAID SECTION AND PERSON MAKING THE PAYMENT OR CREDITING THE AMOUNT TO THE ACCOUNT OF THE CONTRACTOR SHOULD DEDUCT TAX AT SOURCE AS SPECIFIED IN THE SAID PROVISION. THE CORE ISSUE WHICH WE HAVE TO DETERMINE IS WHETHER AS PER THE AGREEMENT BETWEEN THE ASSESSEE CORPORATION AND THE SOCIETY , IT CAN BE SAID THAT THE ASSESSEE WAS UNDER LEGAL OBLIGATION TO DEDUCT THE TAX AT SOURCE IN RESPECT OF THE AMOUNT RETAINED BY THE SO CIETY U/S. 194C OF THE I.T. ACT . AS PER THE AGREEMENT IT IS SEEN THAT THE ASSESSEE MUNICIPAL CORPORATION DECIDED THAT THE MANAGEMENT OF LOCAL TRANSPORT FACILITY SHOULD BE HANDED OVER TO PRIVATE ENTITY ON BOT BASIS IN CONSIDERATION OF THE ROYALTY . ACCOR DINGLY , AS PER THE RESOLUTION N O. 81 PASS ED IN THE S TANDING C OMMITTEE OF THE ASSESSEE MUNICIPAL CORPORATION DATED 18 - 10 - 2005 , IT WAS DECIDED THAT THE TENDER RECEIVED FROM THE SOCIETY QUOTING THE RATE OF PAYMENT OF ROYALTY @ RS.0.80 RUPEES PER K.M. IN RES PECT OF TOTAL KMS TRAVEL LED BY ALL THE BUSES WAS APPROVED. THE TENDER OF THE SOCIETY WAS APPROVED WITH THE CONDITION THAT THE RATE OF ROYALTY WOULD INCREASE IN PROPORTION TO THE RISE IN THE RATE S OF TICKETS. AS PER THE SAID AGREEMENT , THE ASSESSEE SOCIET Y HAS BEEN GRANTED THE R IGHTS FOR PLYING OF THE LOCAL TRANSPORT ATION BUSES IN THE CITY FOR A PERIOD OF 10 (TEN ) YEARS. THE LAW IS WELL SETTLED THAT WHEREVER THERE IS AN AGREEMENT OR CONTRACT THE RELATIONSHIP OF THE PARTY TO THE AGREEMENT ONLY CAN BE DET ERMINED ON THE BASIS OF THE TERMS AND CONDITIONS AS WELL AS THE PURPOSE FOR WHICH THE SAID AGREEMENT IS MADE . WE HEREBY REPRODUCE THE TERMS AND CONDITIONS OF THE AGREEMENT DATED 31 - 10 - 2005 ENTERED INTO BETWEEN THE ASSESSEE CORPORATION AND THE SOCIETY WHIC H SARE AS UNDER: 1. LOCAL BUS TRANSPORT SYSTEM WOULD HAVE TO BE RUN UNDER THE NAME 'AURANGABAD MUNICIPAL CORPORATION (AMT)' WITHIN THE LIMITS OF AURANGABAD MUNICIPAL CORPORATION. AROUND 100 BUSES TO BE RUN ON 25 ROUTES OF THE CITY, WOULD HAVE TO BE NEWLY P URCHASED WITH ADVANCED BODY IN ACCORDANCE WITH THE RULES FRAMED BY THE GOVERNMENT. THESE BUSES MUST NECESSARILY HAVE TWO HYDRAULIC DOORS EACH. OUT OF THEM, FIVE BUSES SHOULD BE AIR 9 ITA NO. ITA NO. 717/PN/2011 & ITA NOS.1888, 1889, 1890 & 1891/PN/2012, MUNICIPAL CORPORATION, AURANGABAD CONDITIONED AND THE SAME WOULD HAVE TO BE PLIED ON TOURIST ROUTES. 2. ALL T HE BUSES WOULD HAVE TO PURCHASE IN THE NAME OF DEPUTY COMMISSIONER, MUNICIPAL CORPORATION. THE SELECTION OF THE DESIGN AND BODY OF THE BUSES WOULD BE DONE BY HON'BLE CHIEF OFFICER AND COMMISSIONER. THE COLOUR OF THE BUS WOULD BE IN ACCORDANCE WITH THE C HOICE OF HON'BLE CHIEF OFFICER AND COMMISSIONER. MINIMUM MARGIN OF 20 % REQUIRED TO BE PAID FOR PURCHASE OF THE BUSES WOULD HAVE TO BE PAID BY THE SOCIETY WHEREAS A MAXIMUM AMOUNT OF 80% WOULD HAVE TO BE SOURCED BY WAY OF BANK LOAN. THE AGENCY WOULD STAND AS A GUARANTOR FOR THE REPAYMENT OF THE LOAN. 3. T HE AURANGABAD MUNICIPAL CORPORATION WOULD NOT BE LIABLE TO INCUR ANY EXPENDITURE IN RESPECT OF THE SAID PLYING OF BUSES. THE SOCIETY WOULD BE REQUIRED TO BEAR ALL THE EXPENSES IN RESPECT TO THE BUS SERVI CE, APPOINTMENT OF EMPLOYEES, STAFF SALARY, ALLOWANCES, DRESS ETC. THE EMPLOYEES OF THE LOCAL BUS TRANSPORT SERVICE WOULD IN NO WAY BE RELATED TO THE MUNICIPAL CORPORATION. BECAUSE THEY WOULD BE THE EMPLOYEES OF THE CONCERNED SOCIETY AND WOULD NOT BE ELIG IBLE TO CLAIM ANY RIGHTS CONNECTED WITH THE SERVICE WITH MUNICIPAL CORPORATION. SIMILARLY, THEY WOULD BE ABLE TO ANY EMPLOYMENT CONNECTION WITH THE MUNICIPAL CORPORATION OFFICE. 4. THE CONCERNED SOCIETY WOULD BE REQUIRED TO STRICTLY ABIDE BY THE RULES AND REGULATIONS OF THE GOVERNMENT TOURIST DEPARTMENT, TRAFFIC POLICE DEPARTMENT AND OTHER DEPARTMENTS. SIMILARLY, THE RESPONSIBILITY TO PAY GOVERNMENT FEES/ TAXES WOULD BE SOLELY THAT OF THE SOCIETY. 5. THE MUNICIPAL CORPORATION WOULD NOT BE RESPONSIBLE TO MA KE GOOD ANY LOSS ARISING ON ACCOUNT OF ACCIDENTS OR PROVIDE FINANCIAL HELP OR MEDICAL HELP IN THE COURSE OF CONDUCTING THE SAID TRANSPORT SERVICE. 6. THE EXPENDITURE INCURRED ON REPAIRS AND MAINTENANCE, DIESEL, OIL ETC. OF THE BUSES WOULD BE BORNE BY THE S OCIETY. THE SOCIETY WOULD BE REQUIRED TO START APPROPRIATE SYSTEM FOR THAT PURPOSE. THE EXPENDITURE ON INSURANCE AND RENEWAL OF INSURANCE WOULD HAVE TO BE BORNE BY THE SOCIETY. 7. CITIZENS/ STUDENTS WOULD BE REQUIRED TO BE GIVEN CONCESSIONS AND PASSES IN ACCORDANCE WITH THE RULES AND REGULATIONS FRAMED BY THE GOVERNMENT. 8. THE TICKET RATES AND STOPS WOULD HAVE TO BE IN ACCORDANCE WITH THE RATES AND STOPS DECIDED BY REGIONAL TRANSPORT DIVISION AND HON'BLE REGIONAL COMMISSIONER (REVENUE). AN ADDITIONAL AMOU NT OF 20% MAY BE CHARGED FOR AIR CONDITIONED BUSES. 9. PERMISSION WOULD BE REQUIRED TO BE OBTAINED FOR THE ROUTES OF THE BUSES FROM R.T.O. OFFICE AND STATE ROAD TRANSPORT CORPORATION. 10.A PROVISION FOR PARKING OF BUSES, SERVICE STATION, SPACE REQUIRED FOR OFFICIAL BUILDING WOULD BE MADE AVAILABLE BY THE MUNICIPAL CORPORATION. THE SOCIETY WOULD BE REQUIRED TO COMPLETELY DEVELOP THIS SPACE. THE SOCIETY WOULD NOT BE CHARGED 10 ITA NO. ITA NO. 717/PN/2011 & ITA NOS.1888, 1889, 1890 & 1891/PN/2012, MUNICIPAL CORPORATION, AURANGABAD ANY RENT BUT THE EXPENDITURE ON CONSTRUCTION ON THE SAID SPACE WOULD HAVE TO BE BORNE BY THE SOCIETY. 11.IF IT IS DECIDED TO START A NEW ROUTE OTHER THAN THE ROUTE DECIDED EARLIER, THE SOCIETY WOULD BE UNDER AN OBLIGATION TO PLY THE BUSES ON THE NEW ROUTE AFTER OBTAINING NECESSARY PERMISSIONS. 12.IF AFTER DETERMINING THE DEPRECIATED COST O F EACH BUS AS VALUED BY THE VALUER APPOINTED BY THE MUNICIPAL CORPORATION, THE TOTAL COST IS LESS THAN THE AMOUNT OF BANK LOAN OUTSTANDING, THEN THE SOCIETY WOULD BE REQUIRED TO MAKE A FIXED DEPOSIT WITH THE BANK EQUAL TO THE AMOUNT OF SAID DIFFERENCE. THI S AMOUNT COULD NOT BE WITHDRAWN WITHOUT THE PERMISSION OF HON'BLE COMMISSIONER. THE FEES OF THE VALUER WOULD HAVE TO BE BORNE BY THE SOCIETY. 13.LOCAL BUS TRANSPORT SERVICE SHALL BE OPERATED BY PARTY NO. 2 UNDER THE CONTROL OF PARTY NO. 1. 14.PARTY NO. 2 W OULD PAY TO PARTY NO. 1, ROYALTY @ RS. 0.80 PER KM FOR THE TOTAL NO. OF KMS TRAVELLED BY ALL THE BUSES. 15. THIS AGREEMENT WOULD BE FOR A PERIOD OF 10 (TEN) YEARS. 16. THE SOCIETY WOULD HAVE TO CONSTRUCT SHELTERS AT VARIOUS BUS STOPS IN THE CITY IN ACCOR DANCE WITH THE DESIGNS APPROVED BY PARTY NO. 1 AND THE MUNICIPAL CORPORATION WOULD ALLOT PERMISSION TO CONSTRUCT SMALL SHOPS ADJOINING SUCH SHELTERS WITHIN THE SIZES DECIDED BY THE MUNICIPAL CORPORATION. THE RENT DERIVED FROM SUCH SHOPS WOULD BE ENJOYED BY THE SOCIETY. HOWEVER, THE SOCIETY WOULD BE LIABLE TO PAY THE ADVERTISEMENT TAX WITH THE MUNICIPAL CORPORATION. THE SOCIETY WOULD HAVE THE RIGHT OT HANDOVER ALL THE RIGHTS IN RESPECT OF ADVERTISEMENTS ON ABOVE STOPS, TICKETS AND BUSES TO ANY OTHER AGENCY . THE RESPONSIBILITY OF CLEANING AND MAINTENANCE WOULD BE THAT OF THE SOCIETY. THE SMALL SHOPS WOULD BE USED FOR TEA STALL, STD, PCO BOOK STALL AND OTHER STALLS. ONE SIDE OF THE BUS WOULD BE RESERVED FOR THE MUNICIPAL CORPORATION. THE SOCIETY WOULD NOT GET ANY INCOME IN THAT RESPECT. PERMISSION WOULD BE GRANTED TO PLACE BILLBOARD IN ACCORDANCE WITH THE DESIGN APPROVED BY THE MUNICIPAL CORPORATION. 50% OF THE SAID AREA SHOULD BE USED FOR INFORMATION REGARDING BUSES WHEREAS THE REMAINING AREA MAY BE USE D FOR ADVERTISEMENT PURPOSE. 17. THE BUSSES SHALL BE PURCHASED IN ACCORDANCE WITH THE INSTALLMENTS DECIDED BY PARTY NO. 1 FROM THE DATE OF THE AGREEMENT AND THE SAME SHOULD ACTUALLY START OPERATING. IN CASE OF ANY DIFFICULTY ARISING THEREUPON, DECISION SH ALL BE TAKEN AFTER THE CONSENT OF BOTH THE PARTIES. 18. AFTER THE LOAN AMOUNT IS TOTALLY REPAID AND AFTER THE END OF TERM OF THIS AGREEMENT, ALL BUSSES, BUS STOPS, REPAIRING CENTERS, SHADES ETC. WILL BE HANDED OVER TO PARTY NO 1 FROM THE PARTY NO 2 WITHOU T ANY CONSIDERATION OR DELAY IN GOOD CONDITION. 19. THE PURPOSE OF PARTY NO. 1 BEHIND FRAMING THIS SCHEME IS SOLELY TO PROVIDE SAFE AND SOUND TRANSPORT FACILITY TO THE CITIZENS AND HENCE, IT WOULD FORM THE RULES AND REGULATIONS AND 11 ITA NO. ITA NO. 717/PN/2011 & ITA NOS.1888, 1889, 1890 & 1891/PN/2012, MUNICIPAL CORPORATION, AURANGABAD MAINTAIN CONTROL IN THIS RESPECT. BUT SINCE PARTY NO 2 HAS TO OPERATE THE SERVICE ON DAILY BASIS, IT MAY CHOOSE THE STAFF IN ACCORDANCE WITH THE EDUCATIONAL AND TECHNICAL STANDARDS PRESCRIBED BY PARTY NO. 1. THE STAFF APPOINTED BY PARTY NO. 2 MUST BE DEAL POLITELY WITH THE COMMUT ERS. IF ANY WRITTEN COMPLAINTS ARE RECEIVED BY PARTY NO. 1, AND IF IT GIVES A DECISION IN THAT RESPECT, PARTY NO. 2 SHALL SUSPEND SUCH STAFF AND WOULD APPOINT OTHER STAFF IN THEIR PLACE. 20.THE STOPS ON EVERY ROUTE WOULD BE DECIDED BY PARTY NO.L AND THE SA ME SHALL BE APPROVED BY THE TRAFFIC POLICE DEPARTMENT AND THE BUSES WOULD HALT ON SUCH STOPS. PARTY NO. 2 SHALL INCREASE THE NUMBER OF STOPS AS PER THE DEMAND AND THE SAME SHOULD BE MADE OPERATIVE IMMEDIATELY. 21. IN CONSONANCE WITH THE DEMAND OF THE CITIZ ENS AND THE BENEFIT OF THE SOCIETY AND AFTER THE DECISION AND DISCUSSION WITH PARTY NO.L, THE NUMBER OF BUSES AND BUS STOPS WOULD BE INCREASED, PARTY NO. 1 WOULD GIVE INSTANT APPROVAL IN THIS RESPECT AND PARTY NO. 2 WOULD NEED TO TAKE IMMEDIATE ACTION AND MAKE AVAILABLE THE REQUIRED NUMBER OF BUSES AND BUS STOPS. 22.IN ORDER TO RUN THE BUS SERVICE SMOOTHLY AND REGULARLY, THE MANAGEMENT OF DIESEL EXPENSES SHOULD BE DONE IN A SPECIAL MANNER AND FOR THAT PURPOSE, PARTY NO. 1 SHOULD ARRANGE TO PAY A WEEKLY CHEQ UE TO PARTY NO. 2 OUT OF THE COMPOSITE TRANSPORT SCHEME FUND. 23.THE PROJECT BEING FOR THE WELFARE OF CITIZENS, IF AT ANY TIME IN COURSE OF THE SAME, ASSISTANCE OF THE POLICE FORCE IS REQUIRED DUE TO ANY ACCIDENT OR DISASTER, PARTY NO. 1 WOULD TAKE NOTE OF THE SAME AND WOULD PROVIDE THE REQUIRED ASSISTANCE TO PARTY NO. 2. 24. IF THE TICKET RATES ARE REQUIRED TO BE INCREASED BECAUSE OF THE INCREASE IN DIESEL PRICES, THE PROPOSAL FOR HIKE IN TICKET RATES GIVEN BY THE SOCIETY WOULD BE APPROVED BY PARTY NO. 1 W ITHIN A PERIOD OF SEVEN DAYS AND THE SAME SHOULD BE SYSTEMATICALLY FORWARDED TO REGIONAL TRANSPORT DIVISION, AURANGABAD. 25.IF DUE TO UNAVOIDABLE REASONS, SUCH AS ROAD REPAIRS, RALLY, STRIKE, ACCIDENT OR ANY OTHER TECHNICAL REASON ETC., THE BUS SERVICE IS HALTED FOR A CERTAIN PERIOD, THEN THE ROYALTY PAYMENTS PER KM FOR THAT PERIOD WOULD NOT BE RECOVERED FROM THE SOCIETY. BUT THE SOCIETY WOULD BE REQUIRED TO GIVE A WRITTEN NOTICE IN THAT RESPECT TO PARTY NO. 1. THE DISTANCE FIXED BY PARTY NO. 1 TO BE COVERE D BY PARTY NO. 2 AND THE AMOUNT FIXED BY PARTY NO. 1 AT THE RATE OF ROYALTY PER KM SHALL BE DEPOSITED WITHIN THE FIRST WEEK OF EACH MONTH WITH PARTY NO. 1 AND PARTY NO. 1 SHALL BE INFORMED IN WRITING IN THIS RESPECT. 26.PARTY NO. 2 SHALL, FROM THE DAY ON W HICH THE BUS SERVICE BECOMES OPERATIVE, OPEN AN ESCROW ACCOUNT IN A BANK WHICH IS SELECTED AFTER THE CONSENT OF PARTY NO. 1 IN THE NAME OF COMMISSIONER, CITY BUS TRANSPORT FUND AND DEPOSIT THEREIN THE INCOME FROM THE SECOND DAY ONWARDS. THE SAID ACCOUNT SH ALL BE OPERATED BY ACCOUNTS OFFICER, MUNICIPAL CORPORATION, AURANGABAD AND SECRETARY, AKPMSSL. THE AMOUNT DEPOSITED DAILY IN THIS ACCOUNT IN EACH MONTH SHALL BE FIRSTLY DISBURSED 12 ITA NO. ITA NO. 717/PN/2011 & ITA NOS.1888, 1889, 1890 & 1891/PN/2012, MUNICIPAL CORPORATION, AURANGABAD TOWARDS PAYMENT OF EMI ON BANK LOAN BEFORE THE FIFTH DAY OF THE SUCCEEDING MO NTH. THIS MECHANISM SHALL CONTINUE TILL THE LOAN IS REPAID. THEREAFTER, THE SOCIETY WOULD BE ELIGIBLE TO USE THE BALANCE AMOUNT REMAINING AFTER DEDUCTION OF MONTHLY ROAD USAGE CHARGES, RTO TAXES AND OTHER TAXES ETC. TO BE PAID WITHIN THE FIFTH DAY OF EACH MONTH OR AT THE EARLIEST POSSIBLE FOR OTHER EXPENSES. THE CHIEF ACCOUNTS OFFICER WOULD MAINTAIN COMPLETE FINANCIAL CONTROL OVER THE SAID SCHEME AND REGULATE THE REPAYMENT OF BANK LOAN. PARTY NO. 2 WOULD BE UNDER AN OBLIGATION TO FOLLOW THE DIRECTIONS GIVEN BY HIM FROM TIME TO TIME. 27. PARTY NO. 2 WOULD BE ENTITLED TO COLLECT AN AMOUNT OF 5 TIMES THE MAXIMUM TICKET PRICE FROM A PASSENGER, IN CASE THE PASSENGER IS FUND TO BE TRAVELLING WITHOUT TICKET. 28. THE PERMITS IN RESPECT OF THE BUSES PURCHASED UNDER T HE SAID ARRANGEMENT WOULD BE IN THE NAME OF PARTY NO. 1BUT THE RESPONSIBILITY TO FOLLOW ALL THE RULES AND PAY THE TAXED UNDER THE MOTOR TRANSPORT ACT, 1988 WOULD BE SOLELY THAT OF PARTY NO. 2 PARTY NO. 2 SHALL FROM TIME TO TIME PAY ALL THE TAXES, CESS ETC . AS AND IN CASE, ANY PENALTY IS IMPOSED DUE TO DELAY OR NON - PAYMENT ON THE PART OF PARTY NO. 2, THE RESPONSIBILITY TOWARDS THE SAME WOULD BE SOLELY THAT OF PARTY NO.2. PARTY NO. 2 SHALL BE SOLELY RESPONSIBLE FOR ANY LEGAL PROCEEDINGS OR FINANCIAL DAMAGES CAUSED DUE TO VIOLATION OF ANY RULES AND IT WILL BE BINDING ON PARTY NO. 2 TO CARRY ON THE PROCEEDINGS AS PER THE DIRECTIONS GIVEN BY PARTY NO. 1 IN THAT RESPECT. 29. IN ALL BUSES, THE RATE CHARGED ON BUS TICKET SHOULD BE WRITTEN IN BOLD AT A VIEWABLE PLAC E. 30. ANY LOGO OR SLOGAN IN RESPECT OF THE BUS SERVICE SHALL BE DECIDED BY BOTH THE PARTIES. 31. IT WOULD BE THE RESPONSIBILITY OF PARTY NO. 2 TO ENSURE THAT SHOPS CONSTRUCTED AT THE BUS STOPS DO NOT CAUSE ANY INCONVENIENCE OR PROBLEM TO PASSENGERS. 32. P ARTY NO. 2 WOULD BE RESPONSIBLE TO ENSURE THAT SMOKING IS PROHIBITED IN THE BUS. 33. IF ANY INCOME OTHER THAN BY WAY OF ADVERTISEMENT ARISES FROM THE SAID PROJECT, THE DISTRIBUTION OF THE SAME SHALL BE MUTUALLY DECIDED BY PARTY NO.L AND PARTY NO.2. 34.PAR TY NO. 2 WOULD BE RESPONSIBLE TO REPAY THE TERM LOAN WITHIN A PERIOD OF SIX MONTHS. 35.PARTY NO. 2 SHALL GIVE BANK GUARANTEE OF RS.50 LACS IN INSTALLMENTS WITHIN THREE MONTHS FROM THE DATE OF REGISTRATION OF BUSES. IF THE AMOUNT AVAILABLE IN THE BANK IS N OT SUFFICIENT TO REPAY THE LOAN, IT WOULD BE THE RESPONSIBILITY OF PARTY NO. 2 TO PAY THE SHORTFALL. 36.THE DECISION OF THE COMMISSIONER OR OFFICER APPOINTED BY HIM FOR REDRESSAL OF COMPLAINTS RECEIVED FROM PASSENGERS WOULD BE BINDING UPON PARTY NO. 2. 13 ITA NO. ITA NO. 717/PN/2011 & ITA NOS.1888, 1889, 1890 & 1891/PN/2012, MUNICIPAL CORPORATION, AURANGABAD 37. LT SHALL BE THE RESPONSIBILITY OF PARTY NO. 2 TO PROVIDE UNIFORM, BATCHES AND IDENTIFICATION NO. TO THE STAFF AND THE SAME IS MANDATORY. 38.BEFORE A PERIOD OF EIGHTEEN MONTHS FROM THE END OF THE TERM OF THIS TEN YEAR AGREEMENT, PARTY NO.2 WILL INFORM IN WR ITING TO PARTY NO.L AS TO WHETHER PARTY NO. 2 INTENDS TO CONTINUE THE LOCAL BUSINESS SERVICE AND WOULD ALSO INCLUDE THE NEW TERMS AND CONDITIONS IN THE SAME. IF PARTY NO. 2 IS NOT WILLING TO ACCEPT THE NEW TERMS AND CONDITIONS LAID DOWN BY PARTY NO.L, PART Y NO. 1 WOULD BE FREE TO PROCEED FURTHER AS PER ITS WISH AND PARTY NO. 2 SHALL HAVE NO OBJECTION IN THAT RESPECT. 39.IN CASE, ANY DISPUTE ARISES AT ANY POINT OF TIME WITH REGARDS TO ANY TERMS AND CONDITIONS OR OTHER ASPECTS IN THIS AGREEMENT, THE DECISION OF THE COMMISSIONER, PARTY NO. 1 SHALL BE FINAL. 11 . ON THE CAREFUL EXAMINATION OF THE TERMS THE FOLLOWING THINGS ARE REVEALED: (I). THE ASSESSEE HAS BEEN ASSIGNED THE RIGHT TO PLY THE CITY BUS SERVICES ON PAYMENT OF THE ROYALTY BY THE SOCIETY TO THE AS SESSEE MUNICIPAL CORPORATION @ RS.0.80 PER KM. (II). ALL THE EXPENDITURE ON THE RUNNING ON THE BUSES SHOULD BE BO RNE BY THE SOCIETY. THE SOCIETY IS TO CHARGE THE RATES AS DECIDED BY THE REGIONAL TRANSPORT DIVISION. THE SOCIETY IS GIVEN THE RIGHT TO CONS TRUCT SHELTER S AT VARIOUS BUS STOPS IN THE CITY AS PER THE DESIGNS APPROVED BY THE ASSESSEE CORPORATION AND SOCIETY IS GIVEN RIGHT TO CONSTRUCT SMALL SHOPS ADJOINING SUCH SHELTERS AND THE RENT DERIVED FROM SUCH SHOPS COULD BE ENJOYED BY THE SOCIETY. THE S OCIETY IS GIVEN RIGHT IN RESPECT OF ADVERTISEMENTS ON THE ABOVE STOPS, TICKETS AND BUSES TO TRANSFER THE SAID RIGHT TO ANY OTHER AGENCY OR PARTY . (III). THE SOCIETY IS TO PUR CHASE 100 NEW BUSES TO RUN ON 25 ROUTES ON THE CITY WHICH DESCRIPTION IS GIVEN IN CONDITION NO. 1 AND THE COST TO BE BO RNE BY THE SOCIETY BY PAYING THE 2 0 % MARGIN MONEY AND 80% SHOULD BE BY AVAILING BANK LOAN. THE SOCIETY SHOULD STAND AS GUARANTOR FOR THE REPAYMENT OF THE LOAN. 14 ITA NO. ITA NO. 717/PN/2011 & ITA NOS.1888, 1889, 1890 & 1891/PN/2012, MUNICIPAL CORPORATION, AURANGABAD 1 2 . THE REVENUE IS PLACING RELIANCE ON CONDITION NO. 26 IN WHICH IT IS PROVIDED THAT JOINT ACCOUNT WILL BE OPENED AND THE INCOME COLLECTED IN A DAY SHOULD BE DEPOSITED IN THE JOINT ACCOUNT. IN OUR CONSIDERED OPINION , THE AGREEMENT BETWEEN THE ASSESSEE CORPORATION AND THE SOCIETY DOES NOT CREATE ANY CONTRACTUAL RELATIONSHIP AS CONTEMPLATED IN SECTION 194C OF THE ACT. THE CONDITIONS FOR OPENING OF THE JOINT ACCOUNT IS PROVIDED AS THE SOCIETY HAS TO BORROW THE LOAN FOR THE BUSES ON THE NAME OF THE CORPORATION BUT THE FACT REMAIN THAT THE ASSESSEE CORPORATION IS N OT PAY ANYTHING TO THE SOCIETY BUT THE SOCIETY IS UNDER CONTRACTUAL OBLIGATION TO PAY THE ROYALTY @ RS. 0. 80 PER K.M. HENCE, IN OUR UNDERSTANDING , THE ASSESSEE CORPORATION IS NOT PAY ANYTHING TO THE SOCIETY AND IF THE ASSESSEE CORPORATION IS NOT PAY ANYTH ING IN THE SOCIETY TOWARDS THE TERMS OF THE AGREEMENT , THEN THERE IS NO QUESTION OF DEDUCTING THE TAX AT SOURCE AS PER THE TERMS AND CONDITIONS OF THE AGREEMENT. IT IS SEEN THAT IT IS RIGHT GIVEN TO THE SOCIETY FOR PLYING THE BUSES IN THE CITY WHICH IS IN FORM OF LICENCE AND THE ROYALTY IS COLLECTED FROM THE SOCIETY . H ENCE, PROVISION OF SEC. 1 94C IS NOT APPLICABLE TO THE ASSESSE E MUNICIPAL CORPORATION . 1 3 . THE REVENUE IS RELIED ON DECISION IN CASE OF S. S. AND CO. VS. STATE OF PUNJAB & ORS. (SUPRA). IN THE SAID CASE THE ISSUE IS DIFFERENT . T HERE IS NO DISPUTE BETWEEN THE PETITIONER AND INCOME - TAX DEPARTMENT . IT IS A DISPUTE BETWEEN THE PETITIONER AND STATE OF PUNJAB AND HARYANA. WE THEREFORE HOLD THAT THE AGREEMENT BETWEEN THE ASSESSEE MUNICIPAL CORPORATION AND THE SOCIETY IS NOT IN THE NATURE OF A CONTRACT WHICH IS CONTEMPLATED IN SEC. 1 94C OF THE ACT BUT IS AN ASSIGNMENT OF THE RIGHT TO PLY THE BUSES AND HENCE, THE BASIC MANDATE OF SEC. 194C IS NOT F ULFILLED. MOREOVER , THE ASSESSEE CORPORATION IS COLLECTING THE ROYALTY AND NOT 15 ITA NO. ITA NO. 717/PN/2011 & ITA NOS.1888, 1889, 1890 & 1891/PN/2012, MUNICIPAL CORPORATION, AURANGABAD MAKING THE PAYMENT TO THE SOCIETY. WE , THEREFORE , ALLOW THE GROUNDS TAKEN BY THE ASSESSEE MUNICIPAL CORPORATION IN ALL THE FOUR APPEALS. 14. SO FAR AS APPEAL NO. 717/PN/2011 AS IT IS INFRUCTUOUS THE SAME IS DISMISSED. 1 5 . IN THE RESULT, ITA NO. 717/PN/2011 IS DISMISSED AS INFRUCTUOUS AND ITA NOS. 1888, 1889, 1890, 1891/PN/ 2012 ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 25 - 06 - 20 1 3 SD/ - SD/ - ( G.S. PANNU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL M EMBER RK /PS PUNE , DATED : 25 TH JUNE, 20 1 3 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - II, NASHIK 4 THE CIT - (TDS) , PUNE 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE